Compensation as a Participant

Hello,

When the document states compensation is only counted while a participant and entry is 01/01 & 07/01. Can you estimate compensation by dividing full year compensation in half or must I go to client and ask for 07/01 - 12/31 Compensation. I have a payroll report for the full year but not quarterly and client isn't great at responding. 

Thanks!

Get it from the client. Otherwise, you incur the liability for any error that occurs due to using incorrect compensation.

The client choose that provision.  If it is too much of a burden to get you the partial year data they can always amend the plan.  

On 2/8/2019 at 12:46 PM, ESOP Guy said:

The client choose that provision.  If it is too much of a burden to get you the partial year data they can always amend the plan.  

Going forward.

Thanks for the replies. I like the idea of switching to full year compensation.

Or, you could ask the client for a payroll report from 7/1 to 12/31.  Hopefully, the plan isn't that big.

38 minutes ago, BG5150 said:

Or, you could ask the client for a payroll report from 7/1 to 12/31.  Hopefully, the plan isn't that big.

Yeah let me be clear when I said they could amend the plan I wasn't recommending that as the best option merely it was an option.

I have plenty of clients that issue 2000-3000 W-2s that has 7/1 entry dates that use comp from 7/1 to 12/31.  They do wash BG says here.  They send me everyone's 1/1 to 12/31 comp and their 7/1 to 12/31 comp.  We determine who entered on 7/1 and use vlookups in spreadsheets to get their 7/1 to 12/31 comp.  

But if the client finds all of that too much of a chore they can amend going forward.  

of course there might be some folks you don't care if they enter mid year...

if it's for testing, you only need those folks who are deferring

if its profit sharing and there is a last day rule and these people quit it doesn't matter

if plan is top heavy and the contribution is not overly large then top heavy on full comp ....

If the client balks at this simple request, I'd hate to be in your shoes for harder "asks".  Establish the importance of doing things right.  It's what you're paid for, after all.

19 hours ago, BG5150 said:

Or, you could ask the client for a payroll report from 7/1 to 12/31.  Hopefully, the plan isn't that big.

If I have full year's comp I find it easiest to ask them for comp thru 6/30 and then subtract it.  That (6/30) report is probably already available somewhere...it's surprising/disturbing how difficult it is for some people to provide 7/1-12/31 figures but easy to get it as of 6/30.