ErisaGooroo

Employer sponsors more than one plan. Each plan has a plan expense account (excess revenue account held within the trust). Question - Can the plan expense account from Plan A be used to offset reasonable administrative expenses for Plan B? Any guidance would be greatly appreciated! Happy Friday! :)

Hello Everyone! I have a situation where a Roth rollover was made in a prior year and just discovered. The receiving plan did not and does not currently allow Roth deferrals to be made. Per 1.402A-1, the recipient plan must otherwise accept Roth contributions. FYI...The rollover was between two 401(k) plans. What is the correction for this type of failure? My first thought is it is an ineligible rollover and must be reversed. Any guidance is greatly appreciated.

Thank you Larry Starr and Bird for the feedback. Much appreciated!

Good point but I thought we were required to use the percentage found at Part II, Box J to determine the allocable qualified plan deduction for each partner?

A partnership sponsors a 401(k) Plan. Partnership consists of multiple partners receiving a K-1. Three of the partners in the partnership are winding down their practices. They are still considered equity partners but are paid a percentage of their collections (reported on their K-1s). Due to some of the partners winding down their practices, the ownership shares have changed mid-year. For determination of the allocable share of qualified plan deductions for each partner, should I use the beginning percentage or ending percentage found in Part II, Box J? Any feedback is greatly appreciated! Thank you.

From the W-2 instructions, I learned that an employer's contribution (including an employee's contributions through a cafeteria plan) to an employee's HSA is not subject to federal income tax withholding or social security, Medicare, or railroad retirement taxes (or FUTA tax). I understand that 415 compensation is grossed up to account for elective deferral amounts contributed to a cafeteria 125 plan but what about if the employer contributes to the HSA on behalf of the employee. Is 415 comp grossed up for the employer contribution to the HSA? And ,if the answer is no, then I assume the plan document would not have to be amended to exclude the HSA employer contribution from the definition of Plan Comp for allocation purposes (SH & ER) because it is not comp for plan purposes. Total Comp is defined as W-2 Comp and Plan Comp does not currently exclude deferrals / cafeteria. Greatly appreciate your input. QNPG

From the W-2 instructions, I learned that an employer's contribution (including an employee's contributions through a cafeteria plan) to an employee's HSA is not subject to federal income tax withholding or social security, Medicare, or railroad retirement taxes (or FUTA tax) but are these amounts included in the definition of 415 comp? Plan sponsor contributes an employer contribution to the HSA on behalf of the employee but does not want to include this employer contribution in the definition of plan compensation (SH and ER). Total Comp is defined as W-2 Comp and Plan Comp does not currently exclude deferrals / cafeteria. To exclude the employer contribution to the HSA from Plan Comp, is an amendment to the plan necessary? Greatly appreciate your input. QNPG

Question #1: Is a participant in a 457(b) top hat plan required to cease deferrals in the 457(b) top hat plan for 6 months after taking an unforeseeable emergency distribution? The document is silent on this fact so I'm assuming the answer is no. Question #2: Client also sponsors a 403(b). It is my understanding that when a participant takes an unforeseeable emergency distribution from the 457(b) TH, the participant must cease elective deferrals in the 403(b) Plan sponsored by the same employer. Is this correct? Any input would be greatly appreciated!

Afterthought... if it was payroll determination for the match, I think there would be an additional match due. If it was plan year determination, I don't think there would be an additional match due.

What about an enhanced safe harbor formula that is 200% up to 2%? Does that satisfy the ADP safe harbor requirement? The overall match is 100% up to 4% if they defer 2%.

I think the corrective match would be due on the three payrolls including lost earnings in addition to the $200 the participant deferred on the next payroll. I'm interested to hear what others think... good question.

Thank you for your humble opinion and reply.

I was wondering the same question. Does anyone want to take a stab at answering this question? Happy Monday!

It is my understanding that the 5 year loan term begins when the funds are withdrawn from the participant's account (essentially the date of the check) rather than the date of receipt of funds by the participant. Do you agree? What if an amortization schedule is prepared with a 5 year loan term based on a date later than the date the funds are removed from the participant's account such as 30 days later from the date the loan is processed? This would cause the loan to exceed the 5 year max loan term at its inception. Would the entire loan be considered a deemed loan? In an earlier benefitslink thread dated back to 2003, IRS seemed to take the position that curing a missed payment after the 5 year loan term but within the cure period provided by the plan and within the normal limitations of 72(p)-1, Q&A-10 would not violate the requirements of 72(p)(2(B). Payments made within the cure period are deemed to relate back and considered made on the date the installment payment was due. However, something posted by QDROPHIL seemed to contradict this opinion and reverts back to the cure period not applying to the last payment. Thoughts on these two issues? Any official cites or reference to material on this topic would be very helpful. Thank you!

Thank you for your help.

I found this in the EOB and it gives me pause... to me this means as part of the negotiation, the union employee doesn't necessarily have to receive a benefit to be considered excludable. What am I missing? "Exclusion of union employees to test non-union plan (union exclusion). When testing a non-union plan, the collectively bargained (union) employees are excludable employees. A union employee is excludable only if the employee is covered by a collective bargaining agreement in which retirement benefits were the subject of good faith bargaining. ..... This exclusion recognizes the separate protections afforded union employees through the collective bargaining process. What the union employees negotiate in the way of retirement plan benefits (including no benefits) will not impact the ability of a non-union plan to satisfy the coverage requirements."

Thank you. What if the evidence that retirement benefits were subject of good faith bargaining, and as a result, it was decided that some would receive a benefit as part of the contract and some would not? In other words, does the union employee have to actually benefit to be excludable as a union employee?

TAXLLM, Any chance the entity is a steeple church? If so, there are some new church regs coming some time in the future (we have no idea when) which now will allow this type of merger. We know we will be able to do this we just don't know HOW yet.

Would the union employees still be considered an excludable employee for 410(b) testing IF some of the union employees did not receive a benefit under the collectively bargained agreement? Some union employees benefit and some union employees receive no benefit under the terms of the collectively bargained agreement for the employer.

Thank you.

I am wondering the same thing. Has anyone here heard any further guidance related to the implementation of such transaction? I have a steeple church 401(a) and 403(b) wanting to merge this year. Anything new to consider?

Thank you both! Have a great week.

My first thought is nondiscrimination and satisfying 401(a)(4) but how would that even work? The terms of the plan document provide for a pro-rata non-elective formula. If it is permissible to do, I imagine the plan document could be amended to allow for a 2nd allocation based on account balance rather than compensation - but then again how does it satisfy 401(a)(4)?

Is it permissible for an employer to allocate an employer non-elective contribution based on account balance rather than compensation?

What if the participant (mother) is living in the "mother-in-law" quarters on the property and the house is owned by the daughter? Property Taxes are due and they will lose the house if back taxes are not paid. Technically, the "participant" does not rent from the daughter so I don't feel they could use the "prevent the participant from eviction from principal residence" rule. Thoughts?