CuseFan

I understand, and if you've asked about any other plans (including SIMPLE and SEP) ahead of time and made clear there are deduction coordination rules, then having their deduction limited by not disclosing such is on them.

Ok, not sorry!

Mistake or not, the participant's actual election was executed, so I say have them fix it going forward and deal with it. Why is it always the collective "we" - plan sponsors, advisors, TPAs, RKs - that are asked to bend over backwards to accommodate a participant's mistake, poor judgment, or lack of attention? When is the participant held accountable for not doing what (s)he is supposed to and then months or years later comes looking for help on situation (s)he could have rectified almost immediately had (s)he paid the slightest attention? I'm sorry, but if I intended to make a PRE-TAX deferral from my pay and my income tax withholdings remained the same, I would have noticed and said something - if not after the first pay period, certainly within a few. Sorry for the rant, and I don't do this administration so I don't deal with these situations - but you all do - and don't you have enough work and have enough plan sponsor and advisor administrative "issues" to fix already? OK, I'm done. Also, it's 9/11, so let's remember those we lost that terrible day and from its aftermath.

In summary - SEP no if on 5305, yes if on another platform but limited to 6% of compensation (if PBGC-exempt) or 31% combined plan deduction limit applies. I see no legal basis for taking out the SEP contribution other than it being a withdrawal of a contribution which is already "in the books" and so you deal with the 31% limit and carry forward DB deduction to 2024. Depending on 2024 max, might need to do another carryforward in year two. All the related SEP coordination should have happened before DBP was adopted and, if it was and the client or advisor ignored, their problem not yours.

Peter, as one who does not get involved in that level of administration, I'll give you my opinion from a top-level viewpoint FWIW. "Must" the payroll function cut off deferrals when limits are reached? No. "Should" the payroll function have the ability to recognize the highest applicable limit available to a participant and only stop deferrals once that limit is reached? Yes, in a perfect world, and certainly yes for any payroll service company that claims to be full service. For those companies that use third party software to run their own payroll in-house, such software may lack the ability or the users lack the programming skills to properly account for all the new complexities associated with recent legislation. In those instances I think they should make every effort to properly administer limits and try to at least account for most situations. Yes, it is easy enough to identify and correct excess deferrals after year-end through corrective distributions (I am not a proponent of playing with W2s after the fact). Besides the added administrative work, the other ramification could be under withholding on income taxes for an affected individual who gets a material taxable refund. The employer would need to make sure recipients were able to make timely tax withholding elections on their refunds to avoid be under withheld. If I'm the employee, I might consider this a big hassle and ask why should I have this inconvenience because my employer or its payroll provider can't properly administer legal limits? Furthermore, if I'm expecting my deferrals to be stopped at a certain point and they aren't, I'm not getting a part of my pay that I was expecting. Yes, I could then elect to cease deferrals, but then I have to elect to restart come 1/1, putting the administrative burden on me the employee. Anyway, that is my humble opinion.

A person starts a new job, usually gets various employment forms to review and complete so just add this to the list. Basically, you can make an affirmative election now to enroll or not enroll (defer 0%), and pursuant to this notice, if you fail to make an election you'll be automatically enrolled on X date. This is always the concern for any administrative task foisted upon a small business.

Be careful if such terminated employees cannot be statutorily excluded from testing, it might create compliance headaches for nondiscrimination, gateway in DCP and minimum participation percentages.

Yes, if the document reference is to the account balance.

If it is truly severance pay - pay given after termination of employment to which the person would not otherwise had been entitled to - then it is not considered compensation for retirement plan purposes and should not be considered for deferrals or matching contributions.

Was the form filed with 10021.00 or simply 10021? If the former, scanning/screening application may not have been expecting dollars and cents.

Agreed, otherwise it is a CODA and you must comply with the 402(g) limits.

You can use historical compensation, including prior to plan adoption, from the entity sponsoring the plan and from any entity within the control group - which ABC and XYZ were not a control group. Joe would have had an aggregated 415 limit IF both ABC and XYZ sponsored DBPs but I don't see you being able to use historical XYZ compensation. I think Joe has 415 FAE of $150k from ABC 2015-2017.

Lou and Peter are spot on. Discretion for consistent and reasonable interpretation of vague plan provisions, not for exceptions. Also, a vague provision does not give carte blanche on interpreting any way the PA desires, it must still be reasonable. I've read many lawsuit summaries where the PA was sued alleging its interpretation was arbitrary and capricious (legal term for willy nilly).

If working <40 hours a month the SoB would not apply anyway. The definitive answer lies in the group annuity contract placed with the insurer that is now providing the monthly annuity benefits. I do not know if suspension of benefits provisions must be included in those contracts, but would think most/all insurers might want those administrative complexities taken out. If the plan termination process has not yet progressed to that stage you are still bound to follow the plan document.

I'm assuming these were/are all DC plans, because DB plans must use actuarial value of assets (usually FMV) for determining funded status and minimum required contributions.

I think both have to claim and satisfy QSLOB and it certainly doesn't pass the smell test when you have one entity providing service to the entire control group - you can't have CG AB where A is a separate line but B is not.

Yes, read the plan document. Any allocation of excess, if permitted by the plan, must be nondiscriminatory. The question on the terminated participant is whether such employee was considered benefiting for 2024 or is a statutory exclusion for 2024 - if the person did not accrue a benefit in 2024 because they terminated and failed to complete an hours requirement in the plan AND also worked 500 or fewer hours. If you must include the employee in testing, you may need to give some of the excess. Also, be wary of minimum participation, if the employee didn't get a 2024 accrual because <1000 hours but can't be excluded because >500 hours, you'll need to give a benefit.

Currently, yes, but you ultimately need a plan amendment to change the cash out threshold from $5,000 to $7,000 (and with a 1/1/2024 effective date) to do this - it's not an automatic the law says we must, it's an option the law allows the plan to say.

Lou is correct - and to clarify the amendment must be adopted by 12/31/2026 (extended from 12/31/2025) or the plan's termination if earlier.

A lot of pension plans had a 20 1/2, 6 months, single entry date design so they could deal with (and value) new entrants all at once. However, I thought that was a straight 6-month elapsed time requirement and you could not attach any hours requirement. Say your June 2024 hire only worked 490 hours. You don't put them in at 1/1/2025, you look at 2025 hours for YOS and possible entry 1/1/2026? That makes me a little nervous, interested if others are fine with that. What is that subsequent YOS requirement, 500 hours, 1000 hours? If 1000, that makes me more nervous.

Why would an advisor be responsible to 1099s unless they/their firm contracted to provide that service? It is a trustee or PA function. Regardless, they created an operational defect if not a fiduciary breach.

I would defer to the company's accountant, but if the consolidated company files a consolidated tax return, then any or all companies within the control group can contribute whatever amounts. However, if A & B file separate tax returns I believe each must contribute and deduct their respective amounts. At least that is my recollection, but again, a qualified tax accountant for the company(ies) should be able to answer definitively.

You don't know how hard it is to resist ......

Also, be careful of this. If dad has any exercisable option on stock owned by son he is deemed to own that as well. (e)Constructive ownership (1)Options If any person has an option to acquire stock, such stock shall be considered as owned by such person. For purposes of this paragraph, an option to acquire such an option, and each one of a series of such options, shall be considered as an option to acquire such stock.

I found the prior discussion and (1) it was related to tax returns and the deductibility of a contribution made by an extended due date on a return filed by the original due date, and (2) there was a revenue ruling or PLR cited where the deduction was allowed and so the extension was not invalidated. So my memory of the question was correct, or at least related, my recollection of the resolution was not - therefore, I think there is not issue following that course of action regarding 5500 extensions, filings and SAR timing.