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.

I have an employer spinning off from an existing company effective 10/24/2020. They want to set up a plan for 2020. They want to implement a SH match for 2020. Can the employer set up the plan to be effective prior to the company being effective - i.e. an effective date of 10/01/2020 so they can cover the 3 month period?

Plan is a annually valued trustee directed 401k safe harbor match/cross tested profit sharing plan. The participant gets an annual statement each year after the plan has been valued following the plan year end. Other than the Summary Annual Report - what other mandatory annual participant notices must the plan sponsor provide to the employee? Are there any notices that are only provided upon request of the participant?

I have a plan that fails 2019 APD testing and it is now after March 15. Is it correct that the deadline for issuing refunds without an excise tax was pushed back? There are 4 HCE’s all over age 50 and two NHCE’s. The The HCE’s deferred respectively 5000 5000 11000 12500 So none had 402(g) catch-up in 2019. Is it permissible to do both a small QNEC for the two NHCE’s and still have the plan fail ADP testing – then do the corrective refunds but to the point where I can utilize ADP catch-up contributions to avoid having to issue refunds altogether. This is on an ASC volume submitter plan document and I don't see where it allows or does not allow a combination of corrective options.

Are there any HCE at the 3% level? Can there be? - Yes - some of the HCE's may be at 3% Will you be able to use component plans? - Not sure what this means or how it works

Physician group - they set up contracts with certain employees to base their overall compensation upon the benefits they will receive in their profit sharing plan (which I'm not fond of). If the highest HCE rate is 20% is there anyway to give certain NHCE's only a 3% profit sharing contribution based on the employment agreement? OEE does not work as many our not OEE's. They also don't want to exclude them from the plan altogether. Plan is also top-heavy.

Employer deposited $50k in 2019 for a profit sharing contribution not realizing they had excess DB assets of $52K that came over from their terminated DB plan which would cover the 2019 profit sharing contribution which ended up be $44K to max out the owner. Question - if the CPA does not take a deduction for the $50K deposit can they just carry the $50K over and allocate it in 2020 or is there an issue with funding the plan and not allocating the money - is there a penalty for that?

1. I don't think there is a relationship between employers 2. Not exactly certain - last year it was about $33K - This year might only be about $11K

Had question posed to me by broker on plan. Three person plan - Dad Mom & Daughter only. Daughter working in UK and apparently in a plan for the UK company where she makes deferrals. If she also worked from Mom and Dad co. in U.S. this year is there any impact on her U.S. plan deferrals based on her deferrals in a U.K. plan? No other detail from agent. Told her I have no idea but would check here or tell them to contact ERISA attorney.

Is it correct that if a participant takes a plan loan from their pre-tax 401k deferral account that they are essentially double taxed when they make the payments back on an after tax basis. Taxed once when the deferral is made and then taxed again when they take a distribution from the plan? I'm trying to figure out how it would be a good idea to take a plan loan if the taxation on the money is detrimental to the employee?

New plan - effective date 01/01/2018 4 employees - Dr. & his spouse & 2 non-related staff members Allows for EE deferrals, Profit Sharing & SHNE. SHNE limited to only NHCE's EE deferral and SHNE component of plan set up with special effective date of 10/01/2018 4 employee all became eligible 07/01/2018 Compensation is based on full year pay - not date of entry Only contributions into the plan will be two $18,500 contributions made by the doctor and his spouse and the 3% safe harbor to the two staff members (neither of the two staff members deferred) When calculating the 3% safe harbor non-elective for the 2018 plan year is the SHNE contribution based on just compensation from 10-01-2018 to 12-31-2018 due to the SH being effective 10/01/2018? Or should it be on the full year compensation 01/01/2018 to 12/31/2018? Plan will be top-heavy for 2018 based on the two HCE's deferral but it is a consists solely of plan.