Jakyasar

Hi Someone I work with where I provided a combo plan proposal forwarded the following they received from the 401k recordkeeper (no name will be mentioned). Background, brand new plan, effective 1/1/2023, signed 3/31/2023 with the following: 401k deferral and NESH (3%), eligibility - age 21 and 6 months service with entry 1st day of the month after completion of 6 months - no hour requirement PS, eligibility - age 21 and 1 year service (1000 hours service required) with entry 1st day of month after completion of 12 months Additionally, as special provision, all employed on or before 1/1/2023 enter the plan without regards to the above eligibility This is what they received from the recordkeeper as forwarded by the client: "I received the feedback below from Compliance: This is a Safe Harbor plan, so we cannot make this plan more restrictive by adding 1000 hours service requirement for PS in the middle of the plan year.* Please let us know if you want to make these changes effective 1/1/2024" What am I missing here? Thanks

Agreed with all above and thank you for your comments. This was a reminder exercise, need it from time to time. Thanks for this group of experts.

According the doc provider, one for the db is coming

Not for SECURE 2.0 as they do not exist yet, I checked with my doc provider. I will have the plan sponsor adopt it when available. They also told me that as long as assets are distributed prior to 3/31/2025, no need for restatement. Will see how it goes.

I am sure this will be a hot topic to discuss in the future. Plan DOT 12/31/2022 Restatement period started 4/1/2023 Possible asset distribution 6/1/2023. Do I need to restate?

Hi Revisiting with a few scenarios: Scenario 1: 401k with basic match and PS provisions (everyone in their own group) Participant does not defer thus no match and gets $0 ps allocation, is this participant's salary included in overall deduction limit? Scenario 2: 401k with NESH 3% and PS provisions (everyone in their own group) Participant does not defer, gets 3% NESH and gets $0 ps allocation, is this participant's salary included in overall deduction limit? Scenario 3: For either above scenarios, participant is categorically excluded from PS portion, is the salary excluded for deduction purposes? Any other scenarios where salary needs to be excluded for deduction (other than being categorically excluded)? Thanks

Not a SIMPLE person, asking for a friend: "My employer started a SIMPLE IRA plan for all employees in April of 2022 with the required 3% match. I contributed the maximum of $14,000 over the course of the remainder of the year. My salary is $200,000 per year, so I believe that the 3% should be based on my compensation over the whole year totaling $6,000. My employer’s accounting firm only deposited $4,500 as the employer match instead of the $6,000 that would equal 3% of my yearly salary and says that they only owe me 3/4 of the total 3% because the plan only existed for 3/4 of the year. This does not seem to correlate to the IRS language regarding SIMPLE IRAs, which states that the percentage is based on the employees’ compensation for the “entire year”, although I cannot find anywhere that says that this language applies even to plans started mid year. What is the correct interpretation?" Any comments/suggestions are appreciated. Thank you.

Bri, you presented a few "if" related scenarios here. I will go back and re-re-re-read the 11-g language in the regs. I think Bird's point is a valid one. I am making noise here and try to understand/learn one additional use of 11-g that is not a corrective action. I never used it for this purpose and for a good reason (at least for me).

Trying to visualize this concept, best with couple questions. Ok, let's say in BG's question, wants to increase one HCE to 8% and provide an 11-g amendment today saying Joe HCE will get an additional 3% of PS allocation where all other HCEs in that group will stay at 5%. Same with the NHCEs. Mary NHCE and George NHCE will get additional 3.75% where the other 4 NHCE will stay with 5%. In both cases above, you are increasing the amount of PS allocation but not allocating ratably, possibly per document language. How do you justify the additional deduction after 2 1/2 months (remember this is a voluntary addition and not mandatory) or will deduct in the current year? You have a grouping with certain allocation language within each group and now with a discretionary 11-g amendment (not mandatory) you are arbitrarily changing the terms of allocation within each group (the way the allocation within each groupings are usually on a prorata basis and different than each participant who are in their own group). Sorry for being dense here but I am trying to understand how this can be accomplished without violating anything. I am sure I am missing something here. May be I will learn something new today.

April 2nd joke. Yes, 2 cents

Agree with CuseFan and Paul I. There is nothing to amend/correct here. Simply a desire in providing an HCE additional allocation. The way the groupings are defined, the way I see it and assume, if you increase for one HCE, you must increase for all HCEs as allocations within the group would be done on a prorata basis (usually standard language would dictate that). Now if you increase for all HCEs and then fail the testings, time for an 11-g amendment unless you increase the allocation for all NHCE globally.

It is determined to undo the termination and redesign the benefit formula.

It is not about charging the client, it is about doing the right thing. The 0.02 hit the account as an interest residue. What to do, what to do.

Client told me all assets were distributed by 6/30/2022. Filed an extension on 1/31/2023 till 4/17/2023 Now found out that still 0.02 is in the account and they will close it this week. When is the final 5500 due?

Good point, thank you

Paul, thank you, looks similar to schedule c. Never dealt with a farmer client before.

Hi Sole proprietor, farm owner. CPA is asking if can use schedule for Pension purposes. Never heard of it but someone may have experience with farm owners. Thanks

Agreed and thank you.

Hi Bri Thank you for the input. If this person worked 1000+ hours from 3/15/2021 to 4/1/2022 (sorry did not mention before), would not be statutory exclusion, correct? Given the age, need in the testing i.e. cannot use as OEX, will never pass the test otherwise.

Hi Looking into a proposal, all plans are calendar. DC Plan already exists. Provisions are 401k+NESH+PS Entry is first day of the month following completion 1 YOS Compensation is defined as from DOP CB plan will have 1 year wait, dual entry and full compensation For all purposes, all top heavy. DC plan top heavy provision states last day rule. PS states last day rule+1000 hours EE data for DC plan: DOH 3/15/2021 DOP 4/1/2022 DOT 5/1/2022 2022 w-2 $12,000 Salary from 4/1/2022 to 5/1/2022 - $3,000 From above, never eligible to enter CB plan so top heavy is only 3% and under DC plan only Gateway is 7.5% (3% NESH+4.5% PS) For gateway, $3,000 salary is used and thus $225. Top heavy is based on full salary i.e. $12,000*3% = $360 however, plan has last day rule. What amount is supposed to be allocated? Thank you

Thank you so much for sharing.

Hi Paul I have not yet submitted to PBGC. Just looking for some wording on a notice to be provided to the plan participants about rescinding the termination. It is a good story though

All I need is to unfreeze at this time, will worry about unfreezing later. Any suggestions on what to write on the notice? I do not see any other way of reducing the vesting to 40%. 100% it is.

Yeah, not really. I have a signed certification stating all notices (204h+NOIT) were provided and timely. I am not going to question this.

All termination was done according to PBGC rules so no questions on that. I simply want to unterminate first and then think about unfreezing later. Lost 50% of biz due to war in Ukraine, that is a good reason for terminating the plan. Well documented.