perkinsran

401k Plan currently excludes part-time employees from participating in the 401k plan. If a full time employee moves to part-time can they be excluded prospectively?

Client makes profit sharing deposits during the year and also has a Cash Balance Plan. In 2019, the profit sharing contribution deposited into the plan was greater than was deductible for combined plan purposes (e.g. profit sharing exceeded 6% due to it being a service company). Since the owner’s portion is not deductible and is below the 415 limit, can the money stay in his account and be treated as after tax basis for taxation purposes.

Thanks to all. I appreciate you feedback.

Thanks. 50% in our office think it is tested under 401m and the other 50% thinks it is tested under 401(a)(4). Are you implying you think it has to be tested under both?

Client contributes 7% as er contributions if ee contributes at least 5%. Less than 5% employees receives $0. In testing this plan for nondiscrimination testing, would it fall under ACP or 401(a)(4)?

Thanks so much. That is what I thought. The fail the ACP test but we could pass the 401(a)(4) test. The prior bundled vendor did not do anything. We just picked this plan up. It is a fairly large plan and they are going to be surprised when I tell them we are going to have some refunds to deal with in the next four weeks.

There is no "Matching"formula. The document says if you contribute at least 5%, we will give you a 7% contribution. So if you do 4%, you get nothing. If you do 10% you get 7%. So you either get 7% or 0%.

We have a 403b plan that provides a 7% match but only to employees who contribute at least 5%. Is the plan tested under the ACP test or the Nondiscrimination test under 401(a)(4)? I assume the ACP since it is conditioned on the employee contributing.

The decision was made prior to the sale to Company B to terminate the plan as Company B did not want to assume Fiduciary responsibility for a plan that they had no involvement. The termination created a distributable event for all participants. The owners initiated their rollover distribution that only was allowed due to termination of the plan. All others are being held up by TPA for processing after termination fees and other administrative fees are applied.

I have an unusual situation. Company A sells their company to Company B. Company A sponsors a 401k plan but Company B by nature of the sale does not decide to sponsor that plan but set up their own plan. Company A sets a termination date for their plan and owners take their distributions from the plan. All participants of company A are now terminated from Company A and are participants in Company B. They have requested Distributions/Rollovers from company A plan. TPA that is executing the plan termination has held the distributions to the remaining participants and now indicates that termination expenses will be charged to the remaining participants. Considering that the owners of Company A had the largest balances in the plan and have taken their assets, have they not breached their fiduciary responsibility? Can they legitimately charge plan termination fees to participants? Are these not settlers expenses? What is being done wrong here?

Company A acquired Company B on 3/27. Company A does not have a plan and Co B is terminating the plan and employees will receive a distribution payout. Co A wants to establish a Safe harbor 401k plan and allow all of company B employees to immediately contribute. Any reason that Co B had a plan would prohibit the safe harbor status? Also can employees that are in Co B that have a loan roll those loans to new plan. Thanks so much.

New owners decided to create a new 401k Plan and to require current employer to decide about exiting plan. Current Plan is terminating existing plan and giving employees the right to receive cash-out of their accounts. Any reason that the new entity/plan cannot establish a safe harbor plan in 2015.

A participant has after tax moneys (non-Roth) in a 401k of $10,000. 401k portion is $90k. The employee is over 59 1/2. Can the employee take a $10k distribution from after tax portion and roll over to a Roth IRA? If yes does it matter if the person is under 59 1/2 and the plan allows after tax distributions? Finally, if yes, can the person do it every year?

If they take over responsibilities for the plan, do they simply amend the plan to change its name and tax id # going forward.

Company A is acquired by Company B on 3/27. Company B wants to establish a new 401k plan and merge Co A asset into the new plan. Since it will take about 60 days to get new plan operational, can Co B become the sponsor of Co A plan in the meantime? My concern is the employees no longer work for company A on 3/28.

The client was looking at an ACA.

Paychex is telling one of their clients they cannot modify a safe harbor plan to add auto enrollment until next year. Any truth to that?

Anybody know the limitation imposed on after-tax (Non Roth) contributions to a defined contributions plan other than the ACP test and 415 limits. I know there used to be a 6% limit, but I can't find that anywhere.

Thanks so much Tom. This helps a lot.

It is a fairly large group with a small number of HCEs that passes all coverage and discrimination testing at each benefit level. My concern really was giving 0% to people who have less than three years. They require employees to wait 2 years to enter that portion of the plan and give them 0% for another year. Just doesn't smell right even if we pass all regulatory tests.

Sorry but what is BRF (Benefit Rate Groups??)

Just came across a new 403b client that has a contribution formula that says: < 3 years = 0% 4-6 yrs = 3% 6+ years = 6% Seemed like a sneaky (maybe illegal?) way to get over the 2 year eligibility requirement. But if the plan can pass coverage testing at the three benefit levels, is this okay? Thanks.

Thanks to all. Tom, no this is not a mid year change. They currently aren't doing anything. I just seemed to recall many years ago, I'm sure prior to the ACP test, there was a restriction (eg. 6%) on matches of after tax moneys. In my research, I could not find any restriction other than ACP passing.

A plan wants to increase match in 401k plan to 25% of first 15% saved. As long as plan can pass ACP, any issues relative to discrimination?

We have two companies in a controlled group that sponsor separate plans. Both have several hundred NHCEs, but company A has the majority of HCEs. We have to run coverage and I just wanted to confirm mechanics. Co A plan has 17 HCEs and it is a 401k plan with a safe harbor match. Co B has 2 HCEs and it is a 401k plan with a Prevailing Wage contribution to virtually all NHCEs but not HCEs. Company's A's matching arrangement will fail the 70% coverage test so we need to go to ABP test. The plan will pass the safe harbor % stipulated in test 1 of th ABP test. So when we run the ABP, we use 401k, 401m and 401a contributions from both companies. We easily pass due to the very high PWC contribution. Correct or am I missing something?