The 402"(G)"

Thank you!

Quick question on some confusion with the code. 1.410(b)-5(a-c) & (d)(2) When determining the actual benefit percentage, the code states that in (d)(2)"Employee contributions and employee-provided benefits disregarded" and clearly states "Therefore, employee contributions (...), and benefits derived from such contributions, are not taken into account in determining employee benefit percentages." However, literature, ASPPA presentations, and the Relius program include employee 401k contributions into the test. Applying to both contribution or benefit basis... Is this due to code 1.401(k)-1a(4)(ii) "Treatment of elective contributions as employer contributions"...? Basically saying that 401k & Roth are considered employer contributions in 1.410(b)-5 Just trying to get some clarification on the confusing wording Thank you

We started up an Open MEP recently and question the best way to collect fee's on it. Before it was a MEP, the fee's had been paid out of plan assets. We had a base fee and then a per participant fee. A total fee was calculated and then taken based on account balance. Not that it is split, we are now not 100% sure if there are certain fee structures that can't be used. Let's say we have the following company fee structure. For simplicity, a $25 per participant fee. 20 people in company A and 80 in company B. - Total fee is then $2,500. However, Company A has 50% of the assets and Company B has 50% of the assets. Now it's created a situation where even though Company B has created $2,000 of the fee's, it only has to pay for 1,250 of it. Does anyone have past experience with this or know if there is some sort of regulation on how we can charge the fee's then for this case? The company would not want to start paying the fee's - they like to have as much paid by the plan as possible.

Thank you everyone for the replies. The more I've thought about this, it does seem right to include the loan. As mentioned, the logic to not include just isn't there. Thankfully in our case the side issue of not having the funds does not have to be addressed. But I will chime in with my 2 cents that since there is no definitive answer on what would happen, I think the vesting rule would be a logical approach to it. Take whatever couldn't be taken out and add it to next years calculated distribution. I will let anyone know if I find anything else! Maybe it's something so obvious I am overthinking it, but I am surprised there is not a more clear answer from the Regs. It doesn't seem like something that would be too rare of an occurrence.

Would you happen to know where I could find some type of IRS backup for what is specifically included and excluded? The logic is there, but I guess my concern to me is this seems like something that would be specifically stated somewhere when discussing the calculation. It seems odd to me that everything I researched is completely silent on the issue. Distributing won't be an issue, enough will be paid back and contributed by the time it needs to be paid.

Hello, I have a semi-rare situation for an HCE's RMD calculation. The account value at 12/31 was $1000, but there was an outstanding loan of $45,000 at the time. (Took the loan, then distributed whole account - still employed). Would we calculate the RMD with a $1000 balance or a $46,000 balance? From the research done, I found a few answers to say include the loan, a few answer to not include the loan. Surprisingly, basically no information on the matter across the board. The IRS & various Publications are silent on the matter - no mention of loans. We are torn 50/50 on the matter - has anyone had experience with this before? We are looking to find some type of backup or codification on the matter that would make this clear for us Thank you in advance,

CuseFan We actually didn't have a MEP initially. It was more of a controlled group situation.Circumstances changed over time and a change in ownership, ect. So we did a change 7/1 to an Open MEP. But from additional research and talks with people it does seem that Scenario 2 is making much more sense. Thank you!

Hi all, Hopefully someone can help, I've searched and not much has come up on the subject. We have a plan that consists of 4 groups. (A,B,C,D) Group A would do administration and training for the other 3 groups. Recently, ownership and roles have changed and it made more sense to convert the plan to an open MEP. Group A still handing the work regarding the plan and letting the other groups adopt provisions within the plan. In past years and from 1/1/2016 to 6/30/2016 it was all in 1 plan, 1 5500. Filing with Group A's data. From 7/1/2016 to 12/31/2016 (and beyond) it is going to be treated as an open MEP. 4 5500's going forward. My question relates to the 5500 filing for this conversion year. It would seem two scenarios are at play, and I'm having trouble finding guidance: Scenario 1 - A 5500 filed for 1/1/2016 to 6/30/2016 showing a transfer out of all the assets. This would be due 4/15/2017 with extension. Then 4 5500's for the 4 groups 7/1/2016 to 12/31/2016 with assets transferred in. Scenario 2 - Since Group A will exist throughout the whole process. Group A files a 5500 from 1/1/2016 - 12/31/2016 - showing a transfer out of the other 3's assets. Then the other 3 groups file their 5500's from 7/1/2016 to 12/31/2016. We are leaning towards Scenario 2 but unsure. Thank you in advance!

Thank you BG5150

Hello All, Quick question on a scenario: We have a participant who is taking a hardship from the plan. For argument sake, say the plan allows only hardship withdrawals from Employee money. She has 10,000 in employee money available for hardship (after all necessary calculations), and 10,000 in employer match money NOT available for hardship. If she elects to take out 9,000 (backup permitting) AND gross up 20% for taxes, are we able to take out 11,250 so she nets out to 9,000 or are we limited to 10,000 - leaving her with a net check of $8,000? I believe we are able to take fee's past the limit (for example a $10,000 withdrawal and then a $100 fee from the Employer Money) but this seems like a different scenario My feelings and around the office is that you are limited to $10,000, with a net check of $8,000. The logic being that if there is not that limit then you could have scenarios where someone elects 10,000 withdrawn and then another 10,000 "withheld for taxes" to skirt around the Employer money limitation. Could not find much on this in research. Thank you in advance for the help!

Hello All, A recent discussion in the office brought rise to a hypothetical question on eligibility of minors. Assuming the plan has no age limit on contributing, what would be the youngest age someone can participate in the plan? From research not much came up, and the few posts I could find on here were dated 10+ years ago. My guess is as long as they have eligible wages as defined by the plan they would be okay, but I also am thinking it wouldn't make sense to have a 2 year old deferring (say from a advertisement for that company). Thanks

Thank you for the response, I wanted to jump in really quick on the HCE issue. We fully intend to keep that person an HCE, as part of the change we are just re-writing the document to allow them to contribute. Our issue is basically the best way to allow them to remain whole with the refund - our fear being hitting that limit.

A plan excludes HCEs from contributing, however an HCE was accidentally allowed to contribute. Mostly due to outside factors, we are changing the plan to a MEP effective July 1st, 2016. The plan currently is a calendar year plan. In trying to find the best way to fix the HCE with this change, the numbers below apply: 1/1 to 6/30 comp = 100,000 7/1 to 12/31 comp = 100,000 1/1 to 5/20 401(k) contributed = 9,000 HCE intends to max out to 18,000 (under 50) Our plan was to immediately stop contributions, refund the 9,000 so that the net 401k contribution for the first half of the year is 0. Then the first pay after 7/1 will have 9,000 withheld to make him whole. Then the remaining pays are held per the 9% deferral rate, giving him an additional 9,000 and getting him exactly to the limit of 18,000. My question is how to treat the refund in regards to the 18,000 limit. Does the refund count towards reducing the contributions for the 402(g) limits? (as in the proposed situation above?) Or as of 7/1 would the HCE still have 9,000 contributed towards that limit? If this were the case, it would lead to meeting the 402(g) limit immediately after we did the 9,000 contribution on the first payroll after July 1st to make him whole. He then would be unable to contribute anything else after July 1st Thank you

Yes were 100% sure the money belongs to the plan and the funds are permitted to be used to pay the operating expense. The main issue would then be going back and 'reimbursing' the employer for fees already paid a ealier this year. However from the sound of the posts and the research I've been doing it is looking like this is not allowed, since as mentioned it is a loan to the plan. Jpod - Thanks for the suggestion. I've been looking into that exeption and there is a rule about it having to have it in writing in if 60 days or longer. Which would make sense for how you mentioned it can't be slid in retroactively.

The check was made out to the plan.