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Message Boards Digest

April 14, 2021

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

t.haley created a topic in 401(k) Plans

45-day notice requirement for safe harbor correction

"Originally posted this question in the correction of plan defects forum but got no responses. Thought I would post here to see if anyone has any ideas:
Employee made deferral election upon beginning employment in September 2020. Recently discovered that no deferrals were made from September through December, 2020. When new plan year began and employee completed annual enrollment forms, proper deferrals began January 2021. Since we just discovered the missed deferrals, we cannot meet the 45-day notice requirement under the safe harbor correction method. Should we go ahead and make the 25% QNEC plus earnings and give the employee notice and move on or must we correct under the regular method for missed deferrals? Thoughts?"
0 replies   |    14 views   |    Add Reply

austin3515 created a topic in 401(k) Plans

Tip income

"OK proposing on a plan where tip income is a large chunk of their pay. What do I need to know? I "always" use the w-2 definition of wages, so I should be able to easily identify the comp number at year-end. I think the biggest question I have is, if someone wants to contribute 4% of pay, how does that work? Does anyone have an article about tip income and a 401k plan?"
1 reply   |    46 views   |    Add Reply

JHawk created a topic in Employee Stock Ownership Plans (ESOPs)

ESOP Basics and Restatement cycle

"Please go gentle on me, I'm new to all of this. Two questions I'm trying to sort out are: 1. How often do ESOPs need to be restated (is this the correct term?) to the IRS? I read every 5 years and now maybe every 6 if using this elusive prototype document process.. 1b. If a firm has not restated/resubmitted well beyond the allowed time is there a different process for restating or submitting or should that firm just hurry up and send it in to the IRS. 2. There is another post on this, so I risk redundancy, but after reading about how the IRS is now allowing ESOPs to follow the prototype, pre-approved process I'm having difficulty finding resources on this.. Anyone on here knowledge and generous to share more on this? Thank you JHawk"
1 reply   |    15 views   |    Add Reply

coleboy created a topic in 401(k) Plans

Top Heavy and Safe Harbor

"Hi, This plan was not a safe harbor for 2020. For 2021, plan added a safe harbor match. The ADP test failed and one HCE has to take back $2000 of the $2500 she put in. The plan also is top heavy for 2021. Total plan assets are $7000. $5000 for the key and $2000 for the non-key. If she hadn't put that $2000 in then the plan would've been fine! Eligibility is 3 months of service making about 30 employees eligible. Their TH contribution for 2021 is going to be big ( for them). Any suggestions to lower the cost?"
12 replies   |    62 views   |    Add Reply

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