metsfan026

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!

There's a discretionary match in the Plan, but it isn't going to be used for this year (1st year of the Plan). My bigger concern was that we needed to go back and catchup the missed deferrals. But since there isn't a match, that doesn't appear to be the case.

Thank you! I just want to make sure I'm reading this correctly. All of the missed deferrals are from August and later so it's all current and there's no current match. That means they just have to start the contributions ASAP, correct?

Good morning everyone. We have a client who inadvertently failed to start auto-enrollment contributions for several employees. I just want to make sure what the correction is for this type of mistake? Do they catchup the missed contributions via the next payroll and pay them interest for the missed contributions? For the interest, what's the best way to calculate? Thank you in advance

We have a client that has been chronically late with their contributions in the past few years (all of the interest is being paid in '24). On Schedule I Question 4a, what would be included: - Would it be just the contributions for the current year? - Would it be all contributions for the prior year(s) where interest had not yet been paid? I believe it's the second one, even though the contributions had been paid in the year. Since the participants had not yet been made whole, all contributions should be included. I just wanted to confirm. Thank you!

Yes, the SB was being done as Frozen and $0 Normal Cost. I just had never done the form for the Frozen, so wasn't sure what to check off (unlike with a Terminated Plan). There's a chance the opt to unfreeze it in a year or two, or just close it down (it's not subject PBGC). That's why I was asking.

Thanks! So, if they opt to un-freeze the plan at some point we simply remove that code on the 5500, right? I just wanted to make sure

Is there anything special to do to file a Form 5500 for a Frozen Cash Balance Plan? It is fully funded (assets exceed the liabilities) OR do we just file it with no contribution requirements for the year?