hsctpa

We have a brand new plan starting up in 2023. We have been including the CARES Act amendment with every new plan document we've drafted but now we are wondering if there is any reason to actually adopt the amendment for new 2023 plans. I can't find anything indicating that we should. Anyone else have input or support otherwise?

We have a client that allows for the true-up of the safe harbor match. There are a few participants that have maxed out their deferral contributions early and the match stopped. The payroll provider is calculating what the match should be based on the deferrals and YTD compensation and funding it through the year. Does anyone see an issue with this since the document allows for True-Up? Or should the funding be done at year end?

We have a client that wants to provide a Safe Harbor Match plan for their employees. They also want to exclude the HCE's from the Safe Harbor Match, which the is allowable. However, they would like to give the HCE's a less generous Non Safe Harbor match. At first glance, It looks like this would be okay because they're giving a better benefit to the nonHighly's. However, someone in the office believes that this would kick in the ACP test. Are there any other issues?

If it's an existing plan, the SECURE Act allows for adoption of the Safe Harbor nonelective up to 30 days prior to the end of the plan year.

We have a client that has acquired another company. They are part of a controlled group so the new company will be part of the plan. The client would like to give a more generous match to the new company's employees. They have no problem excluding all HCE's from the more generous match formula. Since there will be only NHCE's receiving this more generous match, is there any additional testing we must do; such as benefits, rights and features? Any other issues we might not be taking into consideration?

This is a two part question regarding these amendments. At first we (our TPA firm) were thinking that the CARES Act amendment would not be required for those plans that did not offer the distributions or loan provisions in the Act. However, because there is a provision in the ACT allowing suspension of RMD's for 2020 and all our documents include RMD language, we are thinking that we should adopt the amendment for all our plans as the most prudent option, even if there are no participants in the Plan in RMD status. Agreed? We are behind in our amendments so have not amended yet for the HBBA 2018. We were just going to wait until after 2021 tax season (early August) to amend for both. Is there any reason why we shouldn't?

We have a plan that the Plan Sponsor is currently a sole proprietor. They are changing to an S Corp with some of the ownership going to the adult children, which will require a change to the EIN. Is it acceptable to restate the current document and just change the Plan Sponsor name and EIN or must we terminate the Plan and start a new one for the new entity and EIN? Thanks

I have a client with a safe harbor nonelective contribution plan that wants to exclude Christmas bonuses from contributions for 2020. My first thought is that this is a "reduction" in the contribution and, as provided in Notice 2016-16, can be done as long as a notice is given. However, the SECURE Act made it so there is no notice required for the SHNE safe harbor plan. The more I read my research materials the more confused I become - is this mid-year change allowed? If so, does ADP apply? Is there a notice required?

Thanks, Larry. I missed the just in case and focused on me misunderstanding!

I was of the understanding that a Safe Harbor Plan satisfied Top Heavy with a traditional Safe Harbor match as long as there are no other employer contributions made for that year?

We have a Safe Harbor 401(k) Plan client that currently has a three percent nonelective contribution and wants to change to a safe harbor match contribution. I referenced the EOB and it referred me to Notice 2016-16. Under Notice 2016-16 Mid-year Changes to Safe Harbor Plans and Safe Harbor Notices, I see where this might be possible but don't find any specific examples that address this scenario. I feel I could argue either way - for or against and would like input from anyone that may have some insight/advice?

All of the guidance on the IRS website refers to "50% of the participant's vested account balance" when calculating the amount available for a participant loan. When you are calculating the amount available for a second loan with a first loan outstanding, do you include the outstanding balance of the first loan in the "vested account balance"? It appears from the example in the EOB that you should include the outstanding balance of the first loan but wanted someone else's opinion? Thanks

We have a Safe Harbor plan that has two participating employers due to controlled group rules. The employer that is the Plan Sponsor will soon have 100% of the company stock bought by a separate individual. The new owner will continue as a participating employer in the plan. I understand that now that they are no longer a controlled group, they will need to be tested separately, which should be no issue since it is a Safe Harbor Plan. My question - what if the new employer decides he no longer wants to participate in the current Plan? Can he just "spinoff" the current plan as long as he keeps all the provisions of the original plan intact? Or, if at some point in the future, he decides he doesn't want to maintain the Safe Harbor plan, can he terminate the participation of his company in the plan and start a new plan? I assume this would have to be done at the beginning of a plan year, since it was done after the sale of the stock? Is there anything I'm missing?