ERISAGal Posted April 23, 2020 Posted April 23, 2020 If the employer chose to stop their discretionary match mid year, would the compensation for determining ACP testing also only be for the period of time the match occurred during the year or is full Plan Year compensation always used? I seem to be having the hardest time being able to confirm this.
C. B. Zeller Posted April 23, 2020 Posted April 23, 2020 Compensation for the ACP test must be 414(s) compensation. If you are using anything other than a safe harbor definition of compensation, such definition has to be reasonable, and it has to satisfy the compensation ratio test. I have no idea whether a definition that excludes all pay after a given date would be considered "reasonable." ERISAGal and Luke Bailey 2 Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance. Corey B. Zeller, MSEA, CPC, QPA, QKA Preferred Pension Planning Corp.corey@pppc.co
Larry Starr Posted April 23, 2020 Posted April 23, 2020 3 hours ago, ERISAGal said: If the employer chose to stop their discretionary match mid year, would the compensation for determining ACP testing also only be for the period of time the match occurred during the year or is full Plan Year compensation always used? I seem to be having the hardest time being able to confirm this. You can't confirm it because you are looking for something that is not there. The numbers are done for the plan year; doesn't matter when the discretionary match was made. Luke Bailey and ERISAGal 2 Lawrence C. Starr, FLMI, CLU, CEBS, CPC, ChFC, EA, ATA, QPFC President Qualified Plan Consultants, Inc. 46 Daggett Drive West Springfield, MA 01089 413-736-2066 larrystarr@qpc-inc.com
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