Message Boards Digest

August 3, 2022

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

Jakyasar created a topic in 401(k) Plans

Is my salary included for deduction limit?

"I am the owner of Company X Company X sponsors 401k/SH/PS plan As owner, I am eligible to defer, excluded from SH (as HCE) and do not want any PS (no top heavy issues) Is my salary included for determining deduction limit? How about, if I only get SH (assume non-elective 3%) Thank you"
8 replies so far   |    Click Here to Add a Reply

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metsfan026 created a topic in 401(k) Plans

Ineligible Participants Allowed To Defer

"I have a potential client who is having issues with 2021/2022 contributions. It appears that the prior TPA allowed ineligible participants to defer into the Plan. What is the normal procedure in this case? If the money is returned, does the employer have to make the employees whole if the investments are down?"
5 replies so far   |    Click Here to Add a Reply

perplexedbypensions created a topic in Distributions and Loans, Other than QDROs

Paying Federal taxes with Form 945

"Hi, in January of 2022, a participant distribution was processed form funds in a pooled account. The participant received his net amount, and the employer received a check for the federal tax withholdings. Now, 6 months late, he is asking us what to do with the check. My understanding is that it needs to be remitted to the IRS either through EFTPS, or by sending by mail with Form 945 and 945-V. The client does not want to send electronically. The only 945 form I can find is the 2021 form, but this is a 2022 payment. What does one do in this instance when there is not an applicable for for the current year? Thank you all!"
3 replies so far   |    Click Here to Add a Reply

LeesuhOB created a topic in Correction of Plan Defects

Missed Deferral Correction For Terminated Participant

"We have a client who needs to correct a missed deferral opportunity. The error occurred last year over the course of three payrolls. The plan has auto-enrollment and therefore qualifies for the safe harbor correction method. This issue is that the participant is terminated and will not receive compensation any longer. Because the regulations state that: The plan will correct the deferrals by the first payment of compensation on or after the earlier of:
  • 9 ½ months after end of Plan Year when failure first occurred
  • Last day of month following employee notification of error
Can the plan use the safe harbor method and not make the QNEC even though the participant will not receive compensation?"
No replies yet   |    Click Here to Add a Reply created a topic in 401(k) Plans

Catch ups and 415 in a fiscal year plan

"We know that catch-ups do not count for 415. Let's assume a September 30 Plan Year. In calendar 2021, the participant contributed the full $19,500 limit and an extra $6,500 catch-up in level installments. When calculating the 415 limit for the Plan year ending September 30, 2022, I am assuming that only the deferrals after $19,500 is deferred are additions. My reasoning is that Catch-ups, no matter how they are called for plan administration, are the last dollars contributed after the regular deferral limit is reached. In this example, most of the deferrals in the period from October 1,- December 31, 2021 are catch-ups, so they are not 415 additions for the Plan year in which they occurred. I have a TPA telling me that because the deferral election form has a catch-up election that the catch-ups are considered to be pro-rata, but this does not seem to square with 1.414(v) that there are no catch-ups unless the deferral limit is reached."
No replies yet   |    Click Here to Add a Reply

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