Becky Schwing

401k plan is TH. Owner is over age 50. Owner does NOT want to make any employer contribution to the plan for plan year. I assume the owner cannot just make a $6500 deferral for the year without triggering the top-heavy minimum to the non-key employees. I assume there is no way to classify a $6500 deferral as catch-up only and thus avoid TH minimum because the plan would not fail ADP or violate 415 or 402(g). Just wanted to confirm.

401k plan with 3% SHNE + Integrated Profit Sharing Has a last day and 1000 hour requirement - Two out of the three NHCE's terminated with over 1000 hours worked in 2021. Two HCE's - both max 401k and get 3% SHNE and then and integrated PS - one HCE above wage base so slightly higher percentage on the PS cont. HCE 1 non-elective = 3% + 10.28% = 13.28% HCE 2 non-elective = 3% + 7.38% = 10.38% NHCE 1 non-elective = 3% + 7.38% = 10.38% NHCE 2 non-elective = 3% + 0.00% = 3.00% NHCE 1 non-elective = 3% + 0.00% = 3.00% Plan passes 410(b) ratio at 100% because all are getting a non-elective. But my question is do I have to now test the plan for general non-discrimination because two of the three NHCE's are only getting the 3% SHNE and no profit sharing? It will not pass average benefit percentage part of non-discrimination because HCE 2 is a spouse of HCE 1 and defers at a rate of 70% I was thinking there is a multiple formula rule that exists when something like this presents itself - even in what is otherwise a "safe harbor" allocation of the profit sharing which integrated with SS would fall into.

Does the Otherwise excludable employee provision consist of two options: 1. Otherwise Excludable Employees - where any employee HCE or NHCE is removed from testing - thus two tests - one for everyone meeting max age & service and one for those who are otherwise excludable under max age and service. 2. Early Participation rule - where you only exclude the NHCE's who have not me max age and service but would keep any HCE who has not met max age and service in the testing with everyone who met max age and service.

Thanks Bird - they were before my time also - one I first tried to do an RMD for this owner a few years ago he brought this up to me and I had no clue what he was even talking about as I had never heard of such a thing in all my years. Finally I found someone who knew what it was and I ended up getting a copy of the signed election which only states that he does not have to take it while still active even though he was greater than 5% owner. Nothing in the election states anything about how it is to be paid out once he is retired - which he is as of the end of 2020. Thanks for the response.

I have a participant in a plan that had a signed TEFRA election to delay RMD processing. This is the only one I've ever seen. The participant is now fully retired as of 12/31/2020 so I believe he now has no choice but to take an RMD for 2021. Per the election signed in 1983 it states Specifically, I request that funds held for my benefit shall not be subject to distribution prior to my retirement, death or other separation from service with the corporation, or any successor employer Thus since he is now retired from the employer it appears he has to start taking his RMD - is there anything I could be missing?

Company A is 100% owned by Husband and has a 401k plan. His spouse works there but has no direct ownership, just the required family attribution. The spouse started her own business in 2020 and is doing so well that she would like to do a SEP for 2021. Husband has no interest in her company and does not work there. Under section 1563 rules = attribution does not apply if all four of the following conditions are satisfied 1. Spouse does not hold direct ownership in the business 2. Spouse is not an employee and does not participate in the management of the business 3. Business income form passive investment does not exceed 50% of the gross income for the year; and 4 Owner's interest is not subject to disposition restrictions in favor of his/her spouse and the couple's minor children Based on item 2 if she works and is paid by his company they don't meet all the conditions and thus would be considered a controlled group - correct?

Dentist wife works for his company. She never worked 1000 hours to reach YOS requirement to be in plan. They want to let her in so she can max out 401k and get SH Match. Her hire date was February 2019. There are quite a few part time employees in the company who have never met the YOS requirement. Many have hire dates after February 2019. Do you see an issue doing an open enrollment and stating the plan is waiving the 1 yos requirement for anyone employed on 02/20/2019 so that the wife can get in the plan and then it only lets in a few other part-time people with a hire date before hers? This way I could limit the number of Part Time employees who become eligible due to an open enrollment. Also - they sometimes bring back people for a day or two to cover for staff on vacation. If they brought someone back for a few days who had an original hire date prior to February 2019 but left and only works occassionly - would they be immediately eligible if I did an open enrollment? Or maybe I could come up with some exclusion for those employees.

Partner in plan had ordinary business loss on K-1 of -470,100 but had guaranteed payments of 302,576. Line 14 ED loss of -168,060. Partner made $17k in deferrals during year and received match of $7500. Question 1 - Is it correct that due to the negative SE earnings he should not have been able to do deferrals or recieve a match? Question 2 - Plan terminated and all participants including partner have been paid out. Partner rolled his assets to IRA. If he could not do deferrals for year - I believe we have to get the IRA custodian to liquidate and pay him out the excess deferrals - correct - most likely with some sort of earnings. Question 3 - if he can't have the match - that too has to come out of the IRA with earnings - but since the plan participants have all been paid out and the CPA doing the plan audit and TPA who did the compliance work have both been paid in full in advance - what if any options exist for the excess match? Does it have to be allocated to all the participants in the plan and supplemental distributions be complete?

The plan is set up with everyone in their own group - I did not think about testing on contribution basis - that makes sense.

Employer wants to give 3% PS contribution to everyone in the plan - except the owner does not want to take a contribution at all. Owner has a son who happens to be youngest employee in plan and giving his son 3% will not pass rate group testing. He fails. - Can you still give son 3% and just say that the allocation in pro-rata other than the owner is taking $0.00 or Becuae owner is taking $0.00 do you lose the pro-rata design and have to test the plan and thus limit the son to a smaller than 3% contribuiton to get plan to pass testing.

Owner Company 1 Company 2 1 Husband 50% 100% 2 Wife 50% 0% Company 1 has a 401k plan - although plan allows form employer match all they do is allow for 401k deferrals - no match has been made to plan over the years. Husband recently acquired company 2 - only has 5 employees and he is only HCE. Wife has no part of company 2 Husband and Wife have one child under age 21 Am I correct that because they have a child under age 21 there is a controlled group situation here? If they did not have a child under 21 than there would not be a controlled group?

Cross tested profit sharing plan with everyone in their own group. Plan excludes a group of employees by job classification - some who would otherwise be eligible other than the job class exclusion. When doing coverage testing - plan passes Ratio Percentage test with these excluded employees included in the counts as not benefitting. When doing non-discrimination testing on the profit sharing allocation (HCE's getting a 20% contribution and NHCE's getting 5% - has no last day or 1000 hour) do I have to include the excluded employees in the calculations at a 0% benefit rate?

Employer provides tuition reimbursement for employees. When reimbursement payments are processed, taxes will be withheld, however employer does not wish to have it be subject to 401k deferral contributions. How do we characterize this payment so that it is not subject to deferral contributions? Document defines compensation as 3401(a) - Are tuition reimbursement payments part of Code §3401(a)? What are their best options here? I have searched around and see that Taxable Fringe Benefits such as certain tuition reimbursements are included in 3401(a) - but I don't know what "certain type" means. Not sure what question to ask.

So you think they should just make the $18,000 deposit into the plan - for 2018 since they have a written election? It does not matter all that much that it is late?

I have a partnership. For 2018 the partners were going to defer $18,000 in 2019 for the 2018 plan year. The plan is a safe harbor basic match. I provided them the safe harbor match amount based on the $18,000 each they were supposed to deposit. The problem is they had some changes to their accounting group and they forgot to deposit the 401k deferrals even though they did fund the safe harbor match. The match was like $14,000. What are the possible corrective options for this? Can they forfeit the match and use it to offset their 2019 match? Or do they have to allocate that ineligible match as a profit sharing contribution for 2018? Any other ideas? It was just an oversight on the part of the accounting group.