metsfan026

I got a question from a client in regards to how they should be counting hours for a Plan Year. Is it the actual hours worked from 1/1 - 12/31 for that Plan Year? Or should it be based on the hours for the times that match the W2 (for instance, the first payroll on the W2 is all hours worked in the prior year but the pay date carries into January)? Hopefully that makes sense. Thanks in advance!

I've just never come across this. If a participant works over 1,000 hours during the Plan Year but is on FMLA at the end of the year, does that still qualify them as being employed as of the last day of the Plan Year and therefore eligible for a Profit Sharing Contribution? My gut is the answer is yes, I just wanted to confirm. Thanks!

Is there a company that everyone uses to help locate terminated participants who we can't locate? The company we used to use seems to no longer be operating, so we needed a new one. Thanks in advance!

I have a client that has not yet adopted the self-certification for Hardship Distributions. I have a situation where it doesn't distinctly fall under a Hardship per the IRS Safe Harbors, but it's obvious there is a financial need. The participant needs to move to a new rental with their parents, who are terminally ill. So it's not the purchase of a primary residence and it's not for the medical bills, but they are moving/renting in order to get treatment and care for them. Is this a situation where we can still approve the Hardship?

They are purchasing another employer and looking to give service credit for their prior time

We have it in there yes, but wouldn't doing it for a few and not everyone cause different testing issues? Maybe I'm overthinking it.

Sorry for all of the questions lately. We have a client who does a flat 4% Safe Harbor Match who is looking to bring in a new group of employees. For this new group they want to give them the same 4% match long-term, but for the first year they want to give them a 7% match. Is that something that we can even do, if it passes the necessary ACP testing? Or is it not even possible to do since the match is a Safe Harbor? I guess can we give only certain employees a 3% discretionary match but not everyone (assuming it passes the necessary testing)?

Thanks everyone, I really appreciate it. We've been talking to the prospective client about what they are currently doing and how we'd move forward. Basically, if they wanted to limit the exposure they can do the 3% Safe Harbor with a discretionary match (66% of the first 6% deferred) as a way to push extra money to the owner (since the ages/service make a Profit Sharing hard to structure).

So basically if it was a fixed match it's OK, but as a discretionary match it would fail the formula. It can be done, but up to a maximum of 4% of comp. And yes, the Plan does have a small eligibility with only the owner deferring. So if we did go with the Triple Stack Match, would there be an issue with only the owner deferring if it was documented that no one else opted to participate?

If a Plan is giving a 3% Safe Harbor to everyone, could they also augment that with an aggressive discretionary match? Something to the effect of: 425% of the first 6% of compensation deferred I've seen someone doing this and it just looks odd to me, so I wanted to confirm it was alright. Thank you!

That's what I thought. Are there any concerns if it is only the owner that contributed to the 401(k) that I'm overlooking (assuming all of the employees opted out in writing)? We are giving a 3% Safe Harbor to everyone regardless, then adding on a discretionary match for the year.

This is a discretionary match, not a Safe Harbor (they are doing a 3% Safe Harbor) Could they contribute 100% of all 401(k) contributions as a discretionary match (or more than 100%).

Good morning everyone, and sorry for all the questions. Been getting a lot of plans recently that have some interesting quirks/potential issues. We have a plan that's coming over that's current matching formula is: "133 1/3% of the first 3% of contributed eligible compensation, plus 100% of the next 3% of contributed eligible compensation" Question 1) I've never seen a matching formula in excess of 100% of compensation, so I wanted to confirm that this was acceptable. Question 2) They've asked about increasing the matching formula. Can they simply do 133 1/3% of 100% of contributed eligible compensation? Or is there a maximum of 100% of compensation? Thanks in advance everyone!

Just a question, because I honestly haven't dealt with too many frozen plans. If someone is having some cash flow issues and want to freeze their cash balance plan for only 1 year, is that an issue? I just wanted to make sure. It's a discussion that's being had, but not necessarily going to happen. It would be for 2025, since no one has worked 1,000 hours for the year.

I'm taking over a solo 401(k) Plan that has exceeded the $250k in assets and therefore need to file the Form 5500. It used an Adoption Agreement, but what I was provided was dated back in 2018. I'm just confirming, even these types of plans had to be restated prior to July 31, 2022 correct? With the need to provide the date/serial number for the restatement on the Form 5500, I wanted to make sure.

We have a new 1 person plan who failed to file a Form 5500 despite crossing the $250k threshold that requires it. I was looking at the DFVCP program, but one-person plans don't qualify for it. Is there a correction program for plans that file Form 5500-EZ? Trying to figure out how to get them back in compliance. Thanks in advance!

I know a Safe Harbor Match is a discretionary true-up, if it is done on a payroll-by-payroll basis. I just wanted to confirm that a document can allow a QACA match to be handled the same way? Thanks in advance!

Generally we use W2 Compensation (Box 5 of the W2) as the definition for Compensation in our Plans. We have a client that wants to use Gross Compensation though for the Safe Harbor Match. I just wanted to make sure it was allowed, so we knew how to proceed. Thanks in advance!

That's what I thought, I just wanted to confirm. Thank you!

Just curious, a client is looking to change who the Plan Administrator is for their 401(k) Plan (basically just who is able to sign the Form 5500). Is there anything specific that we need to do in order to make that change (it's not a trustee, so I didn't think we needed a Plan Amendment). Thanks in advance!

Just wanted to clarify something and make sure I'm not missing anything. The client moved to being a co-op, meaning all employers have an equal ownership of the company. 17 current employees, so each employee technically owns more than 5% of the company. Am I wrong in thinking that this means everyone is an HCE, and therefore no ADP Testing is required? Obviously, if they add people and have more than 20 employees that would have to be re-evaluated. But currently, no testing would be required correct? Thanks everyone!

We have a Cash Balance Plan that has been adopted since 2020. For 2024 they have elected to amend the guaranteed interest rate up to 6%. My question is how does this impact 2020-2023. When we are accruing balances going forward, are those years still credited at 5% annually and all new years credited at 6% annually? Or should those years have accrued interest at 5%, but going forward they too get an interest rate of 6%? Basically, does the 6% only impact new contributions or does it impact all contributions moving forward? I hope that makes sense!

Can someone please point me in the direction on where I can get a basic idea of how to calculate the 415(b) limit for a Cash Balance Benefit? I just want to have an understanding of it. Thanks in advance!

Thanks. So technically he can have a $70k credit, and show lik a $20k salary type of thing?

Right, I understand all of that but in the Cash Balance Plan the benefit can be set as a flat dollar amount regardless of the three-year compensation. In this case the benefit named in the Plan Document is greater than the salary (and potentially by a substantial margin). I also know that, when there are additional employees, a lower salary is going to increase the calculated EBAR, making compliance testing extremely difficult to pass (in this case, as a 2-person plan with no non-highly compensation, that's not an issue). So, in this case, in a cash balance plan I think it is ok to have a benefit that ends up significantly higher than the compensation for the year (with no compliance issues);