CuseFan

That is spot-on Madison. Agreed. The key here is that the employer must maintain complete and accurate records and has good internal controls. Lack of controls and records almost certainly guarantees most favorable resolution for the employee.

to clarify, my "no" was to this question, not your first one.

no, but just because they may also get a 3% contribution, that may be a profit sharing contribution for the HCE group rather than a safe harbor, and the rules for that are different.

I thought the regs said you could move deferrals not needed to satisfy the ADP test into the ACP test. So if you pass ADP and have some room left over, you can shift to ACP test. I don't think you can reclassify deferrals into ACP test and purposely create an ADP test failure and trigger reclassification of HCE deferral as catch-up. I believe it all starts with ADP test results and flows from there. This is recollection as i don't do these tests regularly.

Does this work on affiliated service groups as well? If AC is an ASG and BC is an ASG, but A & B have no relation or ownership overlap, do I have two ASGs or one ASG = ABC?

agreed, as long as the tax withholding and reporting are done properly and the checks are timely issued so there's no float benefit to the employer, should be no problem.

GTL is excluded from 3401 compensation but included in W-2 compensation definitions unless specifically or categorically (with other fringes) excluded.

I would "run" unless you get a written commitment/service agreement (and commensurate fees) for the client to run a TOTAL data clean up project. I would also further instill in the client that they have fiduciary duty to maintain records sufficient to properly administer the plan. A plan like this would have DOL and IRS auditors salivating.

Great questions - welcome to the facts and circumstances nebula, also known as the Twilight Zone. We often have these arguments with clients. It would be nice if IRS and/or DOL would just draw a line in the sand that everyone could see and abide by. But, if you need facts and circumstances, we usually suggest looking at how the employee is treated (retired vs. employed/not retired) with respect to all the other employer's plans and benefits - life, health, etc. (still covered, offered COBRA). If the person is treated as retired (or not) for all other purposes by the employer, chances are you can justify same for retirement plan(s) - consistency over accuracy - that's what the actuaries kept telling me for years!

so you are a partner but not an HCE? interesting. yes, your contributions come out of your earned income - but then you also get to deduct this directly on your tax return.

i usually use first day of current PY. Retroactive reaching provisions usually have their specific effective dates. And document language usually says effective as of X or as otherwise provided.

Why not? In a non-insured DBP termination you can simply buy annuity contracts for everyone (that have all the options, including a lump sum if applicable), there's no requirement to offer immediate lump sums. Of course no one does that because of the expense. No difference here.

That is the case. The document should say what happens when someone goes from an eligible class to ineligible class of employee and vice versa. Think about the union exclusion. A long time union employee moves into a nonunion position, do they have to work a YOS nonunion before entering the plan? Absolutely not. I wouldn't look for "guidance", it's just application of the rules. You are required to count all service with the employer (or control group) for eligibility and vesting.

This is the more recent discussion I remember - allowing hardship to prevent eviction or foreclosure where the participant was a resident of the dwelling but not the owner or named on the lease. I don't think your current case is any different, except maybe some additional proof that the participant will indeed be living there. I would think the girlfriend would have to disclose this source in her mortgage application. Of course, if the participant's spouse has to sign off on this hardship distribution the whole transaction falls apart!

ditto

180 days - if the plan language was updated for that.

i thought something similar to this came up late last year in this forum and consensus was that this is OK because it will be the participant's principal residence - that is the deciding factor, not ultimate ownership.

Thanks

Have sole proprietor who started business at age 73 and started pension plan at age 74. Is this person a 5% owner required to start RMDs when vested? A prior thread in BL seemed to indicate no, and page 5 of the recent EA conference session on RMDs (attached) backs that up, but does anyone have definitive reg cite or IRS guidance to confirm? All other research I've done does not support this nuance. Thanks 303 - Required Minimum Distributions.pdf

I don't know which is worse - this joke or the movie - did anyone else cheer when Leonardo Dicaprio died?

I would assume the same. The plan sponsor is responsible for maintaining sufficient records - payroll, HR, etc. - to determine whether a participant is entitled to a benefit. Failure to do so should always be resolved in the participant's favor and there have been court cases that have ruled as such. This is also clearly a fiduciary duty on which they have fallen woefully short.

Larry is dead-on here, just because a d-letter was received does not mean the IRS didn't make a mistake in not catching it, and they can subsequently reverse that oversight and make the plan sponsor correct.

The IC question, I think, depends on who has control over this person's work activity? Even if doing the "same job" as when he was an owner, that by itself wouldn't necessarily mean he is an employee now. As an owner, did he come an go as he pleased, have the freedom to complete various tasks according to his own schedule, and from wherever he wanted (home, office, road, etc.)? If he has autonomy in providing services to the business, I think he is a contractor. Certainly wouldn't hurt to get the opinion of accountant (if qualified) or legal counsel.

I fully agree - but to require someone to liquidate their meager retirement savings seems a bit draconian to me - unless maybe the person was deferring pay into the plan when they should not have been because they were getting SSI payments. I think this just highlights a huge dilemma we face in this country, how do you help people in poverty in a fair manner that enables them to escape poverty rather than ensuring they stay there? If I had the answer I probably wouldn't be ranting on BL would I?

By "matched with a SEP" in your title you mean paired with a SEP, not that matching contributions on 403(b) deferrals are made to the SEP, which would violate the uniform contribution requirement, right? Haven't seen that before, interesting strategy to avoid government filings.