duckthing

But those non-vested assets are allocated to a specific participant. In this situation, the amounts are contributed to the plan throughout the year but aren't really allocated until the last day of the plan year. The result is that if anybody terms prior to the end of the plan year, the employer has made (and pre-funded!) a contribution that isn't allocated to anybody, which is frowned on.

For the most part, yes. Can you shift from ADP to improve the ACP results? An amendment to switch to current-year testing beginning in 2017 might be in order...

Agreed on all of this and I believe the reasoning in the original post is solid. This looks (to me) like a failure to implement a deferral election, not a permissible withdrawal situation. It sounds like there's a breakdown in communication between the vendor and the sponsor's payroll, and while you're fixing this I would definitely pull an opt-out report from the vendor to make sure nobody else who opted out is actually still deferring.

Hmm... I guess maybe they're trying to avoid mandatory withholding? Or maybe they think they can dodge the early withdrawal penalty by taking it as a hardship? I'm still with RatherBeGolfing on the "immediate and heavy financial need" issue being a show-stopper here. But I'll defer to the attorney who's actually looking at the document, I guess!

In my mind, the first group is "employees who are participants in the DC plan" and the second group is "employees who are participants in the CB plan". It might just happen that both of those groups describe the exact same set of employees.

"Catchup" isn't the word I would use here. But no, lost earnings would not be due on any prospective future election, even if the intent of that election is to make up for the missed payroll. In my mind that would amount to treating it as a retroactive deferral election, which isn't permitted.

You'd still have to pass general testing if the document does not specify a design-based safe harbor allocation method, even if your allocation "looks like" one. Prior discussion at .

So they're planning to fix their failure to correctly implement your deferral election by also failing to implement your new deferral election? Did they put this in writing, and was there any explanation?

I don't know that you will. Ordinarily a plan sponsor would only conceivably want to do this for an HCE, in which case it would fail benefits, rights, and features testing so would not require a specific prohibition. I think the above answers are spot on. Without knowing how much money hangs in the balance, my guess is the attorney's fees to appeal a denial would eat that up pretty quickly. (Alternate, not-at-all-serious suggestion: determine the amount subject to forfeiture under his current vesting percentage, then have the sponsor inform his attorney that this amount will be the fee, payable by him, to amend the plan document in accordance with his wishes.)

She's an Active participant as long as she meets the plan's definition while on leave, which she almost certainly does. (Surely nobody would try to get away with saying that participants are terminated when they go on leave, paying them "termination" distributions, then "rehiring" them at the end of their leave. And depending on what kind of FMLA leave, presumably she's being credited with service to prevent a Break in Service -- tough to justify for somebody who's not active.) What's the cure period for loans? If she's issued a loan that's guaranteed to be deemed due to repayment not beginning until after the end of the cure period, she's essentially getting an in-service distribution where one would (presumably) not be permitted otherwise. If repayments are going to begin and the loan reamortized/brought current upon her return before a deemed distribution would ever become an issue, I don't know that I see a problem. But I'm certainly open to other opinions from people with more experience.

Yup, there's the answer.

Based on my experience this year, I think this is the safest approach. I had a participant this year who termed 12/30 and who wasn't allocated profit sharing based on the plan's last day rule. The client called to ask why, since 12/30 was the last "work day" of the year. They understood my explanation based on what they provided and the plan language, but ended up clarifying that 12/30 was reported as her termination date only because 12/31 fell on a Saturday, and that the participant was indeed still considered "employed" on 12/31 despite that not being a work day. It worked out fine, but from a client-happiness point of view I'll plan to ask first in the future!

Offhand I'd say that if they met the entry requirements before (or on, if the entry date language is written that way) 1/1 then they entered the plan on 1/1. The plan that they entered just doesn't happen to permit deferrals prior to 4/1.

I've found that Relius (if that's indeed what you're using) doesn't always handle rehire eligibility correctly, especially for disaggregation. To be fair, that may be my own inexperience using it rather than a shortcoming of their system! My understanding is that if you're testing excludables separately, Relius excludes anybody who hasn't met "age 21 and hired at least 18 months prior" even if some of those people have met the plan's entry requirements and are in fact deferring. It may only be looking at the rehire date to make the "18 month" determination. If that's the case then my answer to your question would be "no."

How does your document define an Hour of Service and/or Eligibility Service? I don't know offhand if it's permissible to exclude the union service for allocation purposes -- my guess would be not -- but your document may not even give you the option.

I think the discussion in this thread is what you need and I think the consensus is with you. I reason along the same lines as Bird's answer: she's a current key employee, and the funds are 'related' in the rollover sense as they came from the same employer, so they should be included in the TH determination.

Which VS document is this on FTW's system? I ask because I don't even see how to set up a plan that way (custom language under match timing, additional match subsection under Safe Harbor Contributions) from the options I'm used to looking at, on either the EGTRRA or PPA docs, so maybe it's one I just haven't used before. I don't want to take a stab at answering without knowing how it's been set up!

It should be defined in the plan. Ours define a period of consecutive service by requiring that the employee work at least one hour in each month, and that's probably standard but I wouldn't guarantee it.

I think that's a reasonable interpretation but don't have a citation handy. Tom Poje's answer here seems to reason along the same lines you did.

I'm with you on that one, absent anything special in the plan document. 415 should include 401(k) and 125 deferrals.

I may be missing something here, but... the compensation perspective is probably not relevant here, unless the plan document's language on the last day requirement is something along the lines of "has Eligible Compensation paid or payable on the last day of the Plan Year". Maybe the partner retired and the plan has an exemption to the last-day requirement for retirement? I don't see how else they'd be eligible.

Yes, the 401(a) component can pass the ratio test for coverage separately from the other components. If any of your hourly employees happen to be HCEs (overtime?) that should help quite a bit! Is the safe harbor arrangement a match or a nonelective?

It's not explicitly stated in the question but I think we're talking about a 401(k) plan here. He's talking about a contribution for the year of $X, with the owner's share being $25K. The owner contributes his piece on 1/1 and contributes the piece for everybody else (presumably NHCEs) as late as possible. The overall test passes but the timing is certainly discriminatory in favor of that owner. I'm with everybody else here. I can think of a couple good reasons not to fund a nonelective contribution throughout the year but "you have to crosstest every deposit individually" isn't one of them I've heard before.

Agreed. He's not employed and reaches age 70-1/2 by 12/31/2016 (barely!) so he has to take a 2016 RMD. The RMD amount is calculated based on the balance in the plan as of 12/31/2015, and a rollover subsequent to that can't satisfy the RMD requirement. The recordkeeper may or may not be willing to process the rollover without taking an RMD first on the grounds that he can choose to receive it by April 30, 2017 -- my guess is they will object. In either case he cannot avoid the tax liability just by moving the money out to another qualified plan before the end of the year.

Sorry, this is what I get for trusting my memory. I don't see a model notice, but the rev proc does specify what needs to be included.