Purplemandinga

Can't a solo 401(k) choose to be subject to ERISA by filing a 5500? Similar to how 403(b) church plans work?

Its a discretionary change mid year to retroactively (to the beginning of that year) make eligibility more liberal. Its not an EPCRS amendment, its just an allowed mid year SH change that is retroactive to 1/1.

Hmm, that's where I'm struggling, in determining whether a MOD exists. It is a calendar year plan. There are definitely 3 months left in the year, but if we retroact back to 1/1 then is it arguable that we missed deferrals for 6 months? I know that the rules for midyear changes allow for safe harbor notices to go out mid year for similar changes. However, I keep thinking this situation is similar to the correction for when a safe harbor notice was not timely provided to participants. Lets say someone was allowed to defer on 1/1 but didn't get the SH notice till mid year. Then you have to make an educated guess as to who would have chosen to defer and make corrective allocations to those employees. Your option 2 sounds reasonable though.

Lets say a sponsor half way through a plan year wishes to retroactively amend the plan document back to the first day of the plan year a Safe Harbor Match plan. Specifically, they wish to amend the plan to change the eligibility requirements for safe harbor contributions and deferrals to go from 1 year 1000 hours to immediate entry. If they make this amendment, will they have to make up contributions for employees who did not defer but may have decided to defer had they had the opportunity to do so plus the safe harbor allocation? I want to say I should look at EPCRS which suggests if I inadvertently didn't allow someone to contribute then I should make an allocation to that individual based on the ADP/ACP group that individual falls in. But also I could just be over thinking it. Thoughts?

But if one plan was NE and one plan was Match perhaps it wouldn't pass coverage?!? So many questions!

It applies to matching allocations, I suppose this wouldn't apply if one plan was a NE and one plan was a match. (4) Limitation on HCE matching contributions. The safe harbor matching contribution requirement of this paragraph (c) is not satisfied if the ratio of matching contributions made on account of an HCE's elective contributions under the cash or deferred arrangement for a plan year to those elective contributions is greater than the ratio of matching contributions to elective contributions that would apply with respect to any eligible NHCE with elective contributions at the same percentage of safe harbor compensation.

I thought the requirement was that no HCE could receive a greater allocation than than of an NHCE in a safe harbor arrangement so if you aggregated this would occur.

Hey there BG, They recommended I read the ERISA Outline Book or pay for their TAG research service to point me towards a solid answer... Treasury regulations appear to be silent on whether this can occur. That's why I poked my head on to here to see if anyone had encountered this scenario before either inside or outside of Fort Williams.

Maybe to simplify my question, is it possible to correct ADP failures by distributing QNECs used in the ADP test absent available deferrals to distribute? I can't find anything that says I couldn't, only that I can't reclassify QNECs as catch up for correcting failures.

A prevailing wage plan is failing ADP and pulls amounts classified as QNECs from the prevailing wage column to assist in the plan passing ADP. The problem is that there are some HCEs who received prevailing wage allocations, and while the QNECs did assist ADP, there were still failures for some HCEs. Some of these HCEs the system is showing need distributions are HCEs who didn't defer anything but only received prevailing wages. Do we distribute this as an ADP failure or is FTW getting it wrong and should only shift NHCEs? If I can somehow force FTW to only shift NHCEs and not HCEs, wouldn't the plan have to pass general testing on amounts that didn't shift to ADP? So basically I need to gauge the failure of each test by not shifting HCE QNECs and dealing with the general test vs shifting HCE QNECs and reviewing the failure in ADP?

Other allocation options are available under the plan but what if the sponsor wishes to just sit on them through forfeiture until next year? Can we just forfeit them prior to the ACP test?

If the employer over matched on deferrals because they got the formula wrong are the excess matching contributions fortified before ACP test is run or are they included in the ACP test? I read somewhere they are possibly excluded from the ACP testing and included in the general test. Yeesh. Any clarification would be appreciated, I feel like I'm making this more difficult than it actually is.

A blackout notice was sent but I suppose the "yes" to a blackout on the 5500 issue wasn't the biggest issue. Its whether to include late remittances on the 5500 that occurred during the "blackout" but in the "new" plan. In the single employer plan, participants had access to change investments and request distributions even during the time period when money was transferred from the prior plan. There just happened to be late remittances during this time frame that one couldn't really blame on the blackout. I took the conservative route and stated there was no blackout in the successor plan and included the late remittances that, had there been simply a record keeper change, we wouldn't have reported. but wanted to know if I was being overly cautious.

If you were compelled to pump out the modules and do a brief read of the CPC examination booklet I would think you could make the November examination deadline. A month for the modules and a month for the CPC exam. If you did well on the other exams, and you took them recently I'd say do it just to get it out of the way because the information is probably pretty fresh.

I pre-purchased the modules in the bundle to get them done. I gave myself a month for each module but you could probably do it more quickly if you wished. They are open book, not proctored so not so bad. The actual CPC exam I felt was extremely easy compared to all the other examinations and to be honest after its all said and done, I felt a little cheated that the last exam was just fluff and focused on mainly the most basic of questions for each of the main topics. I would say of all the exams its definitely the easiest. I gave myself 3 months to study and take exam but I didn't need it. You almost don't even need to read the CPC book if you studied for all the other materials, you could pass without reading.

If a plan transfers out of a MEP and into a single employer plan there would be a blackout notice provided to participants upon the beginning of administrative activities to transfer moneys out of the MEP. But when preparing the first year 5500 for the newly birthed plan does the single employer 5500 need to state that the plan went through a blackout period because moneys were being transferred from the prior MEP? I can understand indicating a blackout on say a record-keeper transfer within the same single employer plan, or even the MEP suggesting a blackout occurred when money left its plan, but I'm on the fence about the newly created plan. Thoughts?

We use both Compliance and 5500 modules and it populates 5500 participant counts (beginning and ending) from the data in the compliance module.

A plan with large amounts of prevailinge wage QNECs is failing ADP. Here is my question: 1.401(k)-2(6)(iv)(A) says the following: General rule. Qualified nonelective contributions cannot be taken into account for a plan year for an NHCE to the extent such contributions exceed the product of that NHCE's compensation and the greater of 5% or two times the plan's representative contribution rate. Any qualified nonelective contribution taken into account under an ACP test under § 1.401(m)-2(a)(6) (including the determination of the representative contribution rate for purposes of § 1.401(m)-2(a)(6)(v)(B)), is not permitted to be taken into account for purposes of this paragraph (a)(6) (including the determination of the representative contribution rate under paragraph (a)(6)(iv)(B) of this section). 1.401(k)-2(6)(iv)(D) says the following: Special rule for prevailing wage contributions. Notwithstanding paragraph (a)(6)(iv)(A) of this section, qualified nonelective contributions that are made in connection with an employer's obligation to pay prevailing wages under the Davis-Bacon Act (46 Stat. 1494), Public Law 71-798, Service Contract Act of 1965 (79 Stat. 1965), Public Law 89-286, or similar legislation can be taken into account for a plan year for an NHCE to the extent such contributions do not exceed 10 percent of that NHCE's compensation. Does the term "Notwithstanding" in 1.401(k)-2(6)(iv)(D) mean that if the representative rate calculated in 1.401(k)-2(6)(iv)(A) was greater than the 10% discussed in 1.401(k)-2(6)(iv)(D) then we would still be able to use amounts in excess of 10% if the plan's representative rate calculated in 1.401(k)-2(6)(iv)(A) was greater than 10%?

Do your answers change if the plan's eligibility conditions are source specific? For example the plan's eligibility conditions are set at each source but elective deferrals are the only allowed source. So an employee is eligible for the plan and elective deferrals after 1 year of service elapsed time and enters the plan immediately.

Thanks guys. I only know how to ask dull questions. I think that should be my personal quote on this site!

Lets say a plan has 10 employees, and all employees have enough service to basically enter a plan on day one if a plan were to begin. If an elective deferral only plan was established effective 1/1/2018 but elective deferrals were not effective until 10/1/2018 would my beginning participant count for 5500 purposes include 10 employees or 0 employees since elective deferrals weren't effective till 10/1?

Thank you Luke, I clearly was not reading the fine print here.

414(c)-5 expressly provides for situations where two non-profits can be considered one employer for the purposes of sponsoring a plan together. But it does not expressly provide for a for-profit entity who most likely has control to determine 80% or more of the board at the non-profit to be in a controlled group with one another. Is this situation implied? Can allow the non-profit to adopt the for-profit's qualified retirement plan?

I'm thinking § 1.401(m)-2(a)(5)(iv) says I can exclude amounts not in excess of 4% of compensation from ACP testing.

A Safe Harbor 3% nonelective plan decides to make a matching contribution to the plan in addition to the 3% SHNE. This matching contribution is 100% of deferrals contributed up to 6% of compensation. Is the ACP test required for the entire matching amount or just the amount greater than 4%?