Basically

I think I did it. Here is what I did.... - Had to give it to all who deferred, even if they were not employed on the last day of the plan year (same as a regular ADP SH Match) - It was a "discretionary" ACP Match (SH) - It was a 100% match of whatever % I needed to eat up the $4300 overage (0.373%) I ran all my tests and came through with a Pass!

Thank you... I will explore the document. Appreciate your help! Learn something every day 🙂

This plan is a SH Match.

This is probably stupid but this client deposited $4,300 too much. They asked if they could allocate it as a PS contribution instead of returning it to the company. The plan is a straight SH Match, they don't make PS contributions (it's allowed, they just don't). Problem is, 5 participants who don't defer would receive the PS contribution. No big deal. But the plan has individual brokerage accounts at American Funds. Each of these 5 participants would need an account of which their balance would range from $125 to $236. Hardly worth it..agree? Could these 5 participants share one pooled account? Would it be best to just pay the overage back to the company? Thanks

My understanding is he has a Roth IRA. If he satisfies the 5 year rule in the plan and rolls the Roth money into an existing Roth IRA then he is all set. Honest, doesn't make sense to me a new clock would be started if he rolled Roth money out of a plan into a new Roth IRA... It's Roth already. Oh well. Knowing that he may close the plan soon (within 5 years) he would be better off taking a distribution and converting it to Roth outside the plan. Start the clock outside the plan so he doesn't have to re-start the clock. Make sense?

5 year rule - The Mega Roth scheme where a participant puts in a voluntary contribution and then converts to ROTH immediately starts a 5 year period. For this guy, because the money has been in the plan for more than 5 years already, when it converts to Roth will he have a 5 year rule attached to that money?

He's thinking the plan may close before the 5 years is up. May just be easier to keep the money outside the plan Thank you for the link.

A single member plan (62yo participant) wants to take a distribution from his plan, pay the taxes outside the plan and put the total rollover into a Roth IRA. Can that happen?

There was no PS contribution for 2023... no 415 issues to worry about. That is what we are going to do, allocate the (actually) $4100 to everyone pro-rata. Thanks!

Yup. so the $2700 has to be paid back to the business.... OR everyone can share in that $2700 as a PS contribution pro-rata.. won't be much but that is an option, right? Thanks!

This 401(k) plan was moving along very smoothly. Then I discovered that for the owner (who didn't defer this year) received a match contribution ... on nothing. The CPA told the bookkeeper to put $4500 in for him. Who knows what he was thinking. We have some true-ups for the other employees that we will eat up most of the $4500 but there is still a some left ($2700). To remedy this can the owner put in the $2700 as a Roth deferral which would me batches 100% because it is so small? Amend the W2? or is it too late?

I think this is a softball question and I'm sure I will be told to look at the document. A participant is 66. She is ceasing her deferrals and the match will be up to date. She will still be employed but wants to withdraw her full account and roll it into an IRA. The rules state (right from the IRS page) - > Generally, distributions of elective deferrals cannot be made until one of the following occurs: The participant dies, becomes disabled, or otherwise has a severance from employment. The plan terminates and no successor defined contribution plan is established or maintained by the employer. The participant reaches age 59½ or experiences a financial hardship. Same rules apply to the SH Match. So, sounds like she can take her $$... right?

That explains it! I so appreciate the help. Watch, after all of this finding out how to do this the client will decide not to (which is fine with me).

Got it... "After-tax" so when converted to the in-plan ROTH no taxes need to be remitted. Explain to me... If someone deposits an "after tax" voluntary contribution to a plan, does it need to be converted to Roth? Wait, did I just figure it out? Converting it starts the Roth clock?

I know adopting a SH plan for 2023 is out. What about just a PS plan and then converting it to a SH plan for 2024? That should be perfectly fine, right? Date of adoption would be say today, 2/2/24 Effective date I could say 1/1/2023?

That was my understanding (not that it couldn't be done through payroll) This is all perfect, thank you all

This client is thinking they want to max out 2023 right now if that's allowed and then towards the end of the year they might be able to max out for 2024. Comes down to not exceeding the 415 limit. They don't want to miss the 2023 opportunity. Follow me? (or her financial advisor's thinking?) I guess my question ultimately is, can VAT contributions be paid after the year end like a PS contribution?

Very interesting... I will need to wrap my brain around this.

A single member plan owner asked if they can make a Voluntary contribution to the plan now (in 2024) for 2023. AND, can it then be converted into ROTH money. Follow up question is, I know the client can not contribute in excess of the 415 limit. They would be limited to the 415 limit or whatever their compensation is... whichever is less, right? hmmm, if the voluntary contribution is after tax going in, when converted do we withhold taxes on the conversion? I have to look around and see what I can find.

Can't be greater than 6%... Answered my own question. NVM

I have a plan, the sponsor wants to have a SH Match of 100% up to 25% of compensation. Can this be a SH Match formula? And... in the future, will this design satisfy Top Heavy ? (of course those employees who are eligible but don't defer will need to get the 3% TH Min).

Really? I'll have to read the doc. I guess I assumed there was an IRS limit. After I posted I though... "give them the 3% and then sweeten the pot with a PS NEC if they want. That way they are not locked in". Appreciate the response. Always good to know in any event.

What is the maximum SH NEC % that can be written into a SH plan? 6%

EXCELLENT! Thanks I looked and looked and obviously skimmed over that . Appreciate it.

Yes... I thought it through. I guess I always assume a Schedule C filer is the only employee. On the Schedule C there is a spot for pension deduction in Part II Expenses but that is for the pension contribution for the employees (if there are any), not the owner. Line 31 of the Schedule C is the number to use for the calculation. Looking at the forms... where does the owner deduct his/her pension contribution?