Tom Poje

the following passed the House (as part of the Family Savings Act) basically, no more notice needed if 3% safe harbor. why o why can't this be effect now so I wouldn't have to worry about notices this month!!!!!!!!) plan can be amended anytime during the year plan can be amended after the end of the year (before deadline for refunds) if increased to 4% SEC. 102. RULES RELATING TO ELECTION OF SAFE HARBOR 401(k) STATUS. (a) LIMITATION OF ANNUAL SAFE HARBOR NOTICE TO MATCHING CONTRIBUTION PLANS.— (1) IN GENERAL.—Section 401(k)(12)(A) of the Internal Revenue Code of 1986 is amended by striking ‘‘if such arrangement’’ and all that follows and inserting ‘‘if such arrangement— (i) meets the contribution requirements of subparagraph (B) and the notice requirements of subparagraph (D), or (ii) meets the contribution requirements of subparagraph (C)(2) AUTOMATIC CONTRIBUTION ARRANGEMENTS.—Section 401(k)(13)(B) of such Code is amended by striking ‘‘means’’ and all that follows and inserting ‘‘means a cash or deferred arrangement— (i) which is described in subparagraph (D)(i)(I) and meets the applicable requirements of subparagraphs (C) through (E), or (ii) which is described in subparagraph (D)(i)(II) and meets the applicable requirements of subparagraphs (C) and (D). (b) NONELECTIVE CONTRIBUTIONS.— Section 20 401(k)(12) of such Code is amended by redesignating sub21 paragraph (F) as subparagraph (G), and by inserting after subparagraph (E) the following new subparagraph: (F) TIMING OF PLAN AMENDMENT FOR EMPLOYER MAKING NONELECTIVE CONTRIBUTIONS.— (i) IN GENERAL.—Except as provided in clause (ii), a plan may be amended after the beginning of a plan year to provide that the requirements of subparagraph (C) shall apply to the arrangement for the plan year, but only if the amendment is adopted— (I) at any time before the 30th day before the close of the plan year, or (II) at any time before the last day under paragraph (8)(A) for distributing excess contributions for the plan year. (ii) EXCEPTION WHERE PLAN PROVIDED FOR MATCHING CONTRIBUTIONS.— Clause (i) shall not apply to any plan year if the plan provided at any time during the plan year that the requirements of subparagraph (B) or paragraph (13)(D)(i)(I) applied to the plan year. (iii) 4-PERCENT CONTRIBUTION REQUIREMENT.—Clause (i)(II) shall not apply to an arrangement unless the amount of the contributions described in subparagraph (C) which the employer is required to make under the arrangement for the plan year with respect to any employee is an amount equal to at least 4 percent of the employee’s compensation.’’. (c) AUTOMATIC CONTRIBUTION ARRANGEMENTS.— Section 401(k)(13) of such Code is amended by adding at the end the following: (F) TIMING OF PLAN AMENDMENT FOR EMPLOYER MAKING NONELECTIVE CONTRIBUTIONS.— (i) IN GENERAL.—Except as provided in clause (ii), a plan may be amended after the beginning of a plan year to provide that the requirements of subparagraph (D)(i)(II) shall apply to the arrangement for the plan year, but only if the amendment is adopted— (I) at any time before the 30th day before the close of the plan year, or (II) at any time before the last day under paragraph (8)(A) for distributing excess contributions for the plan year. (ii) EXCEPTION WHERE PLAN PROVIDED FOR MATCHING CONTRIBUTIONS.— Clause (i) shall not apply to any plan year if the plan provided at any time during the plan year that the requirements of subparagraph (D)(i)(I) or paragraph (12)(B) applied to the plan year. (iii) 4-PERCENT CONTRIBUTION REQUIREMENT.—Clause (i)(II) shall not apply to an arrangement unless the amount of the contributions described in subparagraph (D)(i)(II) which the employer is required to make under the arrangement for the plan year with respect to any employee is an amount equal to at least 4 percent of the employee’s compensation.’’. (d) EFFECTIVE DATE.—The amendments made by this section shall apply to plan years beginning after December 31, 2018. DESCRIPTION OF H.R. 6757, THE “FAMILY SAVINGS ACT OF 2018” Delay in adopting provisions for nonelective 401(k) safe harbor Under the proposal, unless a plan provided at any time during the plan year that 401(k) safe harbor matching contributions applied to the plan year, a plan can be amended to become a nonelective 401(k) safe harbor plan for a plan year (that is, amended to provide the required nonelective contributions and thereby satisfy the safe harbor requirements) at any time before the 30th day before the close of the plan year. Further, unless a plan provided at any time during the plan year that 401(k) safe harbor matching contributions applied to the plan year, the proposal allows a plan to be amended after the 30th day before the close of the plan year to become a nonelective contribution 401(k) safe harbor plan for the plan year if (1) the plan is amended to provide for a nonelective contribution of at least four percent of compensation (rather than at least three percent) for all eligible employees for that plan year and (2) the plan is amended no later than the last day for distributing excess contributions for the plan year, that is, by the close of following plan year Nevertheless, the Family Savings Act’s prospects in the Senate remain very uncertain.

send the guy to the board and have him write 100 times. works every time with Bart....oh wait...never mind

my first question would be why the highlighted indicates 3%. That sounds like a 3% nonelective not a 4% match

see 1.401(a)(9)-6 Q-6 you figure out the amount needed as of the prior year, and then base vesting as of the distribution calendar year. Q-6. If a portion of an employee's benefit is not vested as of December 31 of a distribution calendar year, how is the determination of the required minimum distribution affected? A-6. In the case of annuity distributions from a defined benefit plan, if any portion of the employee's benefit is not vested as of December 31 of a distribution calendar year, the portion that is not vested as of such date will be treated as not having accrued for purposes of determining the required minimum distribution for that distribution calendar year. When an additional portion of the employee's benefit becomes vested, such portion will be treated as an additional accrual. See A-5 of this section for the rules for distributing benefits which accrue under a defined benefit plan after the employee's first distribution calendar year.

so in other words, the owner can still defer 18500 plus 6000 in catch up because he makes bookah bucks, but everyone else is now limited to 2 months of deferrals and we get a free ride on the ADP test this smells very bad. since it is known it takes a few weeks to get everything going, this should have been taken care of before Oct 1, and not 'oh, its 10/1 lets set up a safe harbor and when we can get deferrals started we will' I imagine the intent of the regs is that people were able to defer for 3 months not just effective date of 3 month was a notice given out before hand and when? if Oct 1 were the folks told 'oh by the way, you can't really defer for the first month'. that smells bad too.

for the moment, lets ignore the fact the plan is a safe harbor plan If someone has already accrued the right to the contribution (e.g. only need 1000 hours and no last day rule) than I don't see how that is possible to amend the formula - at this late date people have probably already accrued a right to an integrated formula contribution. that could result is a cutback. so I think the answer depends on what are the current conditions to receive a profit sharing.

a loan isn't a contribution, it is more like an investment (based on the stock market this past week a better investment as its returns were better)

I am assuming the plan has never filed before. if the 270,000 includes 50,000 in receivable contribution I "guess" you could file on a cash basis and so only 'have' 220,000 in assets. by the way, if you are not aware A one-participant plan or a foreign plan may elect to file Form 5500-SF, Short Form Annual Return/Report of Small Employee Benefit Plan, electronically with EFAST2 rather than filing a Form 5500-EZ on paper with the IRS. See EFAST2 Filing System in these instructions. The IRS actually encourages using the SF, and as long as you check the 'one-participant' box the form is not available for viewing on the DOL website.

is this like the case Perry Mason lost? technically the answer is YES, but only if you are referring to a SIMPLE 401k.

you are very welcome. if the report helps in any way then it has served its purpose.

if they would otherwise meet the eligibility requirements (including entry date) they are treated as included and not benefiting for coverage purposes. for ADP /ACP test they don't show because you only include those actually eligible to defer or receive match. (e.g. ignoring people who waive, if someone was eligible to defer but failed hours for match they would be on the ADP test but not on the ACP test) for nondiscrim they show as a 0.

yes, I bury the plan name without the company name attached in the user defined fields, and is there is nothing in the fields it prints blank. I try to remember to adjust the reports before I post, but the brain gears are getting old and rusty.... this is a version of census that will print different warning messages e.g. comp but term in prior year (catches rehires!), no comp but no term date and lots of other stuff census to send.rpt

version I posted probably won't print because I do something different for plan name. ( I never liked the fact the plan name generally includes the company name so I do something slightly different than most) this version should work, sorry I didn't think about that soa shares.rpt

possibly try this from my collection

I agree it sounds like advisor wants to get his big (insert comment) hands on the money on the handout it has C. Section 401(k) Plans Contrary to the general rules discussed above which allow in-service withdrawals under a profit sharing plans, employee elective contributions may generally not be distributed inservice but rather, are subject to very restrictive withdrawal rules. This means that even where the Section 401(k) plan is actually a feature of a profit sharing plan, as most are, the participant’s own contributions are subject to much more restrictive distribution rules than those that apply to the employer contributions under the underlying profit sharing portion of the plan. Specifically, distributions attributable to an employee's Section 401(k) contributions (including both before-tax and now Roth after-tax contributions) may not be made before the participant's retirement, death, disability, severance from employment, attainment of age 59 1/2, (but only if the plan so provides) or, hardship, (again, but only if the plan so provides). [IRC § 401(k)(2)(B)]

well, it depends on what type of contribution you are talking about. deferrals, as Belgarath pointed out are generally forbidden. Profit sharing contributions could be rolled 1.401-1(b)(1)(ii) ...distributing the funds accumulated after a fixed number of years, attainment of stated age.. the IRS indicated at least 2 years for such contributions...etc. you at least indicated an intention as a rollover so avoidance of 10% early withdrawal if it is profit sharing for exciting and thrilling reading here is a file (from http://benefitsforward.com/wp-content/uploads/2009/01/distributionoutline2008.pdf) in service distributions.pdf

(1) a pension benefit plan that covers only an individual or an individual and his or her spouse who wholly own a trade or business, whether incorporated or unincorporated; (2) or a pension benefit plan for a partnership that covers only the partners or the partners and the partners’ spouses. Thus, a “one-participant plan” can cover more than one participant If the plan (not the company) requires a 1000 to participate, and the person in question never had 1000 hours then he would not be 'covered' by the plan. so an EZ filing is ok

ASPPA bought the IRS off so they could make the official announcement at their conference this week.

sigh (since this question comes up every year, at least I put an answer in the Coverage and Nondiscrimination Answer Book 12-11 - makes it easy to post a response!) The preamble to the final 415 regulations states that: As noted above, the final regulations provide that a plan cannot take into account compensation in excess of the section 401(a)(17) limit. In addition, the final regulations provide that elective deferrals can only be made from compensation as defined in section 415(c)(3). However, in applying these two rules, a plan is not required to determine a participant's compensation on the basis of the earliest payments of compensation during a year. [Emphasis added.] Issue 2012-1 (Mar. 20, 2012) of the IRS Employee Plan News offers the same advice: “We're Glad You Asked #2” We have a 401(k) plan and some employees’ compensation will exceed the annual compensation limit this year. Should we stop their salary deferrals when their compensation reaches the annual compensation limit? How do we calculate the employee’s matching contribution? Unless your plan terms provide otherwise, the salary (elective) deferral limit is applied uniformly to the compensation that the employee receives throughout the year. [https://www.irs.gov/pub/irs-tege/epn_2012_1.pdf]

1.401(k)-1(d)(3)(iv)(D) Employee need not take counterproductive actions. For purposes of this paragraph (d)(3)(iv), a need cannot reasonably be relieved by one of the actions described in paragraph (d)(3)(iv)© of this section if the effect would be to increase the amount of the need. For example, the need for funds to purchase a principal residence cannot reasonably be relieved by a plan loan if the loan would disqualify the employee from obtaining other necessary financing. Arguably, if the plan does not expect he loan to be paid back it could be denied. and with less than 2 1/2 months to go (especially with a period of time to even process a new loan), and assuming a plan will be amended for the new rules, it might become a wink wink nudge nudge loan is 'denied'. of course I can hear a participant coming back and saying "If I had known there was a 10% early withdrawal penalty I would have taken the loan instead and you had no right to deny the loan..."

it was the ASPPA Q and A not JCEB Q and A, but see note I sent you as well

I suspect FT will have something issued before the end of the year anyway, so probably a moot point, but rather than issue an amendment now that might have to be change slightly they are waiting. I believe the guidance we are waiting on is for situations such as someone who takes a hardship is Dec is suspended for 6 months from deferring. now, when that requirement 'disappears' at the start of the new year can this individual start deferring again immediately?

here is the spreadsheet (and a spreadsheet for covered comp values if anyone still uses those values). spreadsheet also contains a table for estimating soc sec if you plug in your historical comp. at least I come close to matching my own results on that when I plug my actual comps, but who knows if I really have that all set up properly. plugged in the latest national wage average released and the generates the 132,900 value for the taxable wage base as well plugged the cpi-w values and that generates the 2.8% COLA increase. nice to know that I somehow managed to create a spreadsheet that calculates values that match the govt for taxable wage base and COLA! guess even a blind pig can find an acorn Since 1975, Social Security's general benefit increases have been based on increases in the cost of living, as measured by the Consumer Price Index. We call such increases Cost-Of-Living Adjustments, or COLAs. We determined a 2.8-percent COLA on October 11, 2018. We will announce the next COLA in October 2019. indexed limits and soc sec.xlsx covered comp at 132900.xls

agree. let's suppose no deferrals were made during the year, I look at my schedule C and it is negative. oh heck, I'm still going to put 20000 into the plan and then take a distribution because of 415 issues.