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Found 3 results

  1. I hope someone can verify that I understand this correctly. 401(k) plan has 100%-4% enhanced safe harbor match. They added a discretionary match of 100%-15% for NHCE only in 2019. Since the discretionary match exceeds 4%, ACP testing applies. If I test all of the matching contributions together the ACP test fails - a lot of NHCE still didn't participate even with the extra generous match. However, I believe 1.401(m)-2(a)(5)(iv) allows us to exclude employees who are only receiving the 100%-4% enhanced safe harbor match from the ACP testing. Since that group to be excluded includes all of the HCE, the ACP testing automatically passes. Is that correct? In other words, as long as the HCE are excluded from the discretionary match, ACP is going to be automatically satisfied regardless of the discretionary match formula being used for the NHCE.
  2. Hello. I am new to 457 and hoping for some guidance. A tax exempt entity matches 457(b) deferrals. There is a vesting schedule causing the matching to vest and excess deferrals in years subsequent to the initial deferral. If the plan distributes the excess deferral after April 15, does this cause double taxation in a manner similar to the 401(k) plan treatment? My reading of the regulations and secondary materials suggest not. I can find nothing other than discussion relating to failure of the plan generally after April 15 and taxation of deferred amounts that are not subject to forfeiture. But if excess match is taxable in year vested and then distributed in subsequent year, how is it reported and is it taxable at distribution? Is there basis under sec. 72? A previous discussion and example were helpful but did not address matching and did not address specifics as to what is the effect of plan failure given late correction. Can someone provide an example with authority of reporting on W2 for an excess deferral caused by match vesting where distribution of excess is made in subsequent year after April 15? Thanks for any help you can provide.
  3. Plan Sponsor applied an incorrect match % to certain employees for a 3 year period (in addition to failing ADP/ACP). All employee defferrals were prcessed timely and properly. Correction for the incorrect matching % is being done via VCP. Would this also require a VFCP filing? My take would be yes, since a prohibited transaction occured as a result of the incorrect match (and not corrected with the year) and for the lost earnings. However, I do not see any applicable boxes on the VFCP model application. Any suggestions?
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