CuseFan

Maybe the thought is for future years, and that using a higher testing comp for primarily HCEs will give them more deferral room in subsequent years if some had been held back previously?

Just make sure that truly a LTPT and don't get caught any of the gotchas where they could be an otherwise excludable instead. Didn't mean to add the threat of rain on your parade, sorry. Just saying check the complete weather report before leaving the umbrella at home.

seconded

Agree with Peter. If your plan definition of comp is W2 then the excess goes into that (presuming payroll done correctly) and if the definition further excludes fringe benefits et al, it comes back out.

That is GREAT advice from CBZ and the best avenue if the plan document allows.

Which is crazy. Maybe the answer to that is to specify one permitted use for forfeitures in a plan.

No CG, no ASG so no aggregation. I'd be careful simply paying eligible employees solely from Co1 if they are providing services to both companies, especially since unrelated, and assuming they've been on payroll(s) for some time already if becoming eligible. I'd suggest consulting with qualified tax accountant before playing those games. In a MEP, I think the only aggregation is for service, but I'm sure others out there that deal with these know that for sure and anything else relevant.

You crafted your question as a testing issue, but are you now saying the plan's definition of compensation includes bonuses but deferrals were not taken from bonuses? That is an operational defect that needs to be fixed - not a 414(s) test nor ADP test issue and would not matter if either of those tests passed, you'd still have a defect needing to be fixed.

I think you do ADP testing using gross (or some other safe harbor definition of) compensation and then, if failing, correct on that basis and ignore the definition of plan compensation for such purposes.

Yes, provided Plan Section 1.28(f) provides for such employees entry into the Plan upon completion of 1000 hours in a computation period.

Possibly, but will depend on the facts. Yes, Lou is correct. An employee is an employee of the control group (denominator) and if they get a contribution from the plan (or eligible to defer) then they benefit (numerator). Coverage is likely not your issue, but rather nondiscrimination, whether the compensation definition or contributions in general (looking at total compensation). All well and good, but unless you're in the process of setting up the plan now, what the owners want may not matter for any PY in the books because it all depends on what the plan document says, do not ignore what the plan says.

Yes to fixing that new employee in question. Ok to amend to exclude the less than 20 hrs/wk population under the universal availability rules, right? But have to deal with the LTPT rules for those folks, yes?

From the regs. Refinancing does not qualify as a principal residence loan. Prior Q&A also states requirement that loan is used to acquire the principal residence. Q–8: Can a refinancing qualify as a principal residence plan loan? A–8: (a) Refinancings. In general, no, a refinancing cannot qualify as a principal residence plan loan. However, a loan from a qualified employer plan used to repay a loan from a third party will qualify as a principal residence plan loan if the plan loan qualifies as a principal residence plan loan without regard to the loan from the third party. (b) Example. The following example illustrates the rules in paragraph (a) of this Q&A–8 and is based upon the assumptions described in the introductory text of this section: Example. (i) On July 1, 2003, a participant requests a $50,000 plan loan to be repaid in level monthly installments over 15 years. On August 1, 2003, the participant acquires a principal residence and pays a portion of the purchase price with a $50,000 bank loan. On September 1, 2003, the plan loans $50,000 to the participant, which the participant uses to pay the bank loan. (ii) Because the plan loan satisfies the requirements to qualify as a principal residence plan loan (taking into account the tracing rules of section 163(h)(3)(B)), the plan loan qualifies for the exception in section 72(p)(2)(B)(ii).

Temporary is extremely questionable as an exclusion and so the best way to handle is what Mr. Bagwell described.

Wow, that is quite a delay. 1099s for SE income or retirement plan income? If SE, maybe that's the reason? I filed 1/30 and had both state and federal refunds by 2/14.

I think this is your biggest problem, unless there is more to the exclusion language (e.g., unless/until they work 1000 hours). Assuming the plan has the proper language I think you can exclude from testing. If not, they might be otherwise excluded from testing but participation and contributions in the plan would be governed by plan terms.

On the surface, it appears permissible, in my non-legal, non-investment professional opinion. However, I think you may need to be exclusive to who financial wellness education is provided. If you provide to all employees rather than only participants or eligible employees, then I think that could be a problem.

Yes, many cities do have a tax on wages taken at the payroll level w/o further tax return needed, except for self-employment income. I know most cities in Ohio have this, which is why I stayed out of the city when I moved. I believe ERISA25 was asking in DCP context as recordkeeper was the reference rather than trustee/custodian/paying agent which I would associate with a DBP. Regardless, as you note, local taxes likely only apply to wages and not retirement income/qualified plan distributions.

I agree with David and also that this is the key. If the person can elect a lump sum or installments less than 10 years then those could be rollover eligible.

agreed

(1) You clearly have a control group, and (2) plan B would fail coverage on its own and would have to be aggregated with plan A to satisfy coverage, which would also require plans to be aggregated for nondiscrimination (ADP test). HOWEVER, plans are required to have the same plan year if aggregated for testing, so that is your problem. Whoever set up the plans, or at least the second plan, should have recognized that and addressed. Amending one of the plan years to match the other and then testing that plan year I think is the only viable correction method, and may have to be done via a VCP submission.

The TPA is providing an amendment to plan sponsors with instructions (don't give this back to us NOW, wink wink) on how to circumvent the funding rules and in practice give them impermissible discretion on their funding, not to mention violating ERISA 204(h) if plans are not owner-only. How is this OK on any level? Amendment to freeze with proper notice as a "just in case" and then amend later to unfreeze, sure, I think that flies under certain business conditions as a one-off. However, I think doing those on a somewhat frequent basis in practice creates an impermissible profit sharing or cash or deferred arrangement.

I know some but not all states have mandatory tax withholding on retirement plan distributions, and others have voluntary withholding, and I have seen where RKs may only accommodate mandatory requirements. I have never run into a situation where there is mandatory tax withholding at a local municipality (e.g., city) level. If there were any, I'd be shocked if any RK accommodated such unless maybe they were also located within such jurisdiction and had the local tax reporting infrastructure already in place.

Agreed

LOL - thinking the same thing, but then easily could be Florida, Alabama, Arkansas, .......