coleboy

An employee has reached the $270K salary cap but not the $18K deferral limit so deductions are still taking place. The question was asked: Are the deferrals still exempt from the applicable taxes even though the salary limit has been reached? Or does the tax savings stop since the $270k limit has been reached?

A potential client has an existing defined benefit plan and would like to add a 401(k) Plan. His current TPA does not want anything to do with adding a 401(k) plan. Are there any pitfalls to adding a 401k plan to an existing defined benefit plan?

I was thrown off guard by a client wishing to have age 21, no waiting period but quarterly entry dates. Basic eligibility 101 but is this possible?

Hi, A current payroll client had expressed interest in setting up a 401k plan. On the way out of the meeting, they casually mentioned to the salesperson that they currently have a 403(b) plan. They are a church organization. They said that they had no plan document, etc. I have never worked on a 403(b) plan so don;t know too much about them. I do know after checking on the payroll system that there is an ER contribution. Can they have a 401k plan as well? What happens with the 403(b) plan? I am totally in need of guidance!

We prepared a preliminary adp test for a client since their test failed last year. Based on this test, the HCE has contributed about $4000 too much. Can this amount be sent back to the employer then have the HCE's pay corrected on the payroll end? Can you tell that I work for a payroll company?

We have a client that really dislikes his current recordkeeper who is also doing the tpa services. He wants to transfer his plan over to a new recordkeeper and retain us as the tpa. A letter was sent by the client stating that the plan be transferred as soon as possible to the new recordkeeper. The current recordkeeper came back stating that they could not do it until until 1/1/2018. My question is are there any IRS regulations addressing the time frame that a recordkeeper has to transfer plan assets? Thank you for any insight into this matter.

I work for a payroll company One of the sales reps sold the "wrong" kind of 401k plan to a client in 2016. This client has large turnover, etc. Plan was set up with no eligibility requirements. It ended up being top heavy for 2016 and 2017. TH contribution was about 100K for 2016.Plan did not pass adp testing either. I was just asked to re-do the documents and set up the plan as a safe harbor with the original effective date. I was just told tp pretend that it was always set up like that. I don't feel comfortable doing it. After all, it's a year and a half later! Any suggestions?

These things also make my head spin! We are setting up a 401k for a company that was formerly under a PEO plan. This company owns a chain of restaurants. I am waiting to find out what exactly the ownership percentages and who owns what. When they were under the PEO, only management and the people who worked at headquarters were in the plan. Now they want to open this new plan to the restaurant owners and possibly all of their employees. They want to include some restaurants and not others.They also want to set up one match for management and one match for everyone else. Could they do a separate plan for management and a separate plan for the rest of the employees? Each having their own plan provisions.Can they choose to include some but not others?

An employee that was eligible for the plan sends the employer a note stating that she wants to start having $20 deducted from her pay for the 401k plan. He never givers her an enrollment form to complete.He sets up the deduction on payroll. The first deduction went into the plan. After that, for some reason, the deductions got stopped on the payroll system. Now she has terminated her employment and wants to take her money out. Her account balance shows $20. She thinks that she has at least $400 because she thinks the $20 had been coming out of her account each week. There's a $75 processing fee so she can't even get her $20 out. What can/should be done?

Hi, We are taking over a control group of restaurants that were formerly under a PEO plan. They said that this plan is only covering employees at their headquarters plus restaurant managers. Eligibility is 3 months of service.Is it possible to set up a plan this way and not include the other employees ie waitstaff,cooks, dishwashers, etc?

A client currently has age 21 and immediate eligibility. They are not safe harbor plan. They want to change their eligibility so that interns that are hired for the summer months are not included. However, they do not want to change to 1 year and 1000 hours of service. Can they just exclude these interns and other part-times? Any suggestions?

Our salesperson sold a 401k plan to company that should never have happened. This company should've never been sold a 401k plan. Participation is poor. The ADP/ACP failed. The TH 3% contribution is over $90k and they will need an accountant's report. Is there any way we can terminate this plan as if it never happened?

One of our clients has an FSA where they contributed a certain dollar amount for each employee regardless of whether they enrolled in the FSA or not. Now we have found out that they have an HSA. Without telling us, they have been putting that employer contribution into the account of anyone who has the HSA. We have still been putting that employer contribution into that FSA for everyone. The employer is not happy! Can the employer choose where she wants to make that employer contribution on an employee by employee basis? That is, if she decided she's funding the FSA, doesn't she need to fund it for everyone? Can she fund it only for those who aren't in the FSA? Also, because there is an HSA, can't she only have a limited FSA? Or can she have 2 FSA's? The limited one for those employees with the HSA's and a full FSA for those who do not have the HSA.

We took a plan over as of 4/1/16. They had immediate eligibility but wanted to change it to 1 year as of 1/1/16. As I'm beginning the year-end testing, I realized that they never specified whether they wanted everyone who was eligible under the immediate provision to continue to participate or whether they wanted to just start anew. It would've have been an issue except someone that started 3/1/16 actually started contributing. We didn't take it over until 4/1/16. Restated the document as of that date but the 1 year requirement was done to start 1/1/16. Trying to figure out how to handle.

Hi, Silly question but what do you mean by prospective?

We took over this calendar year plan effective 4/1/16. At that point they wanted to change the eligibility from immediate to 1 year of service. Does this change become effective on 4/1/16? If so, does that mean that anyone hired prior to that ie Jan., Feb., March '16 are eligible and anyone after that has to work 1000 hours? What about people in prior years that immediately came into the plan? Do they now have to work 1000 hours beginning 4/1/16? Sorry if this has already been address but I'm a one person shop and I have no one to bounce things off of.

I have contacted them again. They had previously cited the service spanning rules.Why have an election such as that if it could be "overruled" with the service spanning rules?

Yes, we use the FT Williams documents. What is selected if "6 consecutive months of continuous service(not to exceed 12- hours of service failsafe applies)

I have a plan whose eligibility is 6 months of service and age 21. Entry date is first of month following. An employee was hired 5/13/16. Left on 6/21/16 and came back on 10/6/16. The system is making him eligible as of 11/12/16 and entering on 12/1/16. He basically only worked 2 of the 6 months. FT Williams says this is correct. Any thoughts?

My boss gave me an adoption agreement to review for a possible new client. This was an individually designed document. I don't believe that a determination letter was ever acquired. The document was done in 2009 with an amendment to add safe harbor in 2010. There was stuff in this adoption agreement that made me want to run away. I was not comfortable with some of the language. I asked if there was a new adoption agreement that was restated to the PPA,etc. The response was he added in the PPA language when he amended the plan for safe harbor in 2010. He stated that since it was only a few sentences, the TPA would have a hard time finding the PPA provisions within the document unless the TPA actually drafts documents and knew where to look.Hence, That was 6 years ago. Shouldn't the document have been restated again? Should I have reason to worry other than it makes me want to run away?

Thank you. I believe that is the intention is to amend 1/1/17.

OK, I'm taking over a plan that currently has 6 month eligibility. They want to amend it to 1 year/ 1000 hours eligibility. So are all those employees that never worked 1000 hours during the year not not allowed to participate?

Unfortunately this plan isn't that old and neither are any of the terminated participants that tehy want to pay out.

If the cash limit is at $1,000 does that mean balances over that amount cannot be forced out? Sorry I am just coming back into doing tpa work and trying to catch-up with everything.

Hi, Does every plan have to offer automatic IRA's for distributions between $1,000 and $5,000? That is, could a plan state that anyone with a balance under $5,000 distribute the balance in cash after a participant has been notified but has not responded after 30 days? Thank you!