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December 4, 2017

Here are the most recently added topics on the BenefitsLink Message Boards:

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pcbenefits007 created a topic in Defined Benefit Plans, Including Cash Balance

Improperly Excluded Employee; Need a Make-up for Missed Opportunity for Employee Contributions?

What's the prescribed method for handling mandatory employee contributions that were missed due to improper exclusion of an employee from the plan? While it's clear how to correct the employer contribution, it's not clear to me as to whether the employer must also pay the missed employee contributions. Apply the same method as when handling a missed opportunity for after-tax contributions under EPCRS?
Number of replies posted  1 reply      Number of times viewed  49 views      Add Reply
 
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Puffinator created a topic in 401(k) Plans

Safe Harbor Plan at Year End; True-up in Matching Contributions Must Be Made for Owners?

Small plan has basic SH Match and discretionary PS (New Comp/cross-tested). Uses SunGard/Corbel's Volume Submitter document. Adoption agreement specifies SH Match is calculated on an annual basis. Employer prefunds throughout the year, by depositing each pay period, which is when deferrals are deposited. Obviously, true-up is required at year-end to ensure the annual calculation is accurate. The two owners want to see a projection maxing out. A TPA performed similar projections last year, but the TPA did not true-up the owners' SH match before solving for max PS contribution, and I'm trying to figure out why. Although the owners are HCEs, all participants must have the SH Match calculated on an annual basis, correct? HCEs cannot just opt out of true-up, can they? My current thinking is that one must FOLLOW THE DOCUMENT, meaning a true-up must be done for HCEs.
Number of replies posted  1 reply      Number of times viewed  42 views      Add Reply
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Dougsbpc created a topic in 401(k) Plans

Troubled Plan Sponsor Skips Safe Harbor Contribution

Small plan (8 participants) didn't make its 2016 safe harbor contribution. Plan sponsor doesn't want to fund it. It's my understanding that if the sponsor has financial problems and can prove it, it may be able to provide a 30-day notice to participants and then not make any safe harbor contribution from that point (after the 30 days) to the end of the year, though it's responsible for making the SH contribution up to that point. And I believe such a plan still needs to provide top heavy minimums and meet the ADP test for the year. The sponsor's accountant seems to think that if the sponsor can prove it had declining sales and business for the past few years, it can simply skip the funding of the safe harbor contribution. Could that be correct?
Number of replies posted  5 replies      Number of times viewed  76 views      Add Reply
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Schlegdog13 created a topic in 401(k) Plans

Participant Has 401(k) Loan Repayment Question

I'm allowed two loans under my current plan. If I have two outstanding loans and pay them off, would that enable another loan for the maximum possible amount? Or would the the limit on such a loan be calculated using the highest balance for the two loans over the previous 12 months?
Number of replies posted  2 replies      Number of times viewed  37 views      Add Reply
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HWR created a topic in 401(k) Plans

Effect of Incorrect QNEC Calculation on 402(g)

Has anyone ever looked at how a QNEC that is figured wrong can be corrected?
  • In 2016 the plan administrator did not include all applicable Plan Comp in compensation for implementing match and employee deferrals.
  • In accordance with EPCRS principles, a 25% QNEC was made to the plan on behalf of eligible participants. The Plan is a Safe Harbor Match -- 100% of the first 3% of compensation and 50% of the next 2% of comp. Under Rev. Proc. 2016-51, Appendix B Section 2.02(1)(b), Example 6, the QNEC should be limited by any amount that would exceed the 402(g) limit, taking into account the entire missed deferral opportunity, not just the 25 (or, if applicable, 50%) QNEC for the missed deferral opportunity.
  • The QNEC was not properly limited, and a handful of participants have QNECs that, if the entire missed deferral were taken into account, would cause an excess 402(g) contribution. The QNECs were deposited in August of 2017.
  • The TPA wanted to treat as excess 402(g) deferrals. However, the actual dollar amounts contributed to the plan were not in excess of 402(g). Rather, the QNECs were not figured correctly.
Does anyone know the fix? Can the excess QNECs be forfeited and allocated to a suspense account to offset future contributions? Under the definition of "Excess Allocation," I'm not sure this qualifies, because it was "an amount made pursuant to a correction method provided under this revenue procedure for a different Qualification Failure," and hence not an "Excess Amount" under the EPCRS definition. Or maybe it is, because the actual amounts were not limited in accordance with EPCRS?
Number of replies posted  0 replies      Number of times viewed  19 views      Add Reply
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Lori H created a topic in 401(k) Plans

New Comparability Safe Harbor 401(k): Effect of Top Heavy Rules

7 participant 401(k) with standard safe harbor match. Plan is Top Heavy and has a New Comparability profit sharing formula. Is a 3% minimum allocation required for non-key employees if a Profit Sharing contribution is allocated? Doesn't the safe harbor matching contribution satisfy the Top Heavy contribution requirement?
Number of replies posted  2 replies      Number of times viewed  22 views      Add Reply
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