metsfan026

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);

Good evening, I hope everyone had a Happy Holiday and has a Happy New Year! Just a quick question regarding the benefits in a Cash Balance Plan. If the document says Employee A gets a benefit of $100,000 and Employee B gets $20,000. Is there a required salary they need to get to get that benefit, or since the document states a set dollar amount as long as the testing passes there is no issue (the only two employees are 50% owners, so discrimination isn't an issue). Theoretically, can Employee A take a $10k salary and still get the $100,000 benefit? Thanks in advance!

This is a new case for us, so I'm honestly not sure

It was an accountant because the max deductible we were telling them was greater than another actuary. I was just confirming, even though I knew we were correct. Thank you

Good afternoon everyone. Someone is questioning me, so now I'm second guessing myself. The max deductible contribution for a Cash Balance is: Funding Target + Normal Cost + Cushion Amount (Funding Target /2) - Assets I have that correct, right?

We have a client that turned into a co-op, so all 14 employees own an equal percentage of the company (about 7%). So technically all employees are greater than a 5% owner and therefore an HCE. Am I correct in saying that there would be no compliance testing? I just want to make sure. Thanks!

We have an S-Corp who is telling me that the owner is no longer going to be receiving a W2 and instead receiving K-1 income. Is there a way to utilize the K-1 income for the salary? Just trying to help the client. I've read that K-1 can only be used if it's a partnership, but I wasn't sure if that was accurate or not. Thanks in advance!

We have a client setting up a Mega Backdoor Roth contribution in his 401(k) Plan. The question is, does that contribution need to show up on his W2? I didn't think so, but I wanted to confirm. Thank you in advance!

Good morning! I'm just trying to see if we can setup an additional plan for someone due to it being a controlled group: 1) Employer #1 - Husband owns 100% of the company, his wife is the only employee 2) Employer #2 - Wife owns 100% of company (and is the sole employee) So the question is, the wife is getting a benefit under her husband's Plan (and a sizable one). Can she also setup a Plan under her own company or would that not be allowed?

We have a participant requesting a Hardship distribution based on: Yes I am backed up on my bills specially my mortgage, car payment and daycare I'm probably overthinking this, but I don't believe it falls under the IRS Hardship rules. I just wanted to confirm Thanks everyone!