CuseFan

The document, if a pre-approved format, should have language for this - similar to the text below: (b) Mistake of fact. In the event the Employer shall make an excessive contribution under a mistake of fact pursuant to Act Section 403(c)(2)(A), the Employer may demand repayment of such excessive contribution at any time within one (1) year following the time of payment and the Trustees shall return such amount to the Employer within the one (1) year period. Earnings of the Plan attributable to the contributions may not be returned to the Employer but any losses attributable thereto must reduce the amount so returned. (c) Except as specifically stated in the Plan, any contribution made by the Employer to the Plan (if the Employer is not tax‑exempt) is conditioned upon the deductibility of the contribution by the Employer under the Code and, to the extent any such deduction is disallowed, the Employer may, within one (1) year following the final determination of the disallowance, whether by agreement with the Internal Revenue Service or by final decision of a competent jurisdiction, demand repayment of such disallowed contribution and such contribution shall be returned to the Employer within one (1) year following the disallowance. Earnings of the Plan attributable to the contribution may not be returned to the Employer, but any losses attributable thereto must reduce the amount so returned. i believe the miscalculation of compensation is included under the mistake of fact. On the tax deductibility condition, the language appears to require disallowance by the IRS or another jurisdiction before demanding return of the excess contribution - but i think you're safe on the mistake of fact regardless. This illustrates a good reason for business owners to wait until after year end to deposit their contributions.

i suggest looking at Circular 230, and also see if the TPA is a member of ASPPA or another trade group with its own code of ethics.

agree - amendment or policy change cannot impact existing loan(s) refinancing creates an additional loan (to repay the prior loan(s)) and would violate the now existing terms of the plan or policy against multiple loans

agreed. also, doing the amendment versus having the failsafe provision gives you some flexibility on how to fix, which could help keep the cost down. however, if you fix by including terminated participants that were previously excluded from the allocation you'll likely need to fully vest that contribution for those people.

agree on $10k because catch-ups do not count toward any limit but their own. being an HCE is irrelevant to the 415 limit but, as Buffy notes, testing might bite you.

i think if a plan is amended in a current year to allow early entry (or recognize prior employer service) that is fine, but agree with everyone's comments that a retroactive amendment to accommodate a current HCE who was an NHCE when the amendment is retroactively effective doesn't pass the smell test. While we're at it, let's give him/her a 20% profit sharing based on that first year NHCE compensation - they weren't high paid then.

if retirement benefits are the subject of good faith bargaining then that group is considered a separate plan for purposes of applying tests for coverage and nondiscrimination. you can continue under one plan (document, investment lineup, etc.) with different benefit structures but your document must be able to accommodate and be properly completed/amended. it may be simpler to set up a separate plan - and could be more expensive because now you have two sets of accounting, asset pools/investment expenses, 5500's etc., but there could also be savings if the plan had over 100 participants and needed an annual audit but then splits into two plans under 100 participants with no audit requirement.

after reading your scenario more closely, i change my answer. to be benefiting, a participant must be eligible to get a match had they made a deferral. if there was no discretionary match declared for Q1-Q3, then no one would have received a match whether they deferred or not. now for Q4, they declare a match. those benefiting are employees who get or would have got a match had they deferred - so basically any terminations (except <500 hrs) would be non-excludable and not benefiting.

if someone could get a match had they made a deferral they are considered benefiting, so your coverage is relatively easy because anyone who is employed on or after 3/31 would be counted as benefiting for the year even if terminated later and not eligible for a match in a later quarter. and if those not benefiting in Q1 because they terminated have less than 500 hours - probably most if not all - then they can be statutorily excluded. So coverage on the match should be a slam dunk, or at least a banked three pointer at the buzzer from 30 feet to beat Duke.

So an extra 7% was withheld from one paycheck? I agree with the negative deferral approach, which gives the employee back the cash through paycheck and turns the current withholding from +5% to -2%. As noted above, that might create a problem for the RK. If so, then I would reduce the next deferral to 0% and the one after to 3% - or reduce by the actual excess dollars if paychecks aren't all the same. If the employee doesn't care about the excess withholding and everyone wants to let it ride, i would have the employee provide something to that effect in writing to the employer just in case.

Agree step 1 is to verify how the document specifies the match is calculated - it could say on a per pay period basis but the client could still actually deposits after year-end and vice-versa, where it says calculated at year-end but deposits could be made throughout the year. Regarding amendment - it would be a discretionary amendment and it's too late for 2016, would have had to have been executed by 12/31.

you also satisfy RMDs if you commence an annuity beginning on or before the RBD (i.e., don't need to be concerned with actual amount distributed in the first or subsequent year like in a DC plan)

and of course: BEAT DUKE!

What do you by offset? Included or excluded? if they are part of W-2 compensation then start with the plan's definition of compensation and go from there. IRS website and 401k Answer Book (see below) have good resources in that regard. If not included in W-2, then exclude, but if included in W-2 then the plan's compensation definition will say how to treat. If you use W-2, 3401(a) or one of two 415 pay definitions w/o adjustments then I think you have to include (can't "offset"). Oddly, DOL hour of service rules say you don't have to credit hours for state mandated STD, WC, etc. Compensation Definitions.pdf

these employees would not be statutorily excluded, even if the plan had that exclusion, but that doesn't mean you can't exclude them specifically in document language provided it doesn't create coverage problems. saves the complexity of trying to pay them out later, especially after they've left the country.

yes, i actually did this myself years ago - had to provide a little extra documentation to my rollover custodian that the check from me was for the loan amount being rolled, agree that this must be done within 60 days of the distribution/offset, and that it would be cleaner and easier, but likely slower, to simply repay the loan first. as qdrophile notes, this is different from rolling over the note/debt, which would generally not be permitted - could do a direct rollover or transfer of a loan to another q-plan if both plans allowed for such.

Respectfully disagree Tom. If under the terms of the plan as legally adopted deferrals could have been made, the issues with failing to have the proper administration in place are irrelevant.

As Tom notes, because ABT is what blows up, restructured component plans would need their rate groups to satisfy ratio percentage - so if you have 3 HCEs and 10 NHCEs, you need at least 3 NHCEs with accrual rates higher than your target HCE, and then hopefully the rest should be able to pass on contributions. Also, it might take a targeted contribution (and an 11g amendment) to make that happen. Hindsight of course, but it's always a good idea to look forward and know what HCEs are doing and to communicate to owners that spouse deferrals may need to be limited due to testing and to consult with you to determine what can be supported.

Yes, you have to pay out all benefits first (satisfy liabilities), then the excess (or a portion thereof) may be reverted/transferred to the PSP and placed in an escrow account. To avoid income tax and reversion excise tax, it must be used for the current year and future years' allocations, but you must allocate somewhat equally over a period not longer than 7 years and at least 90% (if I remember correctly) of the active employees of the terminated DB plan must be participants in the PSP. Can 2016 be the first/current year? Maybe, because the DB terminated in 2016 - i don't think IRS would take issue with that - but you would certainly have to start using the excess no later than 2017.