metsfan026

I'd have to go back, but it was probably quite a few years ago

I have a plan terminating that had about $20k in the Forfeiture Account. They used some of it to pay plan expenses, but even after that there's about $12k left in there. So who does that money get split up between? Is it: Anyone still actively employed at the time of termination (I believe it was just the owner) Any person who had a balance at the time of termination

Thanks! The Plan isn't currently Top Heavy, so that's not an issue. It was more the idea of people deferring money, but not getting the ADP Safe Harbor Match. I don't believe they actually fail ADP Testing, it was more a safety thing setup at the beginning. So that wouldn't be an issue?

I have a client that wants to shorten the eligibility for 401(k) deferrals to 60 days, but leave the Safe Harbor Match at 1 year. I would think this would cause an issue with the testing, but I wanted to make sure I wasn't overthinking things. Thanks in advance!

This one is new to me, so I wanted to check. We have a potential new client, who plans to employee their 10-year old son (I'm not really sure of the specifics, to be honest). So the question is: 1) Can someone legitimately have a 10-year old on their payroll? 2) If they are allowed to be on payroll, could they then allow them to participate in the 401(k) Plan? The whole thing seems a little odd to me, but they are asking questions so I wanted to try and get the correct answers. Thanks!

Thanks! I believe the fear is that the person on leave has no plan on returning to work, so they would ultimately be taking a distribution, in essence, that wouldn't be allowed otherwise. Is the Plan allowed to have any employee on leave sign something stating that they intend to return to work, and understand what will happen with their loan (re-ammortizing upon their return), in order to take the loan?

Is there anything that restricts a participant to take a loan while they are out on a leave of absence? The loan specifically states that all repayments must be made via payroll deduction, so the thought is that it naturally restricts it. The Trustees are asking if there is anything more specific, though. Thanks in advance!

Good morning everyone! Is the 408(b)(2) required for a Trustee directed pooled fund? It doesn't appear that the investment people do it, and the client is asking. I wanted to confirm if it was required under this scenario or not. Thanks in advance!

Thank you! So even though they were under 1,000 hours they will be getting the 7.5%. I appreciate it!

Sorry, one more on this has come up. There are eligible participants who worked under 1,000 hours during the year. They have to get the 3% Top Heavy, obviously. But is that all they get? I just wanted to make sure they shouldn't be getting the 7.5% Gateway. I'm sure I'm overthinking this, just checking something another TPA did and I'm confusing myself lol

Perfect, thanks! Didn't think being more generous would be a problem, but then I started overthinking it.

Good afternoon. I think this is a silly question, but I just wanted to make sure I'm not overthinking it. I know the Gateway for a Cash Balance/DC Combo Plan is 7.5%. An employer can give more than that, correct? The owner actually isn't taking a Profit Sharing contribution for himself. He'd like to give the employees a little bit extra (about 10% into the Profit Sharing). I just wanted to make sure that wouldn't cause an issue (I don't think so, since he's being more generous, but maybe I'm overthinking it).

Perfect, so they can get some Profit Sharing but not the full 7.5%. It's only one HCE, so that makes it easy. Thank you!

Got it, thanks! And that doesn't apply to HCE, correct? The gateway is only for the NHCE? And the HCE can get a lesser amount in Profit Sharing? I think I'm confusing myself. Sorry!

Thank you! What about someone who terminated prior to the end of the year? That makes them eligible for the Cash Balance (worked over 1,000 hours) but technically not eligible for the Profit Sharing (not working on the last day of the Plan Year). Would they get only the Cash Balance and not the 7.5% Gateway? Sorry, I just wanted to make sure I wasn't overthinking this.

I'm working on a new client that has a group of participants who are eligible for the 401(k)/Profit Sharing, but are excluded from the Cash Balance Plan. Are these participants required to get the 7.5% to pass the gateway? Or can they be given a lower amount into the Profit Sharing? Basically, I wanted to confirm that the people who get 7.5% are those who are eligible to participate in both the Profit Sharing and Cash Balance Plan? If someone is only eligible for the Profit Sharing, can they just get the minimum gateway to pass the New Comp testing? Their contribution, as well as the Safe Harbor Match, does get included into the 6% max going into the Profit Sharing, correct? (I'm pushing to move this to the 3% Safe Harbor, as it will obviously help), but I wanted to confirm I was correct.

What if one is eligible, but opting out of the PS/CB)? So they are getting $0 from either the DB and DC? If there were no contributions, can the DB be $0? What if there was an HCE who made just an Employee Deferral and received a SH match? Does that still mean the Profit Sharing could be $0? I just want to confirm I have all of my ducks in a row.

If there are no HCE's who are left participating in a DB/DC combo plan (an odd situation, I know, and it may just be a 1 year aberration), how would that impact the Gateway? Is it still the 7.5% or can that be reduced dramatically? The employer is going through some turmoil and change over so just want to make sure what we can/can't do. Thanks in advance

Got it, more of what I thought. Just to confirm, because I know the client is going to ask, the return has to be done for all of the HCE evenly? They can't put the correction just on the 1 employee

Question regarding and ADP Test Failure. We have a failed ADP Test for a client with 4 HCE: 2 HCE are under 50, and not eligible for a Catchup 1 HCE maxed out his contributions ($27k), so therefore we are already ignoring the $6,500 catchup in the ADP Testing 1 HCE, who is over 50, contributed $13,000 for 2022 Can we "re-classify" $6,500 of the HCEs 401(k) to a catchup, thus excluded them from the test? If we test this HCE with $6,500, we will pass the testing so I just wanted to confirm. Thanks in advance!

The gateway is an aggregated 7.5%, correct? So if we are giving 6% in the Profit Sharing plus a SH Match plus a flat dollar amount in the Cash Balance (say $2k per employee). That should suffice the gateway, correct?

I know the gateway for the combo plans is typically 7.5% (which can be split between 3% SH + 4.5% PS). What happens if it's a Safe Harbor Match? What type of Profit Sharing contribution do we have to include, because we're running into the 6% deductible contribution going over 6% to the eligible employees (less for the HCE)

Sorry, I should've been more clear. It was the funding rates for the valuation. Thank you for your help!

Thank you!

The document defines them as: The “Code Section 417(e) interest rate” means the adjusted first, second and third segment rates applied under Code Section 430(h)(2)(C), computed without regard to 24 month averaging under Code Section 430(h)(2)(D) and without regard to the adjustment for the 25-year average segment rates provided in Code Section 430(h)(2)(C)(iv).