CuseFan

you don't need to pass rate group testing at 70% (RPT) - the reasonable classification is for coverage only. if coverage passes RPT by this one additional person not benefiting then your NDT can pass however you get it there - RPT or ABT.

then the match is permitted, but still fails ACP and so must be forfeited to extent not vested and distributed to extent vested, right Tom?

i would view as an employer "corrective contribution" because they didn't withhold the proper amount from the ipads when they were given. no good deed goes unpunished right? lesson: change comp definition to W-2 excluding non-cash fringe benefits.

love the Peabody & (pet boy) Sherman refernce Tom!

25% of eligible payroll is plan limit (IRC 404), lesser of 100% of eligible pay or $53,000 (2016) is individual limit (IRC 415).

A co-worker (an actuary of course) shared this. Enjoy

Don't see your language, but the plan says that either all eligible participants get the SH or it specifically limits who gets SH. Based on the wording of your question I'm guessing it does not exclude anyone from the SH so everyone, including HCEs, must receive. This is not optimal design if part of cross-testing PS or DB/DC combo because young HCEs (e.g., owner's children) can really blow up your results (enter restructuring). Good luck

A reduction in tax rates could trigger a slew of Roth conversions, if still available, and yes, make Roth the "game of choice" as you say. The advantages of qualified plans compared to after tax savings are (1) the business owner actually does save and invest the funds for retirement (I just met with a doctor who is concerned with getting by on $500k - spending up to their income and not setting funds aside is a problem) and (2) the funds are protected from creditors. But any good accountant will tell you to tax diversify your (retirement) assets regardless. The ultimate losers will be employees if business owners determine they don't need qualified plans any more.

i don't think anything less than 100% vesting for a terminated participant would work because any non-vested amount would (presumably) be forfeited (assuming concurrent distribution) and I think IRS would tell you the forfeited amount doesn't count toward your test. If you provide benefits for actives who are or have the ability to become vested, then that might be a different story - but this would be a facts and circumstances situation you would have to justify to IRS if the plan is audited or submitted at some time in the future.

Unfortunately, you cannot use the otherwise excludable employees permissive disaggregation and test those people separately and exclude from gateway. 410(a)(1)(B) provides for the 2-year wait and 410(b)(4)(B) provides for the separate testing of otherwise excludables but without regard to paragraph (B) of 410(a)(1). You also can't restructure to avoid gateway either.

so you always had a multiple employer plan but satisfied "commonality" from DOL perspective and now you don't? i think you have to go with S2. Using S1 would only make sense if plan terminated. How would/could you file for A under S1? there's not a lot of guidance on this sort of stuff with 5500's - i'd just do what is reasonable and defensible, Scenario 2.

The key is the limitation year as it is defined in the plan document. It should be defined as the plan year, but sometimes for whatever reason it isn't and you get crazy situations like this.

From IRS Publication 541 - Partnerships Guaranteed Payments Guaranteed payments are those made by a partnership to a partner that are determined without regard to the partnership's income. A partnership treats guaranteed payments for services, or for the use of capital, as if they were made to a person who is not a partner. This treatment is for purposes of determining gross income and deductible business expenses only. For other tax purposes, guaranteed payments are treated as a partner's distributive share of ordinary income. Guaranteed payments are not subject to income tax withholding. The partnership generally deducts guaranteed payments on line 10 of Form 1065 as a business expense. They are also listed on Schedules K and K-1 of the partnership return. The individual partner reports guaranteed payments on Schedule E (Form 1040) as ordinary income, along with his or her distributive share of the partnership's other ordinary income. Guaranteed payments made to partners for organizing the partnership or syndicating interests in the partnership are capital expenses. Generally, organizational and syndication expenses are not deductible by the partnership. However, a partnership can elect to deduct a portion of its organizational expenses and amortize the remaining expenses (see Business start-up and organizational costs in the Instructions for Form 1065). Organizational expenses (if the election is not made) and syndication expenses paid to partners must be reported on the partners' Schedule K-1 as guaranteed payments.

No, and I would say it's because of the anti-alienation/anti-assignment rule, because waiving the benefit is essentially assigning it back to the employer or plan. A majority owner (with spousal consent) can elect to forego benefits in a plan termination to the extent necessary to make the plan sufficient to pay all other plan benefits, but that's it.

i thought for governmental plans there was coordination between 457b and 403b, as 457 plans function closer qualified plans in that space, but i'm not certain. Non-governmental you can clearly double up except the 457(b) must be a top hat (so execs only). Catch-ups are different too. https://www.law.cornell.edu/uscode/text/26/457

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.