I have a plan that wants to do a fixed match in excess of 6% of pay (dollar for dollar up to 10%) --generous, I know. There's a 3% SH Nonelective. Oddly enough, I've never had to perform an ACP test on match in a SH plan. I know I can test ALL the match together. But if I just want to test the non-safe harbor piece, what percentages am I using?

I'm guessing if someone has a 10% match, do I give them a 4% in the ACP test? Someone deferring only 6% gets a 0?

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We have a client that is bringing on board a new physician assistant. Their 401(k) Plan has a one year of service with semi-annual entry dates. They want to amend the Plan to allow this employee to participate immediately. Any thoughts on amending the Plan and under eligibility naming this individual specifically as being a participant in the Plan? I am told this employee will be compensated well below the HCE limit (around $90,000 a year in maximum compensation).

Terminated employee continued to be paid after termination due to payroll error. Employee deferrals were withheld from the erroneous "post-termination pay" and contributed to the 401(k) and employer matching contributions were made on those deferrals. The error was caught and employee repaid the post-termination pay to the employer. But in the meantime, he took a distribution of his entire 401(k), including the deferrals and matching contributions attributable to the post-termination pay (that he since repaid).

I am clear that the employee deferrals are considered Excess Amounts under ECPRS, the overpayment is considered a corrective distribution not eligible for favorable tax treatment, and certain notice and reporting obligations apply. But I cannot find a clear answer on the employer matching contributions? Are they considered Excess Allocations under ECPRS requiring repayment to the plan by either the participant or the employer? But since they were contributed to the plan in error to begin with (and we're still within the same plan year), it doesn't seem rationale to me that they would be required to be repaid to the plan. The amount in question is apx. $300. Or can they be considered Excess Amounts and treated the same as the employee deferrals? Essentially just considered taxable income to the employee? Thanks in advance for any thoughts.

An employer recently decided to terminate their calendar year 401k asap and would prefer to have 2019 be the last year that admin is needed. The SH contribution is the 3% nonelective. I wanted to make sure I have the right procedure in mind after trying to read the regs but finding conflicting information on some of the threads here. If I understand, the soonest that the plan can be terminated is no earlier than 30 days after the issuance of a participant notice which says that the plan is terminating and how the employer's obligation to make SH contributions will end on the plan termination date. At this point it looks like 9/15/19 would be a likely plan termination date. A 'maybe' SH notice was not issued for 2019. The employer will need to not only contribute the 3% SHNEC based on compensation through the date of the plan termination, but also pass the ADP test if any deferrals are made by the HCEs. The plan also allows for cross-tested PS contributions, and if any are made the ACP test would need to also pass. The 415c, 402g and 401a17 limits would all be pro-rated for an 8.5 month short plan year. All contributions must be made during 2019 and all assets must be distributed by December 31, 2019. A 5310 will not be submitted. Is there anything that is being overlooked?

OK, I know this has been asked, but some threads are from 2003 & 2004, so I wanted to ask again. A client received a DOL letter (out of Philly) last month about the late deferrals reported on their 2018 5500. This client had already contributed lost earnings to participants and filed Form 5330 with the excise tax payment. The letter says "It is important to note that some plan sponsors who make late remittances of participant contributions decide merely to calculate lost earnings using the VFC calculator, and deposit that amount into the plan, but do not file a VFCP application. This informal process is not the same as filing a VFCP application, and does not protect a plan sponsor from potential audit by EBSA."

In the last month, I went ahead and filed the VFCP application on behalf of the plan sponsor because I don't know if they would otherwise be targeted for an audit. Questions: [1] If it will be time consuming and costly (to the plan sponsor) to determine actual earnings for each affected participant and payroll, are you using the DOL calculator even when not filing a VFCP application? I believe the answer is yes for the majority. [2] What potential penalties could the DOL impose if they audit a plan that has corrected the prohibited transaction by filing the 5330 and paying the excise tax, albeit with earnings determined using the DOL calculator. I would think none, but maybe they would require the full application? Either way, no one wants the DOL to audit a Plan and I would like to reduce the probability. [3] Are any of you opting for the VFCP filing for all late deferrals from the get go (before the client receives a DOL letter)? We give our employers the option, but we charge an hourly rate for this that would always FAR exceed both the lost earnings and the excise tax, so it is cost prohibitive. Unfortunately, with these DOL letters being sent to plan sponsors, they are getting freaked and we end up doing the filing anyway.

Small DB plan trustee pays for investment courses from trust assets (about $1,500 from $750,000 of assets). Could this be considered a plan expense? I think probably not, but in the context of a DB plan for which the trustee is the main participant and ultimately must meet the minimum funding requirement, it may not make a difference. The ultimate question is whether this type of expense is proper to begin with, and instead is a settlor or personal to the Trustee expense. In the context of a DC plan it could make a difference.

I'm talking to a plan I'm looking to take over. They're getting close to the audit threshold. Luckily, they have two separate businesses in their controlled group, so I'm thinking about splitting the plan into two identical plans to avoid the audit (yes, we'll charge them a little more, but nothing near what the audit would cost). The assets are on a product platform. One of the issues is that very few of the participants have balances. I can deal with manually separating the download, but is there a problem with all the participants staying in the same 'contract'? Is this a master trust?