Top Heavy Fix Basics

[rushlakeguy]

I've run into an unfortunately situation for my company.  I own a hair salon (50/50 partner) with another individual.  We use Paychex to administer our 401k plan and was just informed that we are Top Heavy as of 12/31/2015 (60.7%) and owe $49k. This is a horrible as there are less than $100k of assets in the plan. I'm beyond frustrated as I was told back in spring that we were in compliance and now they are being entirely unhelpful in answering my questions, so I'm hoping someone here can help.

It's a basic deferral plan.  I've never made an employer contribution.

Questions:

1)  They are calculating the TH penalty contribution as being 3% of compensation for every employee who was employed in 2016.  Is this correct, or should it only be employees eligible to the plan (6 months of service and over 21 years old) as of 12/31/2015?

2) what happens if an employee is terminated during 2016?  any impact?

3) Myself and the other owner only made 1% contributions during 2016.  I've heard I may be able to make a 1% contribution, rather than 3% for all employees.  Is that true?

4) Is the vesting for the 3% contribution immediate?

Thank you so much.  I can't wait to get this behind me and replace Paychex as a provider. 

 

[JRN]

If you and the other owner only make 1% contributions, then you should be okay making only the 1% contribution for the "non-keys" -- UNLESS, you have other employees in the Plan that are considered "key employees" (not likely is my guess) and they made 401(k) deferrals of more than 1%.

Other possible way to get out of this: Lean on Paychex to refund to you and the other owner the 1% contributions you made during 2016. In other words, undo your 401(k) contribution.  If you and the other owner don't contribute to the plan for 2016, then you don't have to make the TH minimum contribution.

Good luck.

[Mike Preston]

It seems that some of the large 401(k) providers are compartmentalized to the point that there are a number of issues that don't get addressed until the plan sponsor has very few options.

Nobody can answer your questions without seeing a copy of the plan document that you signed.

However, with that said the answers are:

1) It is probably not everybody,  it is not even necessarily employees "eligible to the plan (6 months of service and over 21 years old) as of 12/31/2015" because not only do they need to satisfy the eligibility criteria they need to also satisfy the entry date criteria. Nobody can definitively answer your question without seeing a copy of the plan document that you signed.

2) Typically, top-heavy minimum contributions are not required for participants who have terminated before the end of the year. Nobody can definitively answer your question without seeing a copy of the plan document that you signed.

3) Typically, if the highest deferral rate for any key employee is 1% then the top-heavy minimum is also reduced to 1% from 3%.  Nobody can definitively answer your question without seeing a copy of the plan document that you signed.

4) Typically, the top-heavy minimum allocation will be subject to a six year graded vesting schedule (0-20-40-60-80-100). Nobody can definitively answer your question without seeing a copy of the plan document that you signed.

See a pattern? Straight out of the department of redundancy department: Nobody can definitively answer your questions without seeing a copy of the plan document that you signed.

I would not "lean on" any service provider to commit fraud.  Unless somebody thinks they can get the IRS to allow you and your partner's deferrals to be retroactively re-characterized, I would stay away from any manner of pretense.

You need to hire a competent service provider to review the actual plan document and the actual history of the plan.  Frankly, the first thing I'd take a look at is that 60.7% figure and make doubly sure that is being calculated correctly.  If that number falls to less than 60% it renders the rest of this discussion moot.

And while it is too late to do much for 2016, until this issue gets resolved you should take steps to eliminate any deferrals by any key employee for 2017 (probably just you and your partner).

Good luck.

 

[JRN]

I don't think it is "fraud" if they undo their 401(k) contributions based on mistake. The owners re-do their W-2s and include the returned 401(k) contributions (adjusted for earnings) in their taxable income for 2016. I don't think that is "fraud". I think it's a practical solution to a problem that comes up more often than it should.

[Lou S.]

As Mike correctly states the answers to your questions should all be in the Plan Document.

While the determination date for 2016 is 12/31/2015, eligible non-key employees in 2016 would get the TH minimum based on full year 2016 pay, even if your document excludes pre-participation compensation.

If your plan document is drafted such that only non-key employee/participants who are employed on the last day of the year are eligible for the TH minimum then you can satisfy the TH-minimum with a 1% contribution (assuming that is the highest deferral rate between you and your partner) just to them.

 

On the other hand if it says all employees even Key get the TH minimum once you and partner get the 1% contribution your are now at 2% with deferral and have to increase to 2% which starts the whole cycle over.

 

But I totally agree with Mike, have that 60.7% figure rechecked.

[Lou S.]

3 minutes ago, JRN said:

I don't think it is "fraud" if they undo their 401(k) contributions based on mistake. The owners re-do their W-2s and include the returned 401(k) contributions (adjusted for earnings) in their taxable income for 2016. I don't think that is "fraud". I think it's a practical solution to a problem that comes up more often than it should.

While I agree with your practicality. I believe the IRS from the podium at conferences agrees with Mike's comment that you can't simply "reverse the key-ee deferals."

[Mike Preston]

What, pray tell, is the "mistake" to which you refer? Please don't tell me that it is along the lines of: "Well, if I was told about the consequences I wouldn't have deferred." While that may be a mistake it isn't something the Code or regulations allow one to "undo". Unless, of course, you are volunteering to assist with an EPCRS filing that incorporates your practical solution.

[JRN]

Mike, Please come down off your high horse. I get your point. But, it's a small business with $100K in plan assets.

[Mike Preston]

I'm quite comfortable up here, way up here, on whatever horse you think I'm perched. Most plan sponsors, no matter the size of the plan, don't want to commit fraud. Paychex might have done the plan sponsor a disservice by not adequately informing them of the top-heavy consequences, even to the point of potential liability should the plan sponsor choose to pursue damages, but I would seriously doubt they would knowingly participate in fraud.

 

[mphs77]

I feel sorry for you having Paychex as your administrative firm. Having reviewed and been the takeover contact on many Plans "serviced" by them over the years, I have yet to run across a Plan without issues caused by their "services".

 

It could be that the only Plans that Paychex had problems with were the ones I saw, but I doubt it.

[ESOP Guy]

I am going to throw my voice behind the idea undoing the deferrals is not an approved correction method. 

[rushlakeguy]

15 hours ago, Mike Preston said:

It seems that some of the large 401(k) providers are compartmentalized to the point that there are a number of issues that don't get addressed until the plan sponsor has very few options.

Nobody can answer your questions without seeing a copy of the plan document that you signed.

However, with that said the answers are:

1) It is probably not everybody,  it is not even necessarily employees "eligible to the plan (6 months of service and over 21 years old) as of 12/31/2015" because not only do they need to satisfy the eligibility criteria they need to also satisfy the entry date criteria. Nobody can definitively answer your question without seeing a copy of the plan document that you signed.

2) Typically, top-heavy minimum contributions are not required for participants who have terminated before the end of the year. Nobody can definitively answer your question without seeing a copy of the plan document that you signed.

3) Typically, if the highest deferral rate for any key employee is 1% then the top-heavy minimum is also reduced to 1% from 3%.  Nobody can definitively answer your question without seeing a copy of the plan document that you signed.

4) Typically, the top-heavy minimum allocation will be subject to a six year graded vesting schedule (0-20-40-60-80-100). Nobody can definitively answer your question without seeing a copy of the plan document that you signed.

See a pattern? Straight out of the department of redundancy department: Nobody can definitively answer your questions without seeing a copy of the plan document that you signed.

I would not "lean on" any service provider to commit fraud.  Unless somebody thinks they can get the IRS to allow you and your partner's deferrals to be retroactively re-characterized, I would stay away from any manner of pretense.

You need to hire a competent service provider to review the actual plan document and the actual history of the plan.  Frankly, the first thing I'd take a look at is that 60.7% figure and make doubly sure that is being calculated correctly.  If that number falls to less than 60% it renders the rest of this discussion moot.

And while it is too late to do much for 2016, until this issue gets resolved you should take steps to eliminate any deferrals by any key employee for 2017 (probably just you and your partner).

Good luck.

 

Thanks Mike, very much appreciated.  Regarding question #3, I think addresses this.  There's a section in the plan document called "minimum allocation for top-heavy plans" which states except as otherwise provided in (3) and (4) below, the employer contributions and forfeitures allocated on behalf of any participant who is not a key employee will not be the lesser of three-percent of such participants compensation or (in the case the employer does not maintain a defined benefit plan in addition to this plan that designates this plan to satisfy code 401) the largest percentage of employer contributions and forfeitures, as a percentage of key employees compensation, as defined by 401(a)(17), allocated on behalf of any key employee during the year.

3- excludes employees not employed on last day of the year

4- excludes employees covered under another plan

How do you interpret that?

[rushlakeguy]

15 hours ago, Mike Preston said:

It seems that some of the large 401(k) providers are compartmentalized to the point that there are a number of issues that don't get addressed until the plan sponsor has very few options.

Nobody can answer your questions without seeing a copy of the plan document that you signed.

However, with that said the answers are:

1) It is probably not everybody,  it is not even necessarily employees "eligible to the plan (6 months of service and over 21 years old) as of 12/31/2015" because not only do they need to satisfy the eligibility criteria they need to also satisfy the entry date criteria. Nobody can definitively answer your question without seeing a copy of the plan document that you signed.

2) Typically, top-heavy minimum contributions are not required for participants who have terminated before the end of the year. Nobody can definitively answer your question without seeing a copy of the plan document that you signed.

3) Typically, if the highest deferral rate for any key employee is 1% then the top-heavy minimum is also reduced to 1% from 3%.  Nobody can definitively answer your question without seeing a copy of the plan document that you signed.

4) Typically, the top-heavy minimum allocation will be subject to a six year graded vesting schedule (0-20-40-60-80-100). Nobody can definitively answer your question without seeing a copy of the plan document that you signed.

See a pattern? Straight out of the department of redundancy department: Nobody can definitively answer your questions without seeing a copy of the plan document that you signed.

I would not "lean on" any service provider to commit fraud.  Unless somebody thinks they can get the IRS to allow you and your partner's deferrals to be retroactively re-characterized, I would stay away from any manner of pretense.

You need to hire a competent service provider to review the actual plan document and the actual history of the plan.  Frankly, the first thing I'd take a look at is that 60.7% figure and make doubly sure that is being calculated correctly.  If that number falls to less than 60% it renders the rest of this discussion moot.

And while it is too late to do much for 2016, until this issue gets resolved you should take steps to eliminate any deferrals by any key employee for 2017 (probably just you and your partner).

Good luck.

 

For #1, it says entry date = first day of the plan year and first day of the seventh month of the plan year.  If the plan has a 6 month of service requirement, does that mean anyone who started after January 1st, 2016 isn't eligible for the 2016 top-heavy contribution? 

[rushlakeguy]

15 hours ago, Mike Preston said:

I'm quite comfortable up here, way up here, on whatever horse you think I'm perched. Most plan sponsors, no matter the size of the plan, don't want to commit fraud. Paychex might have done the plan sponsor a disservice by not adequately informing them of the top-heavy consequences, even to the point of potential liability should the plan sponsor choose to pursue damages, but I would seriously doubt they would knowingly participate in fraud.

 

I'd like to hear more about how they could be liable and what I can do about it.  Here's what happened:

1- We violated the ADP test at 12/31/15, so the owners had to return $15k of excess (returned March 2016).  We were also top heavy and made a $10k contribution last month to correct it.  

2- This was all brand new to us.  We have had the plan for 2 years and had no idea these rules existed (kind of embarrassing I know).   When I talked to a customer service representative about what to do, they processed my return of excess and specifically told me that because of this amount coming out, I should have no problem being under 60% (ie it would get applied back to the 12/31/2015 test date).   Unfortunately I don't have this in writing.

3- Because we thought we were in the clear, the other owner and I each deferred a small amount of our 2016 compensation.  Apparently just enough to get us over 60%.  Had we not been told the excess wouldn't be included in the calc, we obviously wouldn't have. 

 

So frustrating 

[rushlakeguy]

1 hour ago, mphs77 said:

I feel sorry for you having Paychex as your administrative firm. Having reviewed and been the takeover contact on many Plans "serviced" by them over the years, I have yet to run across a Plan without issues caused by their "services".

 

It could be that the only Plans that Paychex had problems with were the ones I saw, but I doubt it.

Who would you all recommend a small business like myself switch to?

[mphs77]

I do not know what area of the country you are in, but I would hazard to say any Third Party Administrative firm would provide you adequate service. Look for that kind of firm, not a business of another focus that also provides TPA services as a "benefit to our clients".

[Tom Poje]

going forward, if all the 'key' employees are age 50 or older, you could ament the plan and put a plan cap of '0%' on them and then they could defer up to $6000 which would be treated as a catch up.

catch up contributions are not included in the ADP test, nor do they count in determining if you need to put in a top heavy for the current year. if there is a match you would not want to match catch ups as matching contributions would require a top heavy contribution  (assuming assets are still over 60% for the top heavy test)

[ESOP Guy]

Another thing a good TPA could help you with is if a Safe Harbor plan makes sense for you company.

If you are having both ADP testing problems and Top Heavy problems it might be worth looking into a Safe Harbor plan that can be set up and ran such you get a "bye" on both of those tests.  There are required contributions in a Safe Harbor plan but they can run a cost/benefit analysis for you to decide if it meets your goals at a cost you can accept. 

I agree with others.  In any metro area of any size there are people who do nothing but help administer these kinds of plans.  Also, some CPA firms have departments that do nothing but help administer these kinds of plans. 

[Bird]

Quote

2- This was all brand new to us.  We have had the plan for 2 years and had no idea these rules existed (kind of embarrassing I know).   When I talked to a customer service representative about what to do, they processed my return of excess and specifically told me that because of this amount coming out, I should have no problem being under 60% (ie it would get applied back to the 12/31/2015 test date).   Unfortunately I don't have this in writing.

Not surprising that this is bad info.

Quote

3- Because we thought we were in the clear, the other owner and I each deferred a small amount of our 2016 compensation.  Apparently just enough to get us over 60%.  Had we not been told the excess wouldn't be included in the calc, we obviously wouldn't have. 

And this is incorrect as well; your 2016 contributions don't impact your 2016 ratio, which is determined as of 12/31/15.  But those contributions are in fact what triggered the TH contribution. 

No need to be embarrassed about not knowing; it's a complex field but unfortunately TH is a classic example of where Paychex and other automated/do-it-yourself "administrators" let you down.  Their business model is basically "you want fries with that payroll service" and depends on low IRS audit rates.

[BG5150]

Those who probably will get the Top Heavy contribution:  anyone hired on or before 1/1/2016. (Those hired on 1/1/2016 became participants on 7/1/2016).  But anyone no longer with the company on the last day of the year can be excluded. 

Even if the plan says that you only take into consideration pay earned only while a participant for most things, anyone who entered the plan on 7/1/16 (and still there at the end of the year) will get 3% (or whatever TH % is required to be that year)  of their full year's pay.

I said "probably" because I haven't seen the document.  But outfits like Paychex usually don't have clients with wacky provisions in the plan doc.

 

[BG5150]

4 hours ago, rushlakeguy said:

2- This was all brand new to us.  We have had the plan for 2 years and had no idea these rules existed (kind of embarrassing I know).   When I talked to a customer service representative about what to do, they processed my return of excess and specifically told me that because of this amount coming out, I should have no problem being under 60% (ie it would get applied back to the 12/31/2015 test date).   Unfortunately I don't have this in writing.

 

8 minutes ago, Bird said:

Not surprising that this is bad info.

Not only bad, but totally wrong.  Any in-service withdrawals will be added back into the plan assets for Top Heavy purposes for 5 years.  (4 years after the year of distribution).  So you are stuck with them for 5 years for each you you have an in-service withdrawal.

[401king]

4 hours ago, rushlakeguy said:

1- We violated the ADP test at 12/31/15, so the owners had to return $15k of excess (returned March 2016).  We were also top heavy and made a $10k contribution last month to correct it.  

 

So, were you also Top Heavy in 2015?

[rushlakeguy]

1 minute ago, 401king said:

So, were you also Top Heavy in 2015?

Yep.  Made a $10k contribution a couple months ago.

[rushlakeguy]

46 minutes ago, BG5150 said:

Those who probably will get the Top Heavy contribution:  anyone hired on or before 7/1/2015. (Those hire on 7/1/15 became participants on 7/1/2016).  But anyone no longer with the company on the last day of the year can be excluded. 

Even if the plan says that you only take into consideration pay earned only while a participant for most things, anyone who entered the plan on 7/1/16 (and still there at the end of the year) will get 3% (or whatever TH % is required to be that year)  of their full year's pay.

I said "probably" because I haven't seen the document.  But outfits like Paychex usually don't have clients with wacky provisions in the plan doc.

 

Can you walk me through how you get to 7/1/2015 in your first paragraph?

[401king]

15 minutes ago, rushlakeguy said:

Yep.  Made a $10k contribution a couple months ago.

If you were Top Heavy in 2015 then why were you not aware that you were Top Heavy for 2016?

[rushlakeguy]

23 minutes ago, 401king said:

If you were Top Heavy in 2015 then why were you not aware that you were Top Heavy for 2016?

When I talked to the Paychex rep, they said my return of excess in March-16 would adjust down my balance and that I should have no problem being under 60% (ie it would get applied back to the 12/31/2015 test date).  

[Mike Preston]

I understand your frustration.  As I could have predicted, there is now confusion regarding the timing of various things.  Now, I'll go further.  Not only is it true that nobody can definitively answer your questions without seeing a copy of the plan document that you signed, but they would need to see the administrative reports for each year the plan has been in existence along with a detail transaction ledger of all deposits (contributions, deferrals) and all withdrawals showing the reason for the deposit/withdrawal.

There is no shortcut.

Good luck.

 

[BG5150]

52 minutes ago, rushlakeguy said:

Can you walk me through how you get to 7/1/2015 in your first paragraph?

Ooops.  Never mind.  I was basing my answer on a 1-yr wait, not six months.

I have since edited my post.

Sorry for any confusion... :(

[rushlakeguy]

18 minutes ago, BG5150 said:

Ooops.  Never mind.  I was basing my answer on a 1-yr wait, not six months.

I have since edited my post.

Sorry for any confusion... :(

no worries, thanks

[401king]

1 hour ago, rushlakeguy said:

When I talked to the Paychex rep, they said my return of excess in March-16 would adjust down my balance and that I should have no problem being under 60% (ie it would get applied back to the 12/31/2015 test date).  

Something just seems "off." So they returned excess contributions for 2015 testing. Then, in 2016, you only made contributions of 1% of combined earnings for the Keys. Was your 2015 refund less than your 1% contributions?

[rushlakeguy]

11 minutes ago, 401king said:

Something just seems "off." So they returned excess contributions for 2015 testing. Then, in 2016, you only made contributions of 1% of combined earnings for the Keys. Was your 2015 refund less than your 1% contributions?

Correct.  They returned about $10k in Mar-16.  The returned amounts are included in the 12/31/2015 settlement date calculation however.     I then made 1% contribution in 2016. 

[Lou S.]

1 hour ago, rushlakeguy said:

Correct.  They returned about $10k in Mar-16.  The returned amounts are included in the 12/31/2015 settlement date calculation however.     I then made 1% contribution in 2016. 

Well in one of the wonderful (and I use that term loosely and sarcastically here) quirks of the IRC, while you got the pleasure of taking that back as taxable income and not get it in the plan tax deferred you get the pleasure of counting it towards the 12/31/15 balance for the TH determination and as BG5150 correctly pointed out a while ago it gets to hang around added back in for the next 5 years as an in service distribution.

Sometimes I think they write these laws with philosophy of - "How can we possibly make this make the least amount of senses and be the most complicated to run"

But if I'm reading the rest of your responses and questions in the thread correctly it sounds like you'll owe 1% to everyone who met the 6 months eligibility who did not terminate employment prior to 12/31/16.

It is possible you can offset some of this if there are forfeitures from your prior top heavy minimum.

I wish you luck. For what it is worth it sounds to me like you are going to have this problem basically forever so you might want to consider changing the plan design to something t hat will automatically pass testing like a Safe-Harbor 401(k) (2018 the earliest you can do this) or perhaps some other plan might suit your business needs better.

I will echo others who suggest you reach out to a qualified TPA in your local area. It is possible you accountant could suggest one or two to interview.

 

[rushlakeguy]

13 minutes ago, Lou S. said:

Well in one of the wonderful (and I use that term loosely and sarcastically here) quirks of the IRC, while you got the pleasure of taking that back as taxable income and not get it in the plan tax deferred you get the pleasure of counting it towards the 12/31/15 balance for the TH determination and as BG5150 correctly pointed out a while ago it gets to hang around added back in for the next 5 years as an in service distribution.

Sometimes I think they write these laws with philosophy of - "How can we possibly make this make the least amount of senses and be the most complicated to run"

But if I'm reading the rest of your responses and questions in the thread correctly it sounds like you'll owe 1% to everyone who met the 6 months eligibility who did not terminate employment prior to 12/31/16.

It is possible you can offset some of this if there are forfeitures from your prior top heavy minimum.

I wish you luck. For what it is worth it sounds to me like you are going to have this problem basically forever so you might want to consider changing the plan design to something t hat will automatically pass testing like a Safe-Harbor 401(k) (2018 the earliest you can do this) or perhaps some other plan might suit your business needs better.

I will echo others who suggest you reach out to a qualified TPA in your local area. It is possible you accountant could suggest one or two to interview.

 

It's so frustrating.  Would the IRS really disqualify the plan with me being at 60.7% under these circumstances?

It's actually not 1% we owe, but 3%.  I misspoke.

You bring up a good point about forfeitures.  There are a few people who were paid Top Heavy Contributions for the prior year that are no longer with the company.  How do I claw those back?

[ETA Consulting LLC]

I reached out to rushlakeguy behind the scenes and got a little information.  As we all know, there are at least a million different possibilities until you get the actual numbers and facts.  I think that was Mike Preston's point all along.

Basically, the Key Employee Balances exceed 60% of plan assets by only $569.10.  Without any employee hardships, loan defaults, or ANY types of inservice distributions during the past 5 years that may be worked back in, you have a top heavy plan.

BUT.... Let looks at a potential grey area for a moment.

We know that for purposes of determining the balances on the determination date, you're not allowed to use discretionary profit sharing contributions deposited in the following year but made 'as of' that date.  There is an exception for the first plan year; where potentially the trust balance is zero on that date and the 'accrued contributions' are all you have.

We also know that plan subject to the funding requirements of Section 412 (e.g. Money Purchase Plans) would have those required contributions considered as part of the plan's balance on the determination date; even though they will be deposited within 8-1/2 months after that date.

But what about the Required Top Heavy Minimum Contribution for the 2015 Plan Year that was actually deposited in 2016.  It has the same characteristics of a 412 funding requirement (in that it MUST be made and not subject to the discretion of the employer), but it is not an actual funding requirement under Section 412.

It may be an interesting argument presented to the IRS during a hypothetical audit that the $10,000 funded to those non-key employees for the 2015, but deposited in 2016, gets accrued to the balances of the non-key employees since it was required to be made in a manner similar to a 412 funding requirement.

What do you think?

 

[Mike Preston]

I think you have it backwards, but we end up in the same place.  

There is an old post of Tom's which goes into the details so I won't go into them again here (He cites a published ASPA Q&A on the issue).  As detailed in the ASPA Q&A the IRS has stated rather vociferously from the podium that the account balance, as that term is used in its most technical sense for top-heavy determination purposes, includes the accruals, even in a profit sharing plan.  

It has been my position (as well as the position of others in the industry like Sal and the 401(k) Answer Book) that the language of the regs precludes including profit sharing accruals and that they conform to what you have said: you include only legally required accruals which would typically ignore profit sharing plan accruals.

So a plan sponsor can choose which position they feel is best for them with very little exposure.

Here is a link to that old thread.  Tom's post is not at the top, but it shouldn't be too hard to find.

mike

[BG5150]

12 hours ago, rushlakeguy said:

It's actually not 1% we owe, but 3%.  I misspoke.

If the highest Key employee allocation, including deferrals, is only 1% of their pay, then all you owe is 1% TH.  After the "your refund will help you not be top heavy" gaffe, I wouldn't trust your provider much, if at all.

My suggestion is take your business to a reputable TPA in your area.  The administration may cost a little extra, but I think it would be worth the piece of mind knowing things are running correctly. 

Another question to ask yourself:  if they messed up the TH thing, what else have they missed or got wrong?

[BG5150]

Side note:  as someone mentioned before, you may want to think about changing your plan design.  A Safe Harbor Match could be the way to go.  The top match is 4% of pay, only for those deferring 5% or more of their own pay.  This way, the partners can defer as much as they'd like without fear of refunds.  Also, if the match is the only employer contribution, it will satisfy the TH minimum no matter how many people defer.

[ESOP Guy]

45 minutes ago, BG5150 said:

I

My suggestion is take your business to a reputable TPA in your area.  The administration may cost a little extra, but I think it would be worth the piece of mind knowing things are running correctly. 

 

Here is what I tell clients all the time about my fees and the fees of other good TPAs.  It is cheap insurance.  By that it tends to save you money in the long run.  I am not trying to rub salt into an open wound here but the little extra you would have paid a TPA would have saved you the cost of the TH contributions.  You can either pay for good advice up front to avoid problems or pay for good advice on how to clean things up.  In the end you will pay for good advice.  This is field is too complex to use the cheapest provider in my mind but I could be seen as have a self-interest in my own advice so do what you want with it. 

[rushlakeguy]

1 hour ago, ESOP Guy said:

Here is what I tell clients all the time about my fees and the fees of other good TPAs.  It is cheap insurance.  By that it tends to save you money in the long run.  I am not trying to rub salt into an open wound here but the little extra you would have paid a TPA would have saved you the cost of the TH contributions.  You can either pay for good advice up front to avoid problems or pay for good advice on how to clean things up.  In the end you will pay for good advice.  This is field is too complex to use the cheapest provider in my mind but I could be seen as have a self-interest in my own advice so do what you want with it. 

I hear ya and we will be switching, but keep in mind this wasn't a situation of us selecting the cheapest provider.  We're actually paying Paychex a decent chunk of change for our HR services.  All the more frustrating

[401king]

15 minutes ago, rushlakeguy said:

We're actually paying Paychex a decent chunk of change for our HR services

Use this as an excuse to keep Paychex for only one purpose: Paychecks. This may not be the last of your unexpected HR expenses brought on by them. 

[Bill Presson]

3 hours ago, rushlakeguy said:

I hear ya and we will be switching, but keep in mind this wasn't a situation of us selecting the cheapest provider.  We're actually paying Paychex a decent chunk of change for our HR services.  All the more frustrating

We are a TPA/Actuarial firm and use Paychex for payroll (not our plan). We started using them for HR stuff a few months ago. It became painfully obvious very quickly that they didn't know what they were doing in that area and we've terminated that service.

So be careful about the HR stuff as well.

[rushlakeguy]

I just want to thank everyone for their assistance with my situation, everyone in this thread and also from ETA Consulting separately. 

I'm moving forward under the assumption that I am not top-heavy in 2016 because the contributions for being top-heavy in 2015 should have been accrued at 12/31/2015.  As such, I'm not on the hook for $48k.