Had an inquiry from an employer who sponsors a cafeteria plan where the employer (C-corp) has 3 owner/employees only -- ALL are Key. No NHC employees. I assume this has no possibility of passing testing, as I'm not aware of any provision similar to qualified plans where coverage/nondiscrimination is automatically passed if there are no NHC employees. So they would automatically fail the 25% key employee concentration test. Agree?

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If a sponsor over-deposits the match for an HCE, do you count the total deposited in the ACP test or would you forfeit first? For example, the match is 50% on 6%. The match should have been $8,250 but the client deposited $10,000. Would you test $10,000 or $8,250 in the ACP test?

Sponsor acquired (through a stock purchase) a company that had a 401(k). Some participants have variable annuities as investments in the plan. The new fiduciary wants to know what his options are, because he doesn't want a legal duty to monitor the annuities. My thought is to restrict new money investments and wait for the surrender charges to burn off and then force the participants to liquidate. Are there any other alternatives, for example the quarantining of the annuities in another plan and just writing a memo that says you didn't choose them, you have no expertise, etc.

I understand that the determination date for top heavy is the last day of the first plan year (for a new plan year). If a plan is top heavy as of 12/31/18, the employer doesn't have to make a minimum contribution until the 2019 plan year, right?

Is the stipend compensation included in plan compensation? Have a 401(k) plan -- the employees are paid regular hourly wages, plus a stipend for meals, lodging, etc. when traveling. The sponsor specializes in providing services to other areas so the stipend makes up a large portion of the company payroll. I believe these are sometimes called per diem payments (not to be confused with per diem employees). The plan document defines plan compensation as W-2 Wages without any exclusions (so fringe benefit is not marked as being specifically excluded). "Wages within the meaning of Code section 3401(a) and all other payments of compensation to an Employee by the Employer (in the course of the Employer's trade or business) for which the Employer is required to furnish the Employee a written statements under Code sections 6041(d), 6051(a)(3), and 6052, determined without regard to any rules under Code section 301(a) that limit the remuneration included in wages based on the nature of location of the employment or the services performed."

It's clear that the stipend in NOT a reimbursement, as it is based on the government rates, and not actual expenses. It's also clear that the stipend is not taxable income and doesn't appear on the W-2. But plenty of things don't appear on the W-2 (FSA elections for example) but are still included as comp. I don't have familiarity with this type of compensation. Thoughts?

It appears from my research that a safe harbor 401(k) plan that uses the 3% nonelective contribution on plan compensation that does not satisfy the "safe harbor" definition of compensation and fails the 414(s) compensation test is a problem. It appears the method of correction is to base the 3% safe harbor contribution on a "safe harbor" definition of compensation which may or may not need an amendment depending on how the plan is written. I am wondering if there are any alternatives other than having the employer deposit additional contributions. For example, can one run the ADP Test on the basis of a "safe harbor" definition of compensation?

A plan was supposed to exclude HCEs from getting matching contributions. The original plan document didn't have that option. The new plan document does, but the box wasn't checked. In all the meetings and materials, the plan was promoted as having no contribution for HCEs. We are giving matches to HCEs for 2018, but we don't want to give matches to HCEs for 2019. Can we retroactively exclude the HCEs for 2019 --- as of 1/1/2019?

Trust is the beneficiary of an individual's 401(k) and Roth IRA. Trust specifies distributions be made to decedent's children at age 25, 30 and 35, distributing 1/3 of their share at each age. First distributions were made from the taxable account, which is now mostly distributed. Remaining distribution to be made from the IRA account. If a distribution is made from the IRA funds, can it be rolled over to an inherited IRA for the trust beneficiary? What are the options?

Let's say a participant is over 70-1/2 and took a full distribution as a rollover and let's say that his RMD was not processed by mistake. What would be the correction method for this mistake if the participant already deposited the check into the receiving IRA? Is amending the 1099-R to reflect that a portion of the distribution is an RMD and requesting the participant to take out the excess from the IRA the only method?

Plan says that claims must be submitted within 45 days after end of plan year. But the provider doesn't even send bill until the end of February. Would you: [1] Pay the otherwise allowable claim, as soon as possible but within 45 days of the participant's receipt of the bill; [2] Amend the plan (retroactively?) to provide a longer run out period; [3] Deny the claim, since not received by the deadline; or [4] Do something else?