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A bit late to this dance, but today's BenefitsLink newsletter includes a just-published IRS PLR that might be of interest: https://www.irs.gov/pub/irs-wd/201833012.pdf

Make no presumptions until obtaining a copy of the basic plan doc.

Yes, always refer to specific plan language, but I would view the bonus as a separate payroll because it allows for a separate election, and match accordingly.

As mentioned above, you need to consider both the cafeteria plan and, if applicable, the self-insured medical plan nondiscrimination tests. If existing employees are disproportionately highly compensated when compared to new employees (which ordinarily is the case), there is a good chance that this arrangement will fail the tests. The only way to know for sure is to run the tests. Failing the tests will result in the highly compensated incurring additional taxable compensation, the amount of which depends on which of the tests (or sub-tests) are not satisfied.

if the match was by payroll, I'd say it makes sense to include/exclude based on participants election. otherwise, unless there was something specific in the document, I would include it. most of the documents I work with indicate a participant can make an election change anytime. so I would view that as saying each payroll period I elect to defer, defer, defer..oh the bonus check I elect not to defer, and the I start up again. otherwise, how do you handle something like only HCEs defer off the bonus and none of the NHCEs defer. I'd think if you don't include it then at the minimum you have to run a comp test because now you are treating it as 'excludable comp'...but I could be way off on my thinking there.

I second Larry's confusion, and the part above is screaming at me. Being beneficiary of the policy is not the same as being entitled to the policy itself as plan beneficiary, and in any event she can't be the beneficiary of the policy on her own life as noted above.

Agree---And the proposed nondiscrimination rules for insured plans would also make this taxable, if the regs are ever written (while I am still young).

Not enough info provided to give a definitive answer, so keep that in mind. HIPPA allowsa for different contribution levels, so I would say a 98% yes it is ok. But if the plan is self-funded, or if the premiums are run through a 125 plan, you should test for non-discrimination for both. Highly unlikely, but possible for discrimination in one of these.

I actually agree with your argument, but I'm not 100% that the IRS would. There is no missed deferral opportunity because the participants were not improperly excluded from making deferrals. They had just as much opportunity to defer as anyone else, they just weren't provided with the proper incentive to defer. They were improperly excluded from the match, so a missed match correction is appropriate. I can see the IRS arguing that a participant was not afforded full opportunity because they were told they would not get a match. If the correction isn't too expensive, I would consider correcting for the deferrals just to be safe.

Luke, This is one of those times where I tell the lawyers I work with: "Trust me, I (we!) are right." The RMD HAS TO COME OUT before the rollover. It is well established and everyone on the site is telling you the same thing.

Obviously, EPCRS does not address the specific fact pattern described but provides that "the correction should be reasonable and appropriate for the failure. Depending on the nature of the failure, there may be more than one reasonable and appropriate correction for the failure." If the employees knew they were eligible for the match it would have affected their decision whether or not to participate. The match would have been an incentive. If you are going to make up the missed match there is an implicit admission that they would have or could have or may have made deferrals. So I would make a QNEC equal to the missed deferral opportunity and a match based on the missed deferral. The calculations depend on whether it is a safe harbor match or non-safe harbor match. This describes a missed deferral opportunity. I don't think there is a way of satisfactorily demonstrating to the IRS that those employees would certainly not have elected to make deferrals.

I respectfully disagree with your analysis of 1.402(c)(a)(7)(a). A distribution is in fact required for the distribution calendar year. The fact that you can delay it until April first of the following year does not alter that fact. The April 1 distribution taken in the following year is the required distribution for the PRIOR year. then you take the second distribution - the one for the current year - be December 31. IMHO you are overthinking this.