Pammie57

Client's plan document has entry dates of 1/1 and 7/1, and it says that changes to deferrals can be made on entry dates. Several participants stopped their deferrals during this COVID pandemic, and now what to re-start them before 1/1/2021. Has something changed on this topic, and CAN they start again next payroll? I don't see anything in their document that says they can re-start at any time, but is that a given? Thanks!

We had a client's participant ask today for a hardship withdrawal, and they are arguing that regular non-elective profit sharing funds are to be allowed. I don't see that anywhere. The participant and representative are wearing us out on this - cited something from the IRS that had the word profit sharing in it. The original document only allowed hardships from the deferrals. They plan to adopt the new regs/relaxed Hardship requirements. Can anybody tell me if profit sharing (on a vesting schedule) is allowed now? Thanks Dazed and confused.

A new plan is effective 1/1.....However, the plan sponsors did not get it all set up until later. Deferrals started 10/1. Do they have to pro-rate either the deferral limit or catch-up. I don't th ink so , but have seen conflicting opinions. What about compensation? I am thinking they use just 10/1 through 12/31? actual compensation?

AN employee has quit working except for PRN but had been full-time and qualified for the retirement plan - took a loan and stopped paying on it when he went PRN - the asset platform is wanting guidance on whether the loan should be deemed distributed or just in default and accrue interest on it? If he is PRN then is he technically terminated if they pay him wages and not 1099 misc.? What are your thoughts on how this loan should be handled and reported. Thanks!

Owner wants to participate..... & with these few employees - I figure it will be top-heavy at some point and might have to give all NHCE 3% in future years or gateway possibly (talking if we go CT PS route) Am I thinking correctly here?

So if the owner is excluded - he can use the different types of classification (hourlly/vs salary) and give each a different level of match with no issues? BRF? etc.? Thanks...new territory here for me.

i have an S corp with one owner who has two other employees. Employee 1 - 44,000 in wages (owner) Employee 2- 53,540 in wages Employee 3- $31,250 in wages Essentially, my goal is to give employee 2 the benefit of a 401k and company match while giving little as possible to employee 3. I am thinking we can use a discretionary match with tiers where full time salary employees get 100% up to 3% (employees 1 &2) full time hourly employees get 100% up to 1% (employee 3).

In light of the COVID-19 effects on a lot of small businesses, I have been asked today about what kind of notice (30 day) or what does the Employer have to give to participants if they want to stop the match for the rest of the year. Can they even do that with the safe harbor match? I think so, but then the plan would have to submit to ADP testing, correct? Did the CARES Act give any guidance in this area? Thanks

I realize that the HS withdrawal regs expanded the money sources and include earnings in the amounts now available for hardship. However, if the plan document still says "deferrals only' do they have to allow distributions from safe harbor monies, etc. Or is that going to continue to be an optional choice? I know they don't have to take loans anymore or stop the deferrals as in the past. Just wondering what to tell this client.

I think they should be - but apparently they are not.....and it's a well known platform....it will only affect one payroll but I assume the employer would have to make up lost earnings if it is held in company assets until the platform will accept the funds. I wonder if they opened an interest bearing account in the plan name and deposited them there if that would be better than being late? anybody?

I am just wondering if any of you have had a plan affected by a blackout period where deferrals were submitted Late because there was an issue with the new provider accepting them?....Did you calculate lost earnings on the late deferrals?

Good to know about the ACP portion. Thanks

We have a client who currently has a 401(k) that does a discretionary match. They have matched for January and part of February of 2020 already. They failed ADP for 2019 so want to do a Safe harbor going forward. Under the SECURE Act,, can they amend now to do the 3% Non-elective for the remainder of the year (as of the date of adoption of the SH plan? ) If so, do they perform ADP test for the months they had the normal match or do they pass for 2020?

Thanks!

Does the son-in-law of the owner get attributed the ownership percentage of father in law? I have daughter as HCE based on Dad's ownership.

Is t his distribution subject to any withholding. I assume no since it can't be rolled? Correct me if I am off base here.

Is it allowable for a participant in a 401k plan to max out his ROTH deferrals in the plan, and also contribute to a ROTH IRA for the same year?

self directed -individual accounts...I have never had a client pay it from the plan where there are no forfeitures to us....so not really sure what format to use to allocate the fee. I am thinking it should be pro-rata - which means owner will pay the bulk.

I think I have read that the financial audit (large plans) fees charged by a CPA firm can be paid from the plan each year. However, my question is -what is a fair way to allocate those fees among the plan participants. If the same amount is charge each participant, then some small account balances could almost be wiped out. Most of my clients just pay it from the company and deduct it as a business expense I guess. For the client who insists on the plan participants paying for it - should they divide the fee based on account balance? What are your thoughts and experiences? Thanks

Thanks!

Unless there is a controlled group issue - is there any reason why an owner/highly compensated employee/key employee cannot max out his deferrals in each company's plan - as well as maxing out in each plan in total. (56,000 total for 2019)?

that was supposed to say top-heavy... not just top contribution.

A retirement plan was operating as a safe harbor plan - until they amended their plan as October 21, 2018 to no longer make the safe harbor match. Do they have to be tested for non-discrimination-- as in the ADP/ACP test for 2018? I think so, but just want confirmation. Also, when the top-heavy test is run, it shows that 74% of the account balances belong to the key employees at 12/31/2018. Do they have to make a top contribution for 2018 or 2019 since they were a safe harbor plan as of 12/31/2017? Thanks!

I am never sure who this is....participants with account balances (both active and non-active), beneficiaries receiving benefits under the plan - but does it include ALL employees who have met eligibility but have no account balance?

Thank you.