Tom Poje

while I've never seen it done, as long as the document allows it you could conceivably do that. I guess something like 100% match for those employees with hours < 1250 , capped at $1000 match 100% match for those employees with hours >= 1250, capped at $2000 match as pointed out, you would have to test BRF so if you had 4 NHCE < 1000, and 6 NHCE >1000 when testing how many eligible NHCE receive 2000 you would be at 60% which fails ratio % so further testing needed. you didn't indicate if these 24/hr a week people would have 1000 hours in the year. if they never would, then they could be treated as otherwise excludable and testing wouldn't be a problem

Ignoring the obvious FICA issue, What timing for this question. the benefits newsletter for 5/29 included the IRS comments on snapshot treatment on 415 dollar limitation, and the opening paragraph has Total annual additions to a participant’s defined contribution plan account are limited to the dollar amount imposed by IRC Section 415(c). Annual cost-of-living adjustments apply to this dollar limit. If the participant’s compensation is less than the dollar limit, annual additions during a limitation year must not exceed 100% of compensation. The limit applies to the total of: elective deferrals (but not catch-up contributions within the meaning of IRC Section 414(v)), employee contributions, employer matching and nonelective contributions, (but not restorative payments under Section 1.415(c)-1(b)(2)(ii)(C)), and allocations of forfeitures. See generally IRC Section 401(a)(16) and 415(c) and Treas. Reg. Section 1.415(c)-1. For 2018, the dollar limit on annual additions to a participant’s accounts for all defined contribution plans maintained by an employer is $55,000. https://www.irs.gov/retirement-plans/issue-snapshot-treatment-of-415c-dollar-limitations-in-a-short-limitation-year or on this website look under News/Newsletter back issues I look at it first thing every morning.

that is how I read it, or put another way, ignoring any correction for missed deferral, if the person was deferring at 3% and made 40,000 for the year, they would have deferred 1200 and base the match on that figure and the 40,000 in comp. while the correction for missed deferral is not a full 3%, the govt realizes the person had no actual deferrals, so they have the 3% in their pocket, and making up a full 3% produces a nice windfall, so to speak. the match, on the other hand, would have been made by the company anyway if the error had not occurred, so it would be the full amount.

cute name Appendix B has (D) Matching Contribution Failures. (1) The appropriate corrective contribution for the failure to make matching contributions for an employee because the employee was precluded from making elective deferrals (including designated Roth contributions) or after-tax employee contributions for a portion of the plan year is equal to the matching contribution that would have been made for the employee if (1) the employee’s elective deferrals for that portion of the plan year had equaled the employee’s missed deferrals (determined under section 2.02(1)(a)(i)(B)) or (2) the employee’s after-tax contribution for that portion of the plan year had equaled the employee’s missed after-tax employee contribution (determined under section 2.02(1)(a)(ii)(C)). This matching contribution is reduced to the extent that (i) the sum of this contribution and other matching contributions actually made on behalf of the employee for the plan year would exceed (ii) the maximum matching contribution permitted if the employee had made the maximum matchable contributions permitted under the plan for the plan year. The corrective contribution is adjusted for Earnings. The requirements relating to the passage of the ACP test before this correction method can be used, as described in Appendix A, section .05(2)(g), still apply. ........................ if you are calculating the match just once a year, then I guess there is no corrected match in this situation(since no match was really missed until after the end of the year), but the amount of match would be based on total deferrals that should have been made, not on deferrals actually made plus 25% missed deferral. at least, that is how I would read it.

well, Appendix B Section 2 .01...D indicates This matching contribution is reduced to the extent that (i) the sum of this contribution and other matching contributions actually made on behalf of the employee for the plan year would exceed (ii) the maximum matching contribution permitted if the employee had made the maximum matchable contributions permitted under the plan for the plan year so yes, it counts towards maximum match how you insure any payroll system would know (if this is corrected during the current year and not after the fact) would be no different than a person deferring into 2 unrelated plans. unless someone tells them, how would the plans know when the person exceeds the deferral limit for the year.

as pointed out, you can't exclude someone because they are 'part-time' (or classified as some other category which is simply a disguised 'part-time' definition.) There is a chance the person might be excluded under the break in service rules (almost impossible if it is a 401k) But, as pointed out in the ERISA Outline Book, Chapter 2 Section V Part B 2(c) Termination of employment not necessary in order to incur a break of serv8ice, and is followed by an example of a person with a reduced work schedule. If the plan uses the rule of parity then it is doubtful they would now be excludable. but if plan has a 1 year break in service rule then yes, they could end up being excludable and then follows Part C 1a1 How to administer if break in service occurs while participant is still working...(e.g. if the person works 1000 hours again)

my understanding is #1, all get top heavy, though the safe harbor counts toward top heavy, so, at least in the case of a 3% SHNEC it doesn't make a bit of difference unless you have mid year entrants. (who would get part 100% vested and part subject to vesting.

I don't think anyone mentioned it, but in addition to the Q and A forum, there is a daily news letter (e.g. click on the tab labeled 'news')

that is correct, no excise tax I suppose, depending on how many people were missed, how long ago, etc, that it is possible you have to go through VCP rather than simply self correct, but still no excise tax. it depends on whether the problem is considered significant or insignificant....

the line I remember best from an old radio program I was born ignorant, and I have been losing ground ever since

well, that reference says if plan satisfies ADP safe harbor using a match then you could exclude 4%. you indicated your plan satisfies that condition. so my understanding is: you are already using the safe harbor match in the ADP, you are permitted to ignore 4% of that in the ACP test if you have to run that test. or put another way, even though you are using the match to satisfy the ADP test we will let you use all of it in the ACP test if you have to test, but what the heck, we will let you ignore the first 4% if you feel like it. this is different that if you had a 3% SHNEC . now you no longer are using a safe harbor match to satisfy the ADP, so you can't exclude any match in the ACP (e.g. if you had a discretionary up to 8%) I don't think you look at it and say "the discretionary match is only on amounts above 5%" and therefore the combined match totally fails ACP so you can't ignore any of the match, because the ADP safe harbor is still satisfied, and that is all the reg seems to say is required. but then, remember, I am half out of my mind at times...

if for instance you use FT Williams Q17: How do I complete a Final or Short Year filing when the form has not yet been made available? Top If you are completing a filing for a plan that has terminated in 2016, for example, and need to use a 2016 Form 5500, you will need to use the 2015 Form 5500 to complete the filing prior to December 31, 2016, as the DOL does not allow a 2016 Form 5500 to be filed prior to January 1, 2017. Once you have used the current year's Form 5500 for one plan, you may add a second plan under the same company and prepare the second filing (for the short year or final return) on the forms under the second plan. Note: you may want to alter one of the plan name's slightly to differentiate between the two plans in the drop-down box. You will want the plan names to be the same on the actual forms, however. Using a second plan will maintain both filings.

jpod- you are correct, I misread your question, though the IRS comments point in the direction of the DOL reference (indirectly at least It is in section 2530) here is the DOL comment. (There is no true DC requirement for accrual of contributions) §2530.200b-1 Computation periods. (a) General. Under sections 202, 203 and 204 of the Act and sections 410 and 411 of the Code, an employee's statutory entitlements with regard to participation, vesting and benefit accrual are generally determined by reference to years of service and years of participation completed by the employee and one-year breaks in service incurred by the employee. The units used for determining an employee's credit towards statutory participation, vesting and benefit accrual entitlements are in turn defined in terms of the number of hours of service credited to the employee during a specified period—in general, a twelve-consecutive-month period—referred to herein as a “computation period”. A plan must designate eligibility computation periods pursuant to §2530.202-2 and vesting computation periods pursuant to §2530.203-2, and, under certain circumstances, a defined benefit plan must designate accrual computation periods pursuant to §2530.204-2. An employee who is credited with 1000 hours of service during an eligibility computation period must generally be credited with a year of service for purposes of section 202 of the Act and section 410 of the Code (relating to minimum participation standards). An employee who is credited with 1000 hours of service during a vesting computation period must generally be credited with a year of service for purposes of section 203 of the Act and 411(a) of the Code (relating to minimum vesting standards). An employee who completes 1000 hours of service during an accrual computation period must, under certain circumstances, be credited with at least a partial year of participation for purposes of section 204 of the Act and section 411(b) of the Code (relating to benefit accrual requirements). With respect to benefit accrual, however, the plan may not be required to credit an employee with a full year of participation and, therefore, full accrual for such year of participation unless the employee is credited with the number of hours of service or other permissible units of credit prescribed under the plan for crediting of a full year of participation (see §2530.204-2 (c) and (d)). It should be noted that under some of the equivalencies which a plan may use under §2530.200b-3 to determine the number of units of service to be credited to an employee in a computation period, an employee must be credited with a year of service of partial year of participation if the employee is credited with a number of units of service which is less than 1000 in a computation period. See also §2530.200b-9, relating to elapsed time. (b) Rules generally applicable to computation periods. In general, employment at the beginning or the end of an applicable computation period or on any particular date during the computation period is not determinative of whether the employee is credited with a year of service or a partial year of participation, or incurs a break in service, for the computation period. Rather, these determinations generally must be made solely with reference to the number of hours (or other units of service) which are credited to the employee during the applicable computation period. For example, an employee who is credited with 1000 hours of service during any portion of a vesting computation period must be credited with a year of service for that computation period regardless of whether the employee is employed by the employer on the first or the last day of the computation period. It should be noted, however, that in certain circumstances, a plan may provide that certain consequences follow from an employee's failure to be employed on a particular date. For example, under section 202(a)(4) of the Act and section 410(a)(4) of the Code, a plan may provide that an individual otherwise entitled to commence participation in the plan on a specified date does not commence participation on that date if he or she was separated from the service before that date. Similary, under section 204(b)(1) of the Act and section 411(b)(1) of the Code, a plan which is not a defined benefit plan is not subject to section 204 (b)(1) and (b)(3) of the Act and section 411 (b)(1) and (b)(3) of the Code. Such a plan, therefore, may provide that an individual who has been a participant in the plan, but who has separated from service before the date on which the employer's contributions to the plan or forfeitures are allocated among participant's accounts or before the last day of the vesting computation period, does not share in the allocation of such contributions or forfeitures even though the individual is credited with 1000 or more hours of service for the applicable vesting computation period. Under certain circumstances, however, such a plan provision may result in discrimination prohibited under section 401(a)(4) of the Code. See Revenue Ruling 76-250, I.R.B. 1976-27.

it is IRC 410(a)(3) the following IRS publication (see page 3) notes that along with corresponding DOL cites min partic standards publication 6388.pdf

I would agree, though I guess it does raise some interesting points. I'm hurting for $ so I need to take a hardship, but then turn around and want to defer right away (which, come the new year will be possible assuming plans are amended for the new rules. if I was deferring 1%, I guess I could now defer 6% when I am able to defer again. since I wasn't deferring for 6 months those $ could have gone into my checking account and now when I start deferring 6% I have the $ set aside and won't miss them from my paycheck. and we all know I have the will power not to spend the extra $ during the time I wasn't able to defer for awhile.

the following memorandum from the IRS might help. there is an example (highlighted) of a situation in which there were 2 loans.1 was paid off then a 2nd taken and that was paid off. even the IRS concluded there were 2 ways of looking at what was the maximum loan available for taking a new loan. loans max.pdf

the regs (1.401(a)(4)-11(g)(3)(vi)(C) simply says (1) expands the group.... there is no specific conditions listed. (except for 'must have substance') which is generally taken to mean you couldn't give, for example $1000 to a 0% vested terminee. or you wouldn't give $1 QNEC to someone and turn around and claim "see, he benefits" the following IRS comments, while dealing with nondiscrim and not coverage, possibly give some insight as to why a plan like FT would increase using those with the most service (though the document was written before the IRS comments, and it is the type of fail safe language the IRS has already approved as opposed to 'increase starting with the ee who has the smallest comp). (which I suppose is interesting because if it was a QNEC for an eligible ee to pass ADP testing you generally have language to start with the smallest paid. but I guess that is the difference between giving something to someone who is already eligible instead of bringing someone into the plan. e.g. failing coverage is a serious problem. to pass coverage by simply providing a corrective contribution to those with the smallest cop, etc is probably not the 'intent' of how the corrective amendment is suppose to work. but I'm certainly not one in a position to decide that or pass judgment in any particular case. (and I'm probably in the minority on how I view it...) you didn't indicate why after years of passing all of a sudden it fails bad enough so that a significant number of NHCEs (not just one or two) must be included. my concern there is that it sounds like this will be a continual problem. irs comments on nondiscrimination.docx

does the document address the issue? for instance the FT William checklist references 4.02 4. Coverage Failures for Matching Contributions Method to fix Matching Contribution Code section 410(b)(1)(B) ratio percentage coverage failures (Section 4.02(d)): a. [ X ] Do not automatically fix b. [ ] Add just enough Participants to meet the coverage requirements c. [ ] Add all non-excludable Participants and 4.02(d) in the basic document is pretty specific who to bring into the plan: (A) The list of Participants eligible to share in the Company's Matching Contributions for such Plan Year shall be expanded to include the minimum number of Participants who would not otherwise be eligible as are necessary to satisfy the minimum coverage requirements under Code section 410(b)(1)(B). The specific Participants who shall become eligible to share in the Company's Matching Contribution for such Plan Year pursuant to this Paragraph (A) shall be those Participants who remain in the Company's employ on the last day of such Plan Year and who have completed the greatest amount of service during the Plan Year.

the only legend about me (unproven) has it I actually post a worthwhile joke (or song) once and a while. the rest is smoke and mirrors. what is your legend?

hadn't thought about it, but while true, they were also reported later as a D and therefore that should have removed them from the list, so in a sense, since the system no longer knows about them they haven't been reported. the whole idea, at least the way I read the instructions is "Look, if you know the person has no balance before the form is due, don't bother reporting them as an A, and then have to take them off as a D the following year" - one of the times I will give them credit for thinking logically.

and so, you calculate your DB E-Bar to age 62 using the db assumptions, then you need to convert that to age 65 using the DC rates so for example if the db was cash balance using a 5% rate, suddenly you use 8.5% for the last 3 years, which almost never helps testing.

yes, 125,000 and key ee 180,000 going up as well.

with the release of the consumer price index last Friday, (based on the current hi 3 average [ feb-mar-apr]) the limits just jumped to the next level 19,000 deferral 280,000 comp 56,000 415 limit of course there are 5 months to go, but I don't see any major drop coming in the index....

the ssa instructions are When Not To Report a Participant A participant who has not been previously reported is not required to be reported on Form 8955-SSA if, before the date the Form 8955-SSA is required to be filed (including any extension of time for filing), the participant: 1.Is paid some or all of the deferred vested retirement benefit, 2.Returns to service covered by the plan and/or accrues additional retirement benefits under the plan, or 3.Forfeits all the deferred vested retirement benefit. ................... since the amounts are less < whatever, I would see about rolling the amounts into an IRA. if done before the filing date for the 2017 SSA it looks like rule 1 applies. or if you are going to simply forfeit then rule 3 applies in either case for 2017 it looks like you could ignore them depending on how you handle it, even at this point in time in 2018.

you are correct, I sit humbled. the notes I looked up were incorrect, probably based on what was first believed when the rules came out. I read further down in my notes and see even I indicate that. my humble apologies all.