Tom Poje

yes, it is sometimes referred to as ethics. and the actual quote is

without knowing more details, if you were in 2 unrelated plans I suppose the following could happen: one plan fails ADP test , you are due $5000 refund and it is treated as a catch up. The other plan (night job) has one nhce. It also fails ADP test and refund is also $5000. treated as a catch up. e.g. the hce deferred but the NHCEs didn't defer. now there are problems because that would be 10,000 in catch up, so in that situation there are issues.

this is an area for years it was 'argued' when determining otherwise excludables you also had to consider plan entry dates. a few years ago the IRS issued a memorandum indicating a reasonable interpretation of 'maximum' exclusion would be, for all practical purposes 1st day of plan year or 18 months. we are all so used to plans with 2 entry dates (e.g. 1/1 and 7/1) but a plan could have entry dates after completing 1 year of service of first day of pan year or 6 months after 1 year of service, so someone who quits before that period could be excluded. I think I have actually seen a plan written that way! anyone, the attachment is the memorandum in Relius, you could still use plan entry dates plan specs/ processing / transaction settings / eligibility and there is a field you can set to either statutory entry dates or plan entry dates otherwise excludables.pdf

To all that it applies. I am so graciously thankful for my mom. She may be in her 90s, but I have been so blessed, and so lucky I can still take care of her at home. well worth the time and effort. God has been so good to me!

I'd hold as long as an interim val is done, it 'indirectly' effects the other participants depending on if this requires an asset reallocation. they don't have 44% less. they never had that portion of the pooled assets. but if there has been a significant drop in value due to stock market you have to do an interim val. a better extreme example that what was given, let's say the person had a balance of 900,000 and assets were 1,000,000 at 1/1. today the assets are worth only 850,000. does the company have to kick in another 50,000 so the person can be paid because he terminated? no you would interim val and prorate the assets. but after all is said and done the other participants still have the same % as they did before(when you take into consideration you are excluding the person distributed.

one reason I can think of not allowing this: the notice MUST 1.401(k)-3(d)(2)(C) the plan to which the safe harbor contribution will be made (if different from the plan containing the cash or deferred arrangement) therefore, you can't have given a notice in Dec 2017 saying deferrals and safe harbor will be made to Plan A and now at this late date say "oh by the way, we were just kidding, if you are so and so, your deferrals and safe harbor will be made to plan B retroactive to 1/1"

I'm guessing the idea might be: to invest in pooled fund A it takes at least 500,000. this particular fund has always had returns twice that of fund B but once the large distribution takes place, the remaining assets will have to be invested in pooled fund B. I think the answer is "That's life". if someone pulls out a large sum (even with an interim val) then yes the others may end up in an asset account that is not necessarily as profitable in the long wrong.

you got me curious so I looked up the FT William language I guess in a db/dc combo if ee works over 1000 hours and terminates and the DB plan indicates top heavy is provided in the DC plan, then says the person is not eligible for top heavy in the DC plan because he terminated, and [c] really should be filled out to include non-key terminees with over 1000 hours 8. Top-Heavy Allocations Top-Heavy allocations are made to a. [ X ] This Plan. Participants who share in Top-Heavy minimum allocations: i. [ X ] Non-Key only. Any Participant who is employed by the Employer on the last day of the Plan Year and is not a Key Employee ii. [ ] All Participants. Any Participant who is employed by the Employer on the last day of the Plan Year iii. [ X ] Participants covered by a collective bargaining agreement will share in Top-Heavy minimum allocations provided retirement benefits were the subject of good faith bargaining. b. [ ] Pursuant to the terms of c. [ ] Other (include information about which Plan allocations are made to and which Participants in this Plan will share in Top-Heavy minimums): d. Other plan maintained by the Employer i. [ X ] N/A - no other plan ii. [ ] Defined Contribution iii. [ ] Defined Benefit

taking it one step further 1.401(a)(4) -9(b)(2)(v)(D)(3) indicates a plan is permitted to treat each NHCE who benefits under the DB plan as having an equivalent normal allocation rate equal to the average of the equivalent normal allocation rates under the DB plan for all NHCEs benefitting under THAT plan. as noted in another post, chances are the db/dc combo is top heavy, if he had 1000 hours and terminated in the DB plan he still gets the top heavy. and who knows what the document language says since he wouldn't normally be eligible in the DC for top heavy.

but Mike if the ee has 1000 hours then he received the DB benefit. so now he has received a nonelective. how is he not eligible for the gateway. last day rule, 1000 hours has no bearing.

I'm assuming you mean the person receives a DB benefit because he has 1000 hours. If the person quits he still must receive the gateway because the DB benefit is a nonelective contribution. if the document has no gateway language after all these years then the folks should be beaten with wet noodles at sunrise or something like that. most db/dc combo plans are top heavy (at least those I have seen) so you may have another issue. you have a DB/DC combo so the top heavy is either in the DB (2% accrual) or the DC (5% allocation) but now the person has quit and so isn't normally eligible for the top heavy in the DC plan. so how do you handle such a person? I think most plans are coded the minimum is provided in the DC plan (again how do you handle a terminee in a case like that), but sometimes the sloppiness rule applies and when the plans were set up no one thought about it and the plans aren't specific!

ft William has 4. Modifications of Elective Deferrals a. Participants modify/start/stop Elective Deferrals/Voluntary Contribution elections: i. [ X ] Each pay period ii. [ ] Monthly iii. [ ] Quarterly iv. [ ] Semi Annual v. [ ] Annual vi. [ ] Pursuant to Plan Administrator procedures (at least once each calendar year) b. [ X ] Participants may stop an election to contribute at any time. I would not read to mean 'stop' forever otherwise [a] means 'this only refers to someone who has never stopped previously the verbiage in the document is clearer as it uses the word suspend (remember the checklist is somewhat shorthand) (b) Modifications. As of the date a Participant first meets the eligibility requirements of Section 3.01, he may elect to contribute to the Plan. Subsequent to that date, a Participant may elect to start, increase, reduce or totally suspend his elections pursuant to this Section 4.01, effective as of the dates specified in the Adoption Agreement.

HCEs can be treated as 'satisfying' the one year wait (1.401(k)-2(a)(iii)(A) [using ADP for all HCEs and all NHCEs disregarding those NHCEs who have not met minimum age and service..], so I could understand it if you mean to say statutory includable consists of all the HCEs at 1.5%, there are no NHCEs so plan passes otherwise excludable group consists only of NHCEs so plan this group passes as well.

I personally (but then what do I know) think it is more of simply being something you can't do. I can't put in a plan today for 2017. sure I can produce a document but....and even though in this case the action took place late in 2017, I'd hold it is the same concept. it is simply impossible to change a safe harbor that late in the year.

who knows. going back to my example, instead of groups, what if I amended to put in hours requirement or last day rule or excluded hourly. I simply can't do that at a late date. or if it was a db plan, I amended from 2% accrual to 3% contribution cash balance for NHCEs and 50% for HCEs. at Dec 1 it is something you simply aren't permitted. ............ but again, with a safe harbor, at 12/1, the best I can do is amend with an effective date of 1/1 the following year. as the Q and A indicated, you might have a Title 1 issue with the DOL. But even in this particular example, a notice was never provided so no one expected a 3%, all were under the impression of the match safe harbor. but again, who knows how the DOL/IRS would handle such a blatant idiotic (for lack of better term) situation that has arisen.

well, lets suppose instead of safe harbor, you had a comp to comp profit sharing no hours requirement. Company amends plan mid year to allocate by groups. I simply can't do that - despite having a new document that says I have a new formula. the fact the HCEs say I have to follow the new plan document can't work, that would be a cut back on what was accrued. in a safe harbor you can't change the formula retroactively, you can going forward, but with 30 -90 days notice. which of course takes it out of safe harbor for that year. so amending the plan to 3% shnec (and eliminating the SHMAC) retroactively effective 1/1/2017 is simply impossible. at least I don't see anything in the regs that says I can do that. it could have been amended going forward, but even at that with at least 30 days notice. in this case it was Dec, so even 30 days notice would put the plan into 2018. others have argued in other posts on other topics they have had success arguing Scrivener's errors under VCP, and so that may be applicable here. who knows.

if the owner is at max comp 270,000, a 20% ps contrib = 54,000, the 415 limit. the gateway minimum is 5%. since 1.085 ^ 17 = 4.00226, then an e-bar for someone 17 younger will put someone in the rate group, because 5% * 4.00226 > 20%. of course if you have deferrals that could reduce the owner to 13.33%, or a gateway of 4.44% 1.085 ^ 14= 3.13, so for starting points you generally need an age difference of 14 to 17 years between the HCE and NCEs.(if you are talking about ideal demographics) keeping things rather simple in the example....

while you can amend a safe harbor to reduce / eliminate a safe harbor and thus require safe harbor testing. if this was done in Dec, that requires 30 days notice 1.401(k)-3(g)(ii), so for 2017 I still think you have a safe harbor match through the end of 2017 just because of the timing issue. since a safe harbor has to be in effect for 12 months (and you can not tack it onto an existing 401(k) I still don't see how the 3% can be effective for 2017 as well. you simply can't do that, at least as far as I understand the rules. (For the sake of the argument, let's say the original plan was simply a 401k, mot safe harbor match. there is no way I can amend in 2017 and make it a safe harbor for 2017 (and therefore cheat and pass testing, and avoid top heavy, etc) or perhaps put another way, I think you have an unenforceable document at least for 2017. how it all gets unwound before the eyes of the DOL and IRS is another matter.

If forfeitures are to be reallocated in the same year they occurred, then they will be a part of someone's balance and therefore included. If you are trying to say without them plan is 60.2% top heavy, but if I add them back the plan will be 59.8% and that's what I want to do so the plan isn't top heavy, that makes no sense because that is assuming none of that amount will be allocated to key employees.

while Card's statement is true, technically this isn't effective until plan years beginning after 12/31/2018, so it might be pushing it....(e.g. at this time if someone takes a hardship you are still suppose to suspend deferrals for 6 months, not "well, they have eliminated that rule in the future so we can ignore it, despite what the document says") for those that missed it, the following changes are upcoming for hardships (and I assume most documents would have to be amended for these to apply) SEC. 41113. Modification of rules governing hardship distributions. 6 months suspension of deferrals after taking a hardship is eliminated (the revised regulations under this section shall apply to plan years beginning after December 31, 2018). SEC. 41114. Modification of rules relating to hardship withdrawals from cash or deferred arrangements. Section 401(k) is amended by adding a new section 14 (14) SPECIAL RULES RELATING TO HARDSHIP WITHDRAWALS.—For purposes of paragraph (2)(B)(i)(IV)— (A) AMOUNTS WHICH MAY BE WITHDRAWN.—The following amounts may be distributed upon hardship of the employee: (i) Contributions to a profit-sharing or stock bonus plan to which section 402(e)(3) applies (that is, a 401k plan). (ii) Qualified nonelective contributions (as defined in subsection (m)(4)(C)). QNECs can be taken (iii) Qualified matching contributions described in paragraph (3)(D)(ii)(I). QMACs can be taken (iv) Earnings on any contributions described in clause (i), (ii), or (iii). Earnings are now includable (B) NO REQUIREMENT TO TAKE AVAILABLE LOAN –(no longer required a participant must take a loan first before a hardship) These changes would also become effective for plan years after 12/31/2018.

I'm not sure what is going on. when did the payroll service provider prepare the document? (you indicated they weren't hired until late 2017) If the document wasn't completed before 1/1/2017, my understanding is you can't switch safe harbors retroactively, one of the rules being the formula has to be in place before the start of the year. The one exception being the 'maybe we will be 3% safe harbor' situation. [As a general rule, the safe harbor provision to a plan must be adopted before the first day of the plan year and remain in effect for the entire 12-month plan year. [Treas. Reg. § 1.401(k)-3(e)]] if the document was amended properly before the start of the year, I don't see how you are stuck with 2 safe harbors, as you generally have to follow the terms of the document. you would have a situation in which you have a bad safe harbor notice. at the 2007 ASPPA Conference one question pertained to issuing a bad notice: Q19) Safe Harbor 401(k): A notice is issued indicating a safe harbor contribution will be made for the upcoming year, but the plan was never amended to contain safe harbor language. Now that it is after plan year end, it is too late to amend to correct the problem. Is the plan on the hook for the contribution, and must also run all appropriate tests? A: Notwithstanding the notice provided, the plan terms do not provide for the safe harbor plan. Therefore, you should follow the plan terms and run the ADP test as needed. (Whether there is a Title I issue due to the notice is in the purview of the DOL.) ............. hopefully (at least it sounds like it) for 2017 the plan was amended too late to switch to 3% and therefore the match would be required (as per terms of the document) and that would align with the notice given for 2017.

Rather be... I read the first sentence to say "If you were a participant before any change, you continue to be a participant.. I read the second sentence, if you had satisfied eligibility but not yet entered you have to wait until the new eligibility (otherwise I don't see a reason for having both sentences) the one plan we had with immediately eligibility was modified to 4. Other Employees [ X ] Other: any Employee who is compensated primarily in tips (hired after January 1, 2009) which changed nothing on anyone who met the requirements prior to 1/1/2009, but after that date it was still immediate unless you were newly hired primarily tipped. so the change was only going forward for new employees, which would seem to match NKOTBs comment

there are 2 issues being discussed. 1. can you change eligibility and exclude someone who was previously eligible. yes, even ERISA Outline Book notes that discussed in chapter 2 section VI Part e 2. does the document permit it? I'm guessing it may depend on whether you have a standardized or non-standardized document. for example the particular FT William document would not permit eliminating eligibility for someone already in the plan (I believe this is a standardized document. Each Eligible Employee as of the Effective Date who was eligible to participate in the Plan with respect to Elective Deferrals and Voluntary Contributions on or before the Effective Date shall be a Participant eligible to make Elective Deferrals and Voluntary Contributions pursuant to Article 4 on the Effective Date. Each other Eligible Employee who was not a Participant in the Plan with respect to Elective Deferrals and Voluntary Contributions on the Effective Date shall become a Participant eligible to make Elective Deferrals and Voluntary Contributions on the date specified in the Adoption Agreement; provided that he is an Eligible Employee on such date. Notwithstanding the foregoing, a Participant shall be eligible to make Elective Deferrals and/or Voluntary Contributions only to the extent such contributions are permitted in the Adoption Agreement.

1.401(a)(9)-2 Q-2(c) a 5-percent owner is an employee who is a 5-percent owner with respect to the plan year ending in the calendar year in which the employee attains age 70 1/2 Apparently, since he was not a 5% owner the year he turned 70 1/2 he would not be considered a 5% for min distrib purposes. (e.g. ignoring sole proprietorship, lets suppose he simply was a run of the mill employee who became a 5% owner after turning 70 1/2. same logic, he was not a 5% owner at age 70 1/2 and as long as he is working, no minimum distribution.

If neither plan accepted deferrals above the limit then neither plan is in danger of disqualification. unless there is another reason for a distributable event then there is nothing either plan does. the individual, when filing taxes, will have W-2s that indicate excess deferrals and he pays the taxes. then someday, when he takes a distribution he will pay taxes again. it is simply the penalty for having excess deferrals not corrected by the deadline. when one is in 2 plans of unrelated employers the burden is on the participant to inform one plan or the other before the deadline. If it is Roth deferrals then see discussion a few days ago.