cdavis25

Curious, how do you adjust the 1099R when one would be in the prior year for the IRR and the other 1099R would be in the current year when the ACP refund is processed? Do you process an amended 1099R for the prior year?

A controlled group each adopted a separate SIMPLE plan. Together the companies are over the 100 ee count. Does each employer/plan in the controlled group have to file a VCP separately and pay a separate user fee?

Can a plan amend their document during the plan year to exclude HCEs from PW? This is not a SH plan.

What if that plan document was a standardized prototype document and had a last day or 500 hours. Would you still be able to amend the Profit Sharing formula?

Yes, owner only 401(k) plan.

A participant wants to make an after-tax contribution to the plan and then, roll that out the next day to a Roth IRA. It would sit in a holding account and have no earnings for the one day. The 401(k) plan does allow after-tax contributions and Roth deferrals. The participant is over 59.5 and the plan allows in-service of after-tax money at any time. Assume the plan does not have a testing issue with ACP. I believe that is possible using a code G on the 1099R and none of it would be taxable b/c no earnings. Is this right? Seems too easy to go around the Roth IRA limits.

Hi Larry, I am just referring to after-tax contributions. I am not referring to Roth.

Is there a deadline for the sole prop to deposit his 2018 after tax contributions? He files schedule C on extension. Can the 2018 after tax contribution be made on 10/15/19 when he files his return? Assume, the 401(k) plan allows aftertax. No other employees. He is not over his 415 limit. Just looking at the timing of the deposit. I think rank and file participants would be ASAP and fall under the same umbrella as other employee contribution timing.

Mike, they pass 410(b) on the nonelective portion b/c everyone is getting the 3% SH giving them a benefit on nonelective. Now, the issue is failing 401a4 ratio % for the group. 6 of the NHCEs get SH and PS. 4 of them only get SH. This is testing on a contribution or allocation basis.

They are SH Tom, so no ADP test. Mike, are you saying this is more of a BRF issue to defer?

A client excludes bonus from compensation for deferral only. They include it for SH and PS. They use full 415 comp for 410(b) and 401(a)(4) testing and are passing. The 414(s) comp test is failing when excluding bonus from deferrals. Am I correct that really isn't an issue as long as they pass the general test on full 415 comp?

That is right...they still count. Component testing does not work. Also, it would not matter if the plan had the integrated formula fixed in the document. You loose the design base when the allocation requirements for last day or 1000 hours are applied to the PS part. That creates a nonuniform formula b/c the SH goes to all and triggers 401a4. Right?

Or, would component testing resolve this issue? Group 1 would be the 4 NHCE that get SH only. Group 2 would be the 6 NHCEs and 2 HCEs that get both SH and int PS. Both groups pass coverage by themselves and therefore, pass 401a4 on the design base SH? Would it matter if the plan was written as new comp each in their own group or fixed integration?

I know this is old, but we had a similar situation on a small plan. How about you give the 3% SHNEC to all. Then, integrate PS using 100% of the taxable wage base (the doc has each ppt in their own group). Coverage for 401a in the 410b test is 100% b/c everyone is getting 3% SH. The avg ben test is failing, since most of the NHCEs do not defer. Now, 6 out of 10 NHCE get the int PS. The other 4 do not b/c they did not meet the allocation requirement of last day or 1000 hours for PS. They are not excluded or term'd with under 500 hours. The two HCEs get the PS. So, they fail the rate group on a contribution basis at 60%. So, it is possible to fail 401a4 when doing this. Suppose the only difference was the PS formula was hard coded in the document for integration so that 401a4 was not required. Then, they would not have the same issue b/c the SH allows them to pass coverage right?

If a sponsor over deposits the Match for a HCE, do you count the total deposited in the ACP test or would you forfeit first? i.e. Match is 50% on 6%. The match should have been 8,250. Client deposited 10k. Would you test 10k or 8,250 in the ACP test?

A plan is a multiple employer plan. John Doe is a key employee for company A and company B. Both sponsor the Plan. John Doe defers from company A and has a balance of say 20,000. He has never received a contribution from company B and has no balance. What do you use for his account balance in the top heavy testing? Do you just use his balance from contributions/earnings from company A for their top heavy test. Then, just use his contributions/earnings from company B for their top heavy test? i.e. His balance in company B would be zero, so he would not have a balance in the top heavy test for B. His balance in company A would be 20,000 and he would have a balance in their test.

Can a 412e3 plan be terminated and the annuity contract distributed to the participant without giving that participant any other distribution option available under the plan? The advisor is saying the contract has all the distribution options built into it and the participant can just take a distribution later. This is a PBGC cover plan and will fill for termination with them.

A ppt is out on a leave of absence (medical for cancer treatment) currently. They have an outstanding loan and the repayments were suspended for the leave up to one year. It has been two months into the leave. The ppt wants to refinance for an additional amount on the loan. They have applied for SS disability and will find out in two months, if they qualify. The plan uses SS determination for the def of disability. The client does have some documentation from her doctor that this is a permanent disability. Although, the ppt has told them that she wants to come back to work and has not quit. So, is there any reason not to allow the refi? My concern was is this a bona fide loan for the refi. If there is documentation from a doctor on permanent disability and she applied for it with SS, then will she ever make a repayment or have the ability to payoff the loan? Of course, who is to say she cannot make a pre-payment via check before the one year suspension is up. The loan program allows for a total repayment via check. Otherwise, repayment is via payroll deduction. Thoughts?

The ACP test fails. Corrective distributions will apply. If the match is made after the plan year end, is it acceptable to say the earnings for the corrective distributions are zero?

For the document, "In the event an Employee is transferred between Participating Employers, accumulated service and eligibility shall be carried with the Employee involved. No such transfer shall effect a termination of employment hereunder, and the Participating Employer to which the Employee is transferred shall thereupon become obligated hereunder with respect to such Employee in the same manner as was the Participating Employer from whom the Employee was transferred." So, I am now thinking they do get the match and B has to pay it.

I might be overthinking this. John Doe worked for company A. They have a match with a last day (12/31) and 1,000 hr requirement. John quits A in June and goes to work for B. A and B sponsor the same multiple employer plan. They are not related employers. John did work 1,000 hours at A and did not work 1,000 hours at B. John is a participant and deferred at both companies, since all his service counts for eligibility. Does he get the match? He was not at A on the last day and did not have 1,000 hours with B.

Tks. The termination caught me off guard. I always just thought 21, 1 YoS, and 1/1 or 7/1 entry. So, he would count b/c he came in on 7/1. I was asleep at the wheel...or texting that day. lol

So, you agree you can test him separately? The fact that he terminated makes that possible. Had he not terminated, then he would not be tested separately.

A 401(k) plan is using 21, 1 YoS, and dual entry dates for all sources. It is a calendar year plan. They have a NHCE participant that is 42. He was hired 4/23/16. He had 1,000 hours in 2016 and 2017. He entered the plan on 7/1/17. He terminated employment on 7/14/17. You are using the 410a4 statutory entry dates (earlier of 1/1 or 6 months after completing the statutory age (21) and service requirement ( 1YoS)) to define otherwise excludable employees. Can you test him separately for 410b and ADP testing b/c he terminated and would not have entered the plan 6 months after satisfying the statutory service requirement?

If a plan uses 3401(a) for the def of comp, then that excludes group term life correct? The plan does not use w-2 def of comp, which would include it under 6052. They also do not exclude fringe.