Tom Poje

As quoted above, in order to fix the problem using the safe harbor method, you would have to have provided a notice 45 days after correct deferrals began, so in this case it appears the safe harbor method (no corrective QNEC for missed deferral) is not available.

If October 13 falls on Friday the 13th, you have good luck and your deadline is extended until Monday the 16th. Now there is a comforting thought!

if it is before 4/15 deadline I would say at the minimum he should inform the participant of the consequences, and thus getting the $ out of one of the plans. If after that date, warn the participant to watch out this year. since neither plan is subject to disqualification, I don't see the burden on his shoulders much more than that. I'm assuming this is a participant who defers the max every year so should be aware of such things anyway, and if the IRS didn't catch something as obvious as that by adding the W-2s...

why I remember this is beyond me, because I don't remember much of anything on the old tv game shows, especially only seeing it once (unlike a tv series) on the old Match Game show the 'fill in the blank' My cousin in so cheap. To prepare his taxes he didn't use H & R Block. instead he used _________ and the contestant answered H & R Blockhead (I doubt that software would find excess deferrals!) as I recall he didn't get any matches, but everyone was laughing so hard anyway it didn't matter.

there is no where on the tax return you indicate how much you deferred. But the IRS has your W-2s, so something should kick out at their end there is an excess deferral and the person is taxed on the $350 for the year the taxes are filed. Then someday years from now the person will take a distribution and be taxed again on the $350. simply out of luck as indicated above, neither plan violated any rule so the plans are ok. If you are talking about 2016 it is probably a bit late to make any correction for the participant.

I'll go out on a limb and assume when you say no employees want to participate you mean the HCEs are deferring and no one else. otherwise, why have the 401k. As Lou indicated, if your document says the safe harbor is 3% then anyone eligible to defer MUST receive the 3%. If there are HCEs deferring then it would be best to amend to a safe harbor match, but then make sure all NHCEs sign a deferral election of 0% to protect yourself and no one comes back and says "If I knew there was a match I would have deferred" If the plan is cross tested then the 3% safe harbor is common because it covers top heavy as well.

if I understand things correctly, an after tax contribution was missed due to an error (mistakes happen and of course both sides need to deal with it and handle things as best as can be done without hurting feelings , etc) and sometimes even those best efforts unintentionally fall short for one reason or another. under EPCRS (self correction program) Appendix B Section 2 .02(1) F (F) Special Rule for Brief Exclusion from Elective Deferrals and After-Tax Employee Contributions. An Plan Sponsor is not required to make a corrective contribution with respect to elective deferrals (including designated Roth contributions) or after-tax employee contributions, as provided in sections 2.02(1)(a)(ii)(B) and (C), but is required to make a corrective contribution with respect to any matching contributions, as provided in section 2.02(1)(a)(ii)(D), for an employee for a plan year if the employee has been provided the opportunity to make elective deferrals or after-tax employee contributions under the plan for a period of at least the last 9 months in that plan year and during that period the employee had the opportunity to make elective deferrals or after-tax employee contributions in an amount not less than the maximum amount that would have been permitted if no failure had occurred. ................... example 4 (this is if correction is by QNEC correction not brief exclusion) (3) Corrective contribution for missed after-tax employee contribution: Employee X was eligible to, but was not provided with the opportunity to elect and make after-tax employee contributions from January 1 through August 31 of 2006. Employer C must make a QNEC to the plan on behalf of Employee X equal to the missed opportunity to make after-tax employee contributions. The missed opportunity to make after-tax employee contributions is equal to 40% of Employee X’s missed after-tax employee contributions. The QNEC is adjusted for Earnings. The missed after-tax employee contribution amount is equal to the 0.5% ACP attributable to employee contributions for nonhighly compensated employees multiplied by $24,000 (8/12ths of the employee’s 2006 plan compensation of $36,000). Accordingly, the missed after-tax employee contribution amount is $120. The missed after-tax employee contribution is not reduced because the sum of $120 and the previously made after-tax employee contribution of $250 is less than the overall plan limit of $1,000. Therefore, the required QNEC is $48 (that is, 40% multiplied by the missed after-tax employee contribution of $120). The QNEC is adjusted for Earnings ................ As indicated, the applicable correction can not exceed any plan limit. in the example above the plan limit is $1000. in your case the plan limit is 50%. they are saying they can't increase your after tax for the rest of the year because you are already at 50%, the plan limit. so the question becomes is the 50% per pay period or 50% for the whole year. if it is 50% for the whole year then you should be able to increase. for example, if your after tax was at 45%, each pay period you could have increased to 50% and under the brief exclusion rule you could have obtained the maximum amount had the error not occurred. But if you are not permitted to increase your after tax, the brief exclusion rule fall apart. so if they make a 40% QNEC for missed after tax the total over the whole year of your after tax + corrective QNEC would not exceed 50% and so no plan limit was violated. .. but then I have been known to ramble on and on....and hopefully I didn't miss anything.

I wouldn't think it makes a difference. I would add the following (just in case the plan fails the ADP test): When correcting an ADP test failure, a plan may permit a highly compensated employee who has made both Roth contributions and pre-tax elective deferrals in the applicable year to choose whether the distribution of excess contributions will consist of Roth contributions or pre-tax deferrals. Roth 401(k) contributions that are distributed as corrective distributions are not qualified distributions. Roth contributions (basis) will not be taxable to the participant, but earnings associated with the distribution will be. http://www.maddinhauser.com/uploads/14thAnnualTaxSymposium-EvolutionoftheRoth401k-gmr.pdf

but if the agent's name is Columbo and he starts to leave, then turns around and says "Just one more thing about not making this distribution", it might be wise to sneak out the back way when you get a chance.

this could depend on how you have filled out your document. for instance, the FT William document has the following option 15. Post Year End Compensation [ ] Determine Compensation using Post Year End Compensation NOTE: If selected, amounts earned during the current year and paid during the first few weeks of the next year will be included in current year Compensation. NOTE: A.15 will also apply for purposes of Statutory Compensation. ........... corbels document had the following for the final 415 amendment language 3.3 Administrative delay ("the first few weeks") rule. 415 Compensation for a "Limitation Year" shall not include, unless otherwise elected in Section 2.1 of this Amendment, amounts earned but not paid during the "Limitation Year" solely because of the timing of pay periods and pay dates. However, if elected in Section 2.1 of this Amendment, 415 Compensation for a "Limitation Year" shall include amounts earned but not paid during the "Limitation Year" solely because of the timing of pay periods and pay dates, provided the amounts are paid during the first few weeks of the next "Limitation Year," the amounts are included on a uniform and consistent basis with respect to all similarly situated Participants, and no compensation is included in more than one "Limitation Year." ................................................ so I guess if you want you could take all the W-2s for everyone and increase them by a few weeks, but then you really should back off the first few from the prior year because you wouldn't want to count comp twice. and do that every year. not sure that is worth all the trouble, but that is probably just me.

as Belgarath points out, it is under coverage that speaks of the transition rule, there is no corresponding rule for nondiscrim. but the only people on any ADP test are those who can actually defer, so if you look at each plan separately (since you don't have a coverage issue), each is a safe harbor and my conclusion is you are ok.

well section 1.401(k)-1(b)(4)(iii)(B) ...thus, in applying the permissive aggregation rules of 1.410(b)-7(d), an employer may not aggregate plans that apply inconsistent testing methods. ....... now if you combine things you have some people who are deferring but get no safe harbor and that would appear to be inconsistent, so I would agree with your conclusion. but then if they can't pass as stand alone, what do you do. I haven't seen guidance. the IRS is not out to disqualify plans. if it was 3% SHNEC then I'd say just give them the 3%. but if it's a SHMAC it is a little more complicated because people couldn't defer in the first place. is this a new controlled group and can you use the transition rules to pass coverage. if not new, then of course, why wasn't the issue resolved previously....but of course, I'm not really asking that but just muttering out loud. I do that from time to time.

years ago (2009) I had submitted the following for the ASPPA Q and A (it was #16) Is it permissible to shift after a correction has been made? Example: ADP% ACP% HCE 7% 2% NHCE1 4% .75% 1% is refunded to the HCEs, reducing the percentage to 6% (a passing percentage). After shifting .75% from both HCE and NHCE, the percentages are as follows (and the ACP test is passed): HCE 5.25% 2.75% NHCE1 3.25% 1.50% IRS Response Yes, this is permissible. However, the fact that the correction method for excess contribution refunds allocates the 1% to various participants creates mechanical problems that have not been resolved. so, while your software might not be able to perform the function, it is still probably possible to shift even though you failed ADP test. so, lets say after the refund the ADP was now 4% HCE and 2% NHCE. you shift everything to the ACP test (there is no last day or hours requirement for the match. if the NHCE receive a 1% match, you now have 4% NHCE and 3% NHCE on the ACP side, so the HCEs could conceivable get a match on the ADP side since you shifted everything you have 0%, so ADP passes as well the cautionary note is that opinions expressed at the ASPPA conference might not reflect an actual treasury position.

if it hasn't been done before and it turns out the distribution is for an HCE, and therefore he is going to get the advantage of the great gains for this 2017 year based on his 12/31/2016 it smells worse than the refrigerator after a weeks power outage. yes, interim vals are done from time to time, e.g. in the case of an HCE with a large balance and the plan lost big $ then you were pretty much forced to do so - back when the stock market collapsed a few years ago this was done on plans - there were situations in which you didn't have enough to even pay out the balance as of the end of the prior year. .................... If the doc says assets are valued once a year it also takes an amendment for the purpose of running the gains/loss.

the CPI-U released today was 245.519 if next months collapses to exactly 243 I have the limits at exactly 55,000 dc limit, comp limit 275,000, etc it is not going to collapse that much, so only a change to the regs will stop an increase

while not exactly what you have, suppose you had 2 allocation groups 1. partners 2. the common folks so now how would you calculate? the LRMs say The employer contributions allocated to each participant allocation group will be allocated among the employees in that group in the ratio that each employee’s compensation, as defined in section _____ of the plan, bears to the total compensation of all employees in the group. In the event that an eligible employee is included in more than one participant allocation group, the participant’s share of the employer contribution allocated to each such group will be based on the participant’s compensation for the part of the year the participant was in the group in that case you would 'ignore' the W-2 comp. I don't see how your situation is that much different. you have '2 groups' each getting the same % of contribution

agree you could have excess as well agree, you defer on the draw. what if at the end of the year you have no compensation? the preamble to the regs even speak of that. yes, you can defer, but you need to make sure at the end of the year you actually have comp sufficient for the deferrals

the people one block away had up to 6 inches of water in the house. I only conclude the block I am on must sit up at least 6 inches higher than one block away. talk about fortunate (and very very blessed) that wasn't a consideration when I bought a house years ago. in fact, I was even shown some of those houses that suffered water damage.

I think it is built into the same concept as providing the notice in the first place, it is suppose to be done so the participant can make a reasonable 'decision'. so lets say they would amend the plan for the year to be safe harbor. you were still supposed to provide a notice 30 day beforehand for the upcoming year. so you kill 2 birds with one stone notice. "yes we will be top heavy for the current year and maybe next year" it is already pushing it (sort of) to proved a notice less than 30 days for a plan that is already safe harbor, and at least then the 30 days is considered 'reasonable'. No such clause exists for an amendment in the case of 'maybe' and I don't think I would push it.

just curious how much excess are you talking about? if you were $1000 over and had 30% taxes that would only be $300 for the 'second tax' somewhere down the line. you talk about 'forfeiting' the $1000 and making the guy whole outside the plan. why not just make him whole based on the amount of taxes he has to pay the first time? seems like it would be less and certainly nothing done under the table trying to beat the system.

by coincidence all my problems were on 9/11 (though most of Florida was a day before) it will make it east for me to remember the best part, I get to stay home and only take a 'passing' look of things at work but then I do have a lot of cleanup, leaf debris and stuff. the back porch flooded, so need to scrub down some stuff there hope your repair work won't be bad.

woke at 12:45 am, power went off and on so hopped out of bed to shut down the computer. at 1 the power went off for good until 11 internet and phone finally came back on at 5:30 or so. God smiled on me - no damage to the house. next door the garage flooded. across the street a large branch fell and dented the guy's car end of the block a large tree toppled. elsewhere nearby a few houses had carpeting sitting out front by mid afternoon, so I feel real blessed. a minimum of 10 inches of rain since Sunday at 9, but dummy Tom only set out a container 10 inches deep. Tom shows little sense answering questions on the links here, short on attempts on humor, and just as short putting something out to measure things.

not much change, reduced from a strong category 1 to simply a category 1 by Monday morning for Jacksonville.

current predictions have it hitting Jacksonville as a category 1. I don't live near the beaches and on the evacuation map I live in a white zone - there are 6 color zones plus white, basically, women and children first and as for you Tom, well, best of luck you are low on the totem pole. sometimes it pays to live where one does, maybe I'm not that close to the beach, but what the heck. I suspect may lose power, but cleaned up the stuff around the house, etc. Last storm knocked out power for less than a day, and most of that was at night so no big loss. we shall see what the 11:00 update says.

example 1 (see last sentence) is On June 30, 2007, Employer A uses the one-to-one correction method to correct the failure to satisfy the ADP test for 2005. Accordingly, Employer A calculates the dollar amount of the excess contributions for the two highly compensated employees in the manner described in § 401(k)(8)(B). The amount of the excess contribution for Employee P is $4,000 (4% of $100,000) and the amount of the excess contribution for Employee Q is $2,375 (2% of $118,750), or a total of $6,375. In accordance with § 401(k)(8)(C), $6,375, the excess contribution amount, is assigned $3,437.50 to Employee P and $2,937.50 to Employee Q. It is determined that the Earnings on the assigned amounts through June 30, 2007 are $687 and $587 for Employees P and Q, respectively. The assigned amounts and the Earnings are distributed to Employees P and Q. Therefore, Employee P receives $4,124.50 ($3,437.50 + $687) and Employee Q receives $3,524.50 ($2,937.50 + $587). In addition, on the same date, Employer A makes a corrective contribution to the § 401(k) plan equal to $7,649 (the sum of the $4,124.50 distributed to Employee P and the $3,524.50 distributed to Employee Q). The corrective contribution is allocated to the account balances of eligible nonhighly compensated employees for 2005, pro rata based on their compensation for 2005 (subject to § 415 for 2005). ........... sorry, I am in Jacksonville Florida and only taking a quick look at anything on the Links here. I've got some things I'm doing around house that concern me a little bit more than some of this.