tjw572

I have a situation where the prior year profit sharing calculation missed giving a contribution to an eligible employee that should have entered the Plan. The normal correction method is to do a make-up contribution for the prior year plus earnings. Total contribution due is approx $1k. However, I have an extra issue with this Plan. It is a partnership subject to the self-employment calculation. To be technically correct, 2018 should be redone adjusting the contributions/plan compensation of the partners in 2018. That would cause many more problems, i.e. amendment of the partnership return, the individual returns of the partners. Would it be more practical to factor it into the 2019 partnership calc along with the staff ER contributions for 2019?

I have an interesting situation. The adoption agreement in question only has a last day requirement waiver for normal or early retirement. I have a Participant that has met Normal Retirement Age but is not employed on the last day of the Plan Year due to death. Would this person get an employer contribution? I definitely admit this is a gray area and could be argued either way. My thinking is leaning towards no since there is a separate waiver for death as an option in the adoption agreement. This is on a Relius Document.

I have a plan where one of the employees went from a W-2 employee to a partner. He received a W-2 and K-1 income. While I agree that the two pieces need to be added together to calculate the profit sharing contribution, I am being told to ignore the fact that the participant was a w-2 employee when doing the earned income calc for the profit sharing contribution (i.e. not reduce Earned income by employer contribution for their share of the contribution on their w-2 compensation) and also adjust the SS Wage base for this individual. I looked in the ERISA Outline book and can't find anything specific on this. Can anyone shed some light on this or provide a solid reference siting?

Yes. Net earned income before ER contribution is 23,589.75. The 25% ER contribution reduces his self employment income to 18,871.80. Unless my logic is is flawed today, 18,871.80 would be the max deferral. In essence zeroing out comp. 4,417.95 would be considered catch-up.

I have a sole prop plan with a small earned income amount. There are no other employees in the plan. Owner is over 50 and catch-up eligible Net earned income after Sec. 164(f) deduction is $23,589.75. 25% PS contribution is $4,717.95. Plan comp is now $18,871.80. What is he eligible to defer? My thoughts are that it would be $18,871.80, but our testing software is coming up with 402(g) and 415 limit excess amounts with these amounts. What am I missing? Sorry if this obvious. My brain doesn't seem to be working today.

I have an age weighted profit sharing plan that I am working on. I haven't seen many of these in my 20+ years. Plan Document is SunGard PPA. NRA in document is age 55. UP-1984 8.5% is mortality table. Based on the document the units are determined by multiplying compensation by the table factor on years to NRA and table factor of adjustment factor if NRA is not 65. Does the adjustment factor change for those over 55? Our testing software is using the adjustment based on participant's current age if over Age 55. This appears reasonable, since the participant's NRA is their current age since they are still employed. Or would the adjustment factor remain at Age 55 even if the participant is over age 55? I can't find any documentation on this and ERISA Outline Book doesn't have much on Age Weighted allocations and there is not much on the web doing a general search.

Thanks everyone for the responses. Our document is SunGard protoype and it just references offsetting Employer Contributions

I have a plan that uses the Prevailing Wage contributions to offset the Employer Contributions. The plan has safe harbor matching contributions and a profit sharing contribution. Can the prevailing wage contributions offset both contributions (if there is enough available) or does the offset limit you to 1 type of ER contribution to offset? I can't find anything definitive on this. Our testing software (DATAIR) only uses it for one and kicks it out of the other depending on which the PW is chosen to offset.

Thanks for your help.

I have a plan that is performing its ADP testing by excluding the otherwise excludable employees. I know that the 410(b) testing has to be performed the same. However, if the plan is cross-tested under 401(a)(4) for the employer contributions, does this testing have to follow suit? Or does the 401(a)(4) testing stand on its own?