401K with voluntary

Before I stand accused of wasting time, and know this is not going to fly, but accountant as well as broker did question.

I have a 401K safe harbor with voluntary, after tax contributions.  One of the owners mistakenly over contributed a portion of the voluntary such that he's over 415.

Since voluntary is not deductible anyway, could not the excess be transferred to a rollover account.

I said " no", but I they they're fishing.

No. The 415 regs (and the document) state what is supposed to happen to a 415 excess so that's pretty straightforward.

I am curious how after tax money for an owner passed the ACP test. It's pretty rare.

Yes to every thing Bill said.

1 hour ago, Bill Presson said:

curious how after tax money for an owner passed the ACP test

I feel like it is Déjà vu every time there is a medical conference somewhere.

"Yes Dr. Acula, I understand that your brother at Google can make this kind of contribution, but it is not going to work for your plan...."

Three owners, two doing voluntary, the second minimal, third $0.

ACP passed, I checked by hand as I could not believe it, either.

Oh well, in addition to our mentioning it, he't just got to watch for the limit.  ADP (payroll ADP) isn't going to limit him.

They don't even limit some of our 401k clients for the maximum  402(g) anyway!

Thanks all.

If I am understanding correctly, from ASPPA AC, pertains to DB plan, since corp also sponsors a defined benefit plan,  owner can take a Covid distribution equal to the amount of overage in the 401K, pay tax, contribute to corp who then pays to plan as part of the minimum required contribution?

17 minutes ago, thepensionmaven said:

If I am understanding correctly, from ASPPA AC, pertains to DB plan, since corp also sponsors a defined benefit plan,  owner can take a Covid distribution equal to the amount of overage in the 401K, pay tax, contribute to corp who then pays to plan as part of the minimum required contribution?

What is AC? Can you link to whatever source you're referring to?

A corrective distribution may not be treated as a COVID distribution. From Notice 2020-50:

Quote

However, any amount described in Q&A-4 of §1.402(c)-2 is not permitted to be treated as a coronavirus-related distribution. Thus, the following amounts are not coronavirus-related distributions: corrective distributions of elective deferrals and employee contributions that are returned to the employee (together with the income allocable thereto) in order to comply with the § 415 limitations, excess elective deferrals under § 402(g), excess contributions under § 401(k), and excess aggregate contributions under § 401(m); loans that are treated as deemed distributions pursuant to § 72(p); dividends paid on applicable employer securities under § 404(k); the costs of current life insurance protection; prohibited allocations that are treated as deemed distributions pursuant to § 409(p); distributions that are permissible withdrawals from an eligible automatic contribution arrangement within the meaning of § 414(w); and distributions of premiums for accident or health insurance under § 1.402(a)-1(e)(1)(i).

41 minutes ago, C. B. Zeller said:

What is AC?

My guess would be ASPPA Annual Conference.

3 hours ago, thepensionmaven said:

Three owners, two doing voluntary, the second minimal, third $0.

ACP passed, I checked by hand as I could not believe it, either.

Oh well, in addition to our mentioning it, he't just got to watch for the limit.  ADP (payroll ADP) isn't going to limit him.

They don't even limit some of our 401k clients for the maximum  402(g) anyway!

Thanks all.

Hate to be a pest here, but in the first post, you said the plan is safe harbor. Are there really dollars subject to the ACP? Is there a match that's not safe harbor? Hate to be pessimistic, but this is just odd to me.

51 minutes ago, RatherBeGolfing said:

My guess would be ASPPA Annual Conference.

You mean that thing that was cancelled this year? You are probably right and I'm sure thepensionmaven actually meant ASPPA All Access which replaced it. Still I have to wonder if inventing a new abbreviation and the added confusion that comes along with it was worth saving the effort to type "nnual onference." Don't mind me, just grumpy this morning.

58 minutes ago, Bill Presson said:

Hate to be a pest here, but in the first post, you said the plan is safe harbor. Are there really dollars subject to the ACP? Is there a match that's not safe harbor? Hate to be pessimistic, but this is just odd to me.

A plan using the ACP safe harbor is "permitted to" exclude the safe harbor matching contributions when performing the ACP test on voluntary contributions (1.401(m)-2(a)(5)(iv)). Therefore it follows that you are permitted to include them in the test as well.

OK, it appears this conversation has gotten a bit out of hand -perhaps I did not ask correctly.

1.  Not to split hairs, the ASPPA Annual Conference (AC) was held, although not in person, but virtually. A conference is still a conference, whether in person or virtually.

2.  My second question was worded entirely incorrectly.  The owner overshot his 415 limit by some portion of his voluntary contribution.  I was not asking if he could take a COVID to pay the excise tax.  What I was thinking, and I did check this with an ERISA attorney with a positive response, was removing the excess prior to 12/31; claiming as income, paying the excise tax, then loan the excess to corp, corp to plan to pay a portion of the safe harbor 3%

3.  Client also has a DB.  Take a CRD to pay the baalance of the safe harbor, the balance to fund the DB.