JackS

I am a little late to this thread but what on earth could be in this for you? Are you in the habit of doing others peoples billings for them?

Hire an attorney - do not take advice from people on the internet

No. If Daughter owned shares directly those would be attributed to her spouse but shares she is attributed from her father do not get attributed to her husband.

Check out IRS Publication 15-B https://www.irs.gov/pub/irs-pdf/p15b.pdf

Hopefully your allocation method is an "each in own" so that you can just give this person(s) enough to pass testing. If it's a "class" allocation it certainly has the potential to be a bigger problem.

Unless the employer allcoation is a fixed required contribution, limit his employer allocation, transfer the excess out of his account (I assume it was depsoited during the year otherwise you would have done this when calcualting his allocation) and reallocate it to the other participants.

Start with the average NHCE ADP for the year in which the deferral opportunity was missed plus the match if one was made. A copy of Rev Proc 2019-19 is attached. Rev Proc 2019-19 Expanded SCP.pdf

Not this one!

Use your best judgement. Pay him out 100% of 12/312018 and then pay out the rest once the valuation is done....pay him out 80% of 12/31/2018 and the rest when the val is done (in the event that the plan may have sufferred a loss this would protect the plan from an overpayment). Had you paid him out before 12/31/2019 100% of the 12/31/2018 valuation, you would not owe him any gains/losses for 2019 but since the payment is obviously occuring in 2020, you would need to allocate g/l to his account for 2019.

Some thoughts from a non attorney....You don't need to amend the tax return for an incorrect rollover amount. It has no bearing on taxation. Having funds in your IRA that are not "qualified" could jeopardize the tax status of the rest of the money in your IRA. If they file a suit and can prove your were overpaid, you will have to return the overpayment. If you hire an attorney, do so to ensure that the vesting they are telling you is correct is in fact correct and that there is no other reason why your vesting should have been calculated differently. Fighting the suit just because you don't think you should have to pay the money back would be a waste of $$. People ignore this kind of thing at thier own peril. If the amount is small enough, they may not see an advantage to filing a suit and trying to recover the funds. For $6000, i would not be surprised if they pursue this.

Self Directed Brokerage Account not really relevant to the Q but now you know.

I believe many plans have taken that election out of the adoption agreeement and now treat it as an administrative election. This means they can change the procedure just by deciding to do it a differnet way and without a plan amendment, although you may have to generate revised enrollment forms & and SPD or SMM.

I don't think so. Even if the plan permitted it, the participant did not elect it. I think it needs to come out of the participants account, adjusted for losses not gains. The employer can make the employee whole by correcting the payroll and paying the employee the funds that way. I would normally suggest the employer transfer the overpayment to a forfeiture or plan account and use it to offset future contributions. This avoids the hassle of processing a distribution from the plan to refunding it to the employer and any appearence of a reversion. Some recordkeeping systems permit negative contributions which can be a very easy way to correct the transaction on the plan end.

What Bill said but that does not prevent someone from maxing out contributions in multiple plans (of unrelated employers).

I am winging this one but since no one has responded to I'll throw this out and let others shoot it full of holes if they disagree. I think you can but I'd set up the plan so that 1) The safe harbor used for the entire year is consistent. 2) You don't duplicate contributions - i.e. offset the Safe Harbor in the new plan by the SH provided in the MEP plan 3) Design the plan to avoid impermissible mid year changes.

Now that we have Roth and in-plan Roth conversions, both options have become almost useless and irrelevant. As Bill states, Owner only is the only pace this tends to work but ask the owner this question, would you rather make deferrals of compensation and pay wage taxes or just make a PS contribution and not pay wage taxes? If the owner's comp is low - e.g. $30k and they want to be able to put most of it in a plan, then the deferral part will be needed. If the comp is high enough the deferral part can be ignored. Make the PS and do an in-plan roth transfer if you just have to pay taxes now. BTW, every month or 3 some yahoo writes an article touting the benefits of post-tax contributions in plans, gives it some marketable fancy name (e.g. Mega Back Door in Morningstar recently!) as if they have just discovered penicillin. They always ignore the practical issues - ACP testing. Then a new crop of advisors read it and think they have just found a magic elixer of eternal life. Those of us in the pension community have the honor of breaking the bad news to them. It's a conversation that has gotten very old. Interestingly, I did talk to an advisor the other day who claims that Google uses the post tax feature. I can see where they would have many people in the higher (but not HCE high) salary range who many want to defer more than the 19k/25k limit. I can also see where they have the resources to throw $ at the plan in the form of additional matches for NHCE's to support the program and pass the testing. It's always nice to have a client where money is no object.

What Luke said but if the plan document is suitably vague, it is the legal Plan Administrator's responsibility to interpret the document. Review the docs, look at the SPD, and any other employee communications see if there is anything that requires or states the match be calculated one way or another. Many times, that provision is "discretionary", which can mean that the ER can decide year to year how to calculate the match.

I have always suggested this course of action in order to avoid even the appearance of a reversion.

Simple 401k or Simple IRA?

I agree withthose who say you can file a final 5500. The amount is too small to be overly concerned. Bill them $167 for researching the issue.

Check your document as to how much time you have to allocate it but I would recommend they allocate it as a match per the current terms AND amend the doc so that in the future they could use it for any legal purpose. Allocating it as a NE could potentially create a lot of very small accounts. By allocating it as a match, you are giving it to participants who already have accounts.

At the risk of making a simplistic statment about a complicated topic, this seems like a classic ASG to me. It does not matter what the doc says they are or are not. You cannot "not" be an ASG just because you say your not. I would keep testing them as such until a CPA or Attorney reviews the facts and circumstances and makes a detemination.

SteveK, it sounds like you ought to hire firm #3, Mike Preston.

So you don't get the additional $9000 deduction in 2018 and you have to pay taxes when you do withdraw the $9000....I wonder what negative consequences arise if the additonal $9000 was Roth and the employee isn't getting the deduction now anyway. What if you have someone contribute 19,000 in roth to two plans of unrelated employers. Other than the W-2's how or would the IRS notice or respond to that. Just thinking out loud.

As a TPA, my response was always, I may be able to assist you with general questions about the plan but I cannot give you any specific information over the phone. I don't have any way to distinguish between you and your ex-spouse's private investigator. Give "client contact" a call, they can call me and ask questions and if you are conferenced in, I'll be happy to help in any way that I can.