AlwaysLearning

Here are the specifics: SH - 3% nonelective PS - allocation method - new comparability - everyone in their own group - plan document indicates plan year compensation is used for allocation purposes - no allocation conditions. Plan is Top Heavy The client would like to make quarterly SH and PS contributions throughout the year. My question is do we need to perform the required new comp. cross-testing (rate group/non-discrimination/gateway) for each allocation if the HCEs are receiving a greater contribution than the NHCEs? or do we just need to make sure it passes at the end of the plan year? If we do need to test each time a PS contribution is made, what code section indicates this? Any insight would be greatly appreciated.

Here is an ASPPA powerpoint on ADP/ACP testing and has some information on recharacterizing contributions. If the ACP test is passing, could you shift the ACP contribution to the ADP as long as the required rules are followed (the powerpoint provides an example)? This could be another option without changing the plan document. https://www.asppa.org/sites/asppa.org/files/PDFs/Education/Webcasts/WEB180523%20Riordan.pdf

"Distribution Date" definition was meant to indicate the distribution of all assets out of the plan to indicate a final 5500 date. All assets are being transferred to the new plan and there will be no distributions to any current participants. Thank you so much for the clarification!

To clarify, all assets were transferred to the PEO plan. The 5500 form indicates there was a resolution to terminate the plan, so I'm not sure what documentation was prepared to document the transfer, but there were no distributions paid to the employees all assets were transferred.

I have a client who terminated their existing plan and transferred to a PEO. A final 5500 Form was completed with a short plan year from 1/1/2018 to 6/11/2018 (I'm assuming this is the date all assets were transferred to the PEO plan with the plan number as 001). The client now wants to move out of the PEO and start a new plan sponsored by his company (same EIN as the prior plan) under plan number 002. Since the last distribution date of the terminated plan of the Plan Sponsor is less than 12 months, is there a successor plan issue, if the effective date of the new plan is 1/1/2019? FYI - This is not a safe harbor plan. If this is a successor plan issue, is the resolution to have a short plan from 7/1/2019 to 12/31/2019? Thank you for any input.