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Found 5 results

  1. Safe harbor match formula is 100% on the 1st 3% and 50% on the next 2% Match is calculated on a per pay basis Participants elective withholding is 5% Total Compensation is $286000 Retirement plan software matched participant 4% of each pay based on the match formula for a total of $11440 for the year But isn't the max match permitted for this person $10800 which is 4% of $270000 Pretty sure I need to forfeit $640 of match since participant was matched on wages over $270k, but the per pay basis for allocating the match is throwing me off Any thoughts on this would be welcome... Thanks
  2. Company B is purchasing 100% of the assets of Company A. All employees of Company A will terminate effective July 15. Company A's 401(k) Plan is terminating. Owners of Company A would like to make a discretionary profit sharing contribution to Company A 401(k) Plan for this final plan year. Even though the asset sale will occur on 7/15 and all employees/owners will terminate employment effective 7/15, can Company A elect to wait until 12/31 to formally adopt a resolution to terminate the plan, thus avoiding a reduction in the compensation limit, 415 limit, 1,000hrs allocation service requirement for PS, etc...? As an added benefit, the employer would not have to provide top heavy minimum contributions since the limitation year would be extended to 12/31. While I cannot find anything suggesting the plan is deemed terminated or must terminate as of the transaction date, it doesn't seem right that an employer could manipulate the staff funding requirements by postponing a formal plan termination.
  3. This is related to a question I posted recently under Defined Benefit plans. Client recently discovered a few participants who appeared to have exceeded compensation limit. Each of these participants was participating prior to 1/1/96, and the plan had no compensation limit in effect on 7/1/93. The plan was amended back in 1995 (the TRA 86 restatement) to incorporate the limit effective 1/1/96 for all participants. Did the grandfather rule for eligible participants need to be set forth in the plan document for the plan to be able to use it?
  4. It was discovered that a few participants in a governmental defined benefit plan had compensation over the 401(a)(17) limit. Benefits were within 415 limits. This resulted in an overpayment for a few participants who have retired but also in employer pick up contributions that were higher than they should have been. There seems to be a good amount of guidance (including last year's revenue procedure) and opinion out there on how to correct the overpayment. BUT How can the pickups be corrected? Assume that they involve years prior to 2015. My immediate thought was that the appropriate correction would be to 'forfeit' under the plan - meaning the employee would not have credit for them - which in this case really boils down to whether contributions would be paid out to a beneficiary if the participant died before receiving annuity payments at least equal to his or her contributions. Then the "Employer", in this case the municipality, would need to make the employee whole for the deduction that was taken from pay in error. The payment to the employee would be reported on a revised W-2 for each applicable calendar year, and the employee would need to re-file taxes for those years. Is there a better (easier) answer? Something that doesn't involve re-filing individual income tax returns? Also, could it be possible - consistent with EPCRS principles - to offset the overpayment by the over-contributions? For example, the plan overpaid you $5000, but you overpaid the plan $2000, so you need to pay back $3000 to the plan. Errors are very small relative to the plan size and involve only a few plan years. The intention is to self correct, not to submit under VCP. (It's understood that the plan wouldn't have reliance on the correction method without VCP compliance statement.)
  5. I have a scenario where I have a safe harbor match of 100% of 4% and for 2012-2014 they didn't have a cap on the match at the annual compensation limit, so some received thousands more in match because their gross income was over $250,000. How do I get participants to return funds if they have already taken distributions? Are there any correction methods for this?
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