JackS

What section of the code is the Federal Thrift Savings Plan under? Are there any published correction procedures that apply? I am working with errors made by the VA relating to eligibility and the correction of an ineligible participant (an entire group of them actually).

I would do a single test for the entire year. I don't think moving from MEP to MEP requires you to run separate tests. Even if there is some justification for running multiple tests (I'd love some examples where people think this is appropriate), I think you could rely on permissive aggregation.

OP doesn't specify which coverage test they are running 401k? 401m? 401a?

Simple question, unforgiving answer...but you may be able to allocate some of the money deposited in 2021 for 2020 - if you have deductibility and 415 limit room. That could reduce the owners allocation for 2021 and lessen the contribution required to the employee.

Does anyone know if the additional Medicare tax on high earners gets factored in when calculating Earned Income for a Self-Employed individual? Since that tax is entirely on the employee, my guess is that it can be ignored and does not factor into the SE calcs.

He does not need to defer over 402g. He just needs to have deferred at least $6,500 in 2020. When you allocate a PS to get him to the 63,500 limit, the entire 401k deferral could be considered a catch up. To be a catch up it needs to be a salary deferral (i.e you could not allocate a 63,500 PS) and exceed some legal or plan imposed limit (e.g. 402, 415, plan imposed limit)

Yes it's allowed but you cannot make salary deferrals in 2020 without testing them and you won't enjoy the TH exemption . As other have said, the deferral portion of the plan must exist for at least 3 months or you cannot rely on the SH to exempt you from testing.

if your amendment does not specify that it's 4% for the 2020 year only, then yes, I think you have a 4% SH for 2021.

You do not state this but your question presumes that your CB plan deduction is using up your 25% deduction limit. If your CB deduction is only 10% of comp, you may not have an issue. Also, you may be able to amend the CB plan for 2020 in order to reduce the required contribution for 2020. Finally, why would you need a second 401k? You already had one, why pay someone to set up a second one?

I would assume that you only need to file the 9855-SSA in order to unreport previously reported persons. Filing a final 5500 implies there are no longer deferred vesteds. You do not need to file an 8955-SSA in any year in which there is no one to report.

Correct, Salary deferral provision must be in existence for at least 3 months during the plan year in order to use a SH provision for that plan year.

If they are planning to keep the SH going forward I would just include that in the amendment. Otherwise, you'll be doing amendment every year they want to use a SH and you'll need to get the amendment and notices out timely in order to utilize the 3% SH.

Hire an attorney to do a full audit/due diligence review. Terminate the plan before they merge and DO NOT MERGE it. I am sure others can provide much more detail but most of the time, attorneys will recommend the second option. Why would you want other peoples problems?

Agree with Lou but you can always use an off calendar year 12/1 - 11/30 for instance. That could get you your 2020 deferral limit and the safe harbor.

I think it's doubtful but that is a personal opinion from someone with no inside knowledge. Why would the IRS decide to let TH plans avoid TH Minimums for 2020? As you probably know, if the plan is calculating the SH match less frequently than annually, the funding is due no later than the last day of the Q following the Q for which the match is calculated. You can amend this mid-year to an annual match calculation. This will never result in a decrease in the amount of the SH MC due for a particular participant - in fact many times their SH Match will increase for the year. Why would you do this if you are trying to manage expenses? Because your SH match will then be due by the due date of the employers tax return, including extensions. This would allow the employer to defer the SHMC deposits for a year or more and help with cash flow. Another personal opinion, this time next year, this will all be nothing but confusing history and a boat load of good faith amendment requirements.

Ask the participant

No

But it's not as if you don't have options. Read the SPD - request one if you are not sure you have a current version. If you have more than $5000 in the plan you can probably delay the distribution. Perhaps you can take less than your entire amount. Find out what date they plan to use for the interim valution. How much is this likely to effect your account balance? $200? So what, move on. If you are looking at 10's of thousands and they are telling you that you have no options, hire an attorney and make sure you have all the facts and know your options so you can make the best decision for you.

You are out of luck on 2019 - they are not going to "correct" that as you requested. You may be entitled to a corrective plan contribution from the employer directly to your account - one of the links above describes that as a QNEC of 50% of what should have been withheld from your check adjusted for earnings. That basically would amount to free money so it's hard to complain about that. Without knowing all of the details of your plan (Auto Enroll Plans have some modified rules that could result in a smaller correction), I would reference the section quote above to your HR and request that correction and see where it goes. Since you were willing to post up here, let me ask you a question that all of us in the pension comunity ask ourselves frequently. How do you not notice that 20% of your income is not being withheld from your paycheck? You never, not once, looked at a paycheck stub?

No option to take distributions becuase the new entity assumed sponsorship of the plan. Curiously, why did they adopt a new plan also? Once they took over the old plan, why did they feel the need for another?

You should ask FTW.

I think the doc was intended for PEO's to provide a plan for it's clients. Not all PEO's want to participate in a plan - why force them to - thus the document design. If you have significant exposure for prior years, you can always file this under VCP. From past conversions with attorneys who had a hand in that doc, i understood that the employer deduction is the biggest issue (if the PEO ee's and PEO itself made very large contributions without a PP AG, the deductions could be disallowed). The compliance part of this is easily corrected. Have the PEO sign a PP agreement.

You ar emissing nothing. Let the investment company know the loan was treated as a distribution and a 1099-R has been issued and they should update thier records accordingly.

They don't have to bring these people into the plan at all this year. Perhaps they should just wait until next year. In a stock sale, all of the employees get credit for thier service with the acquired entity - you cannot ignore that. if you brought them in for deferrals but denied them the SH portion of the plan (maybe by using an excluded classs) you would not have a safe harbor plan anymore. You could set up a separate plan for them for the rest of the year and then merge them in at the end of this year or the year after but you cannot have a SH plan with eligible employees that denies SH eligiblility to people who have satisifed the eligibility requirements. You could use a 1 year wait for match - that is what the plan does now but you do have to credit thier prior service with the acquired company. You cannot pretend they are new employees with no past service.

If they have already told the participant the amount they are due and the participant has signed and returned the form I would pay it out without delay. The trustee knew the distribution was coming and could have planned for it by selling assets to cover it. How do you think the participant will respnd when you ask them to suffer the consequences of the Trustees lack of attention? As others have said, this could call for a special valuation - especially if the distribution represents a large percentage of the total assets of the plan that action could be defended and justified. Otherwise pay him and spend some time making sure the PA and Trustee communicate.