JackS

This sounds like a payroll error to me. Talk to your payroll company about how to fix it. You MAY have to contribute something to the plan but since the withholding wasn't authorized, it should have been corrected by payroll anyway. Had the fund been deposited into the plan, it should probably be refunded.

They can make the contributions, they just are not allowed to rely on the testing exemptions. You should probably notify the HCE's and determine how best to test the plan for the year - you may be better off with prior year testing.

I think your testing is sound but they are not following the terms of the plan docs. Amend them to Non-Std or VS docs and properly exclude each entity the other plans.

btw, Happy Birthday

The document may permit you to allocate the SH MC to the HCE's anyway. Read all the notes on the AA and the relevant sections of the BPD. You may find what you are looking for. If you do, you won't need to amend at all. If you don't, you will need to amend the plan for next year.

I don't think it's unreasonable but I would not expect it to work. If they knew where the EE was, he or she would have received the check in the first place. Also, some people leave jobs under negative circumstances. They m,ay be avoiding all mail or contact form the employer. They may be more likley to accept sometyhing from you. I'd put the money in the plan, set up an account for this person, report or re-report them on the SSA and do a participant search just like any other lost participant.

I think you are remeding it. You are getting a better service provider. I don't think there is anything that you need to do to fix the past.

You state all of the NHCE's are participating. This is understandable as there is a Safe Harbor match available. In this case, it is unlikley that a discretionary match would be more efficient than the profit sharing allocation. It's possible...say if all 9 employees earn $20k a year. From a strict $ and cents perspective a SH NE may be the most efficient but you would find that employee particpantion would tend to lag. If the Dr's objectives are to make sure eveyone is getting a meaningful retirement benefit....5% 401k+4% Mc+3% PS =12%. That's a meaningful benefit and presumably with the proper communication, their employees see this and understand what a meaningful benefit they are receiving.

I don't think waiving your right to be a beneficiary has anything to do with spousal consent to a distribution. I think the spouse needs to consent to the distribution, unless the employee is deceased.

David, I looked for that language and could only find the following under 1.28 of the Corbel doc. Could you point me in the right direction? If, in the Adoption Agreement, the Employer elects to exclude Part-Time/Temporary/Seasonal Employees, then notwithstanding any such exclusion, if any such excluded Employee actually completes or completed a Year of Service, then such Employee will cease to be within this particular excluded class.

Kevin C, which document is that?

If the $18 was supposed to be forfeited and the plan doc requires forfeitures to be reallocated as an additional contribution, have the employer kick in another $18 to make the plan whole. Almost any other scenario, ignore it. It's not worth $18.

And if you are using a Prototype Doc or a Prototype formatted VS doc, the language ETA refers to will be in the BPD, most likely not in the AA.

The doc I have worked on the only benefit of NRA is 100% vesting. I reviewed that with the attorney's at Corbel long ago and they told me to just preserve the 100% vesting at the prior age and change NRA. In the conversation you are having with yourself, one of you makes perfect sense to me.

That may be a rule in the particular ESOP you are working on but it is not a universal rule.

Non-Owner HCE's.....just a guess.

T-32 Q. How are rollovers and plan-to-plan transfers treated in testing whether a plan is top-heavy? A. The rules for handling rollovers and transfers depend upon whether they are unrelated (both initiated by the employee and made from a plan maintained by one employer to a plan maintained by another employer) or related (a rollover or transfer either not initiated by the employee or made to a plan maintained by the same employer). The rest of this section seems irrelevant to the current discussion So a distribution from a plan initiated by an employee cannot be considered a related rollover - it would only be subject to the 5 year in-svc lookback UNLESS 416(g)(3) Distributions during last year before determination date taken into account (A) In general For purposes of determining— (i)the present value of the cumulative accrued benefit for any employee, or (ii) the amount of the account of any employee, such present value or amount shall be increased by the aggregate distributions made with respect to such employee under the plan during the 1-year period ending on the determination date. The preceding sentence shall also apply to distributions under a terminated plan which if it had not been terminated would have been required to be included in an aggregation group. So if a distribution is a result of a plan termination, you only look back 5 years unless the rollover was not participant initiated or was DIRECTLY rollover over by the participant from one plan of an employer to another. (B) 5-year period in case of in-service distribution In the case of any distribution made for a reason other than severance from employment, death, or disability, subparagraph (A) shall be applied by substituting “5-year period” for “1-year period So if a Key employee was eligible for an in-svc distribution and rolled their money over to an IRA or a plan sponsored by an unrelated employer - the employer would count that in it's TH calc as an in-svc dist for 5 years but even if they then rolled it back into the plan it would be NOT be considered a related rollover. I am sure I am missing something here but I'll have to figure that out later. Thanks for the input, I really appreciate it.

I thought I had, I'll try again.

ETA you seem very sure. What is your reasoning or this? Clarified my question - the Simple IRA money is excluded but the 401k money from 20 or so years ago is the question.

An employer sponsored a 401k plan long ago - pre 2010. They terminated the plan and everyone was distributed. The employer then started a Simple IRA and has been using that ever since. They have discontinued the Simple IRA and want to start a 401k again for 2019 (traditional 401k, non safe harbor). The new plan would be treated a NOT Top-Heavy because all the distributions were more than 5 years ago. The owner wants to rollover money from an IRA that contains the original distribution from the prior QUALIFIED plan (not the Simple IRA money - I don't think there is any question that should be excluded from the TH calc). Would doing this make the plan TH immediately (assuming his account is more than 60% of the EOY account balances)? It seems it would be a related rollover and by putting it back into a plan sponsored by the same employer, it would have to be counted in the TH calculation. Does this sound correct? Am I missing something important here?

Yes. It probably should not be but that document was approved and there isn't any other language in the doc that conflicts. You are following the terms of your plan document when you true it up.

Watching this thread closely. I would have said it was too late but I don't know. I see a couple things of interest particularly (2) the participant failed to meet the loan repayment terms because of a separation from employment (if the plan provides that the accrued unpaid loan amount must be offset at this time)." I would get a copy of the note and all loan paperwork from your prior employer, including their loan policy and present it to your current employer and ask them if they need anything else in order to set up the loan as a rollover. Make sure your CPA is onboard as you will get a 1099-R showing the taxable event and he/she will need to take that into account on your tax return. Given the $$ it's certainly worth the effort. Good Luck and let us know how things work out.

Here is the language form the Corbel Doc. There is no notice required. The employer can decide to make it after PYE just like any other discretionary contribution. Excluded Participants. For purposes of the "ADP test safe harbor contribution," the term "eligible Participant" means any Participant who is eligible to make Elective Deferrals unless otherwise excluded below (leave blank if no exclusions): f. [ ] Exclusions (select one or more): 1. [ ] Highly Compensated Employees (HCEs). The Employer may, however, make a discretionary "ADP test safe harbor contribution" for the HCEs in a percentage that does not exceed the amount (or in the case of a matching "ADP test safe harbor contribution," the rate) provided to the NHCEs.

If the plan doc allowed for a discretionary SH to HCE's and they did that I believe you would preserve the TH exemption for the year. If it didn't the employer would need to make a PS and then you lose the SH exemption.

Sorry, my answer was erroneous. I was thinking excess contributions when I said "yes to the 5330" (since deleted). I agree with PensionPro.