401Kerfuffle

I'm revisiting the <20 hours exclusion for a non-church 403(b). Here's the scenario: Participant hired in 2010. At that time the document had no <20 hours exclusion. The participant was eligible and deferring. In 2016 the <20 hour exclusion was added. The participant has never worked >20 hours or >1000 hours per year. The document states the following: "NOTE: An Employee normally works fewer than 20 hours per week if, for the 12-month period beginning on the date the Employee's employment commenced, the Employer reasonably expects the Employee to work fewer than 1,000 hours of service (as defined under section 410(a)(3)(C) of the Code) in such period, and, for each Plan Year ending after the close of that 12-month period, the Employee has worked fewer than 1,000 hours of service in the preceding 12- month period. Under this provision, an Employee who works 1,000 or more hours of service in the 12-month period beginning on the date the Employee's employment commenced or in a Plan Year ending after the close of that 12- month period shall then be eligible to participate in the Plan. Once an Employee becomes eligible to have Elective Deferrals made on his or her behalf under the Plan under this standard, the Employee cannot be excluded from eligibility to have Elective Deferrals made on his or her behalf in any later year under this standard." I'm stumbling on "this standard". Is the document referring to the 1000 hour rule as "this standard"? If so, I'm thinking the participant should have been reclassified in 2016 as an excludable employee because she didn't meet the "standard".....and deferrals should have stopped. What is your interpretation?

Company A is 100% owned by a non-US company. Company B is 100% owned by the same non-US company. Is there a control group for 401k purposes?

I would like to continue with this scenario and ask a couple of follow up questions: 1. If the plan did not have a last day or 1000-hour requirement, would you be able to change the fixed profit sharing mid-year, prospectively? Say from 7/1/2020 forward? 2. Would you answer the same way if it was a 403(b) instead of a 401(k)? Thanks!

A 403(b) plan with universal availability for elective deferrals. The plan uses the excludable classification of employees who work less than 20 hrs/wk. Does the excludable class of employees get counted in a 410(b) coverage test for elective deferrals?

Prior plan is an non-ERISA 403b effective from 2009 and terminated prior to 2015. They only had employee contributions, never any employer contributions. The new ERISA 403b is effective 1/1/2015. The plan excludes vesting service prior to plan's effective date. Can the new plan exclude vesting prior to 1/1/2015 even though they had another plan during that time?

Can a plan make a profit sharing allocation, for 2018, after they've filed their taxes for 2018? The calendar year plan has no intention of amending their 2018 return, so we'd be looking at deducting the 2018 allocation for the 2019 tax year. I know they'd be subject to the 25% deductibility for 2019 (considering all employer contributions for 2019 plus the 2018 profit sharing allocation). Is it possible to allocated the PS for 2018 but deduct and report it in 2019? If so, what other compliance tests would the profit sharing need to be included in?

I have a plan that's a closed MEP. The participating employers have common ownership but it's not a control group. One of the participating employers is leaving the plan, effective as of the last day of the plan year. Is this considered a partial plan termination? Should the employees who are part of the leaving employer be accelerated to 100% vesting?

Madison71: I would like to use that definition! Do you have anything to reference it? What about when a participant who has a last-day-worked of 12/28/17, but his final paycheck falls on 1/5/18 and he has deferrals and a matching allocation. That's going to mean it needs to be included in the ADP/ACP testing. Isn't he considered benefiting in 2018?

401king: The sign-on bonus is reported as W2 wages paid prior to the first day worked. In this case, it's not 401k eligible because the service requirement is one year. The start date is what I'm trying to establish. Madison71: Are you saying that when compensation is paid has no bearing on DOH or DOT?

What is the definition of start date for eligibility in the 401k? Is it first day worked? First day paid? I have client that uses a sign-on bonus and pays it at signing. Does this begin the count-down for eligibility? Or can they still use first day worked? And the reverse: what is the definition of a termination date? Last day worked or last day paid? A participant who terminates on 12/28/2017, but his last paycheck in in January 2018. What is his termination date? Is he eligible for 2017 contributions with a last-day requirement?