Search the Community

Participant X is in two 401(k) plans for 2019. He is less than 50 years old. In plan A he defers $10,000 in 2019. In plan B he defers $10,000 in 2019. In plan A, he is an HCE. The plan fails ADP testing and he is refunded $1,000. Has he violated 402(g) for 2019?

Anyone knows of a designer and/or TPA that designs and/or administers defined benefit plans including the 401(h) health expenses benefits part, for financial advisors' clients?

I'm working with a plan that is considering implementing a QACA SH match on 1/1/2019, but they would also like to match additional contributions over the QACA match. Specifically, they want to match 50% of contributions on deferrals between 7-10% - auto escalating up to 10% using the QACA AE provision. They want to try and get total employee contributions over 15%, but encourage it with the discretionary match over the QACA formula. is the discretionary match subject only to ACP? are there other considerations with offering this additional match above the SH match limit? any help would be appreciated.

I have 2 companies that have a multiple employer plan. My question has to do with the compensation for the owner. I have an owner who owns 100% of Company A and 50% of Company B. This owner receives W2 compensation from both companies. I am wondering how I actually test the plan? Do I have this owner in both companies' separate testings and give them an allocation in both? (They want to do the max) Or am i allowed to aggregate the compensation and only have the owner in one company's testing? I am leaning toward the first way as I feel they do need to be tested under each employer, but I cannot find a definitive answer anywhere. I do know that the 415 limit is based on the compensation the owner receives from both employers.

The client is part of a PEO which handles all the HR functions and paid through PEO. Employees can make 401(k) contributions to PEO calendar year 401(k) Plan. The client sponsors a separate PSP for employer contributions. The PSP is an off-calendar year plan that uses calendar year comp for contributions and testing. The PSP contribution is cross-tested. I believe I need to include the 401(k) contributions for non-discrimination purposes and the 401(k) account balances for Top Heavy Testing. Is that correct?

C-corp is changing to a safe harbor plan, due to issues with testing. The goal is to use the enhanced testing method and avoid all testing requirements for ACP/ADP/top heavy . Is it possible to use the following enhanced match: Contrib/Match 1%-1% 2%-2% 3%-3% 4%-3.5% 5%-5% My concern is the "step-up" from the 3.5% match to the 5% match,,,,,,,, The goal is that employees that contrib 5% continue to receive a 5% match -- does that mean that 4% contrib would need to receive a 4% match? Thanx, SD

Consider a safe harbor 401k plan with a few owner/key employees in the plan (nobody else). If the company adds a new non-key employee to the plan, won't the plan immediately become top-heavy, since the owners all have several years of assets in the plan and the non-keys have basically nothing at that point? Are there any workarounds for that problem, other than these I've found: Make sure the 401k only has safe harbor employer contributions (no more profit sharing, etc.), to qualify for the safe harbor top heavy testing exemption. The downside here is no profit sharing anymore, which hurts everyone. Provide an extra contribution for the new employee only, to fix the top heavy failure. The downside is that the employee kind of gets "more benefits" per year than the owners, which the owners may not like.

Sorry if this is a newb question, but any help would be appreciated- given the new overtime rules going into effect I am concerned about some clients increased responsibilities if they don't exclude overtime my question is - If you only exclude overtime for matching contributions, do you still run compensation test? If so- assuming you pass - do you use that for ACP? or is there flexibility? I really want to make sure of what happens if we are only making a compensation adjustment to matching contributions. Thanks

Client failed testing. Refunds issued and cashed. Discovered bad data was used. Tests rerun and client still failed but refund required for HCEs was less than what was issued? As to issue of refund, can they self correct?

A plan has an employee on leave for uniformed service. The plan would like to make current contributions to her profit sharing account while she is gone and also include her for testing purposes (she was a critical cog to testing). I can't find anything to preclude an employer from funding a person on leave's account currently and if they do so, is there any reason not to include that participant in 401(a)(4) testing. Thanks

Plan definition of compensation is W-2 plus 401(k) and 125 elective deferrals and reduced by the safe harbor taxable fringes in IRC Section 414(s) regulations. This includes "deferred compensation". The plan sponsor has an elective deferred compensation plan ("SERP") in which senior executives participate. The 401(k) master plan document (national prototype) allows the sponsor broad discretion in designing procedures for participants to make elective deferrals and limit is the 402(g) limit. The sponsor's payroll dept has been applying 401(k) deferral election percentages by the senior execs to their gross pay, before the SERP deferrals. The match is fully discretionary - no formula or limits in the document. Company announced that it would match "100% of deferrals up to 4% of pay". Sponsor also uses gross (before SERP deferrals) pay for applying the match. Recordkeeper believes sponsor needs to do voluntary correction under EPCRS as it was using a compensation definition not in the plan. The recordkeeper uses the 414(s) definition of compensation for ADP and ACP testing and the plan passes both tests every year. Code section 401(k) and (m) cite to 414(s) compensation in describing the ADP and ACP test. For deferrals, section 401(k) just describes a plan that allows an employee to elect cash or deferral into the plan. 1.401(a)(4)-1(b) regs say that deferrals and matching contributions are deemed to pass 401(a)(4) if the ADP and ACP tests are passed. Does the sponsor have a good faith argument that its administrative procedures and practices are not violating the plan document and 401(a)? I recall that on a previous post it was suggested that the sponsor amend the plan to adopt Medicare Wages to solve this issue.