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Revenue Ruling 2002-45 [http://www.irs.gov/pub/irs-drop/rr02-45.pdf] describes a restorative payment (the ruling’s antidote against counting an amount as a contribution) as a payment “made to restore losses to the plan resulting from actions by a fiduciary for which there is a reasonable risk of liability for breach of a fiduciary duty under title I of the Employee Retirement Income Security of 1974 (ERISA)[.]” Beyond the examples given in the ruling, the IRS in practice has treated a payment as restoration if the employer made a written finding that the selection or negotiation of the insurance or investment contract was (or might have been) a breach of the employer’s fiduciary responsibility, whether under ERISA or other law, and the finding is plausible. The Treasury department’s interpretation requires also that “participants who are similarly situated are treated similarly with respect to the [restorative] payment.” For a limitation year that began or begins on or after July 1, 2007, the ruling’s principle is included in the annual-additions-limit rule. 26 C.F.R. § 1.415(c)-1(b)(2)(ii)(C). https://www.ecfr.gov/cgi-bin/text-idx?SID=9ee62d943d4b498039cba586af9d3fc9&mc=true&node=se26.7.1_1415_2c_3_61&rgn=div8 The Treasury adopted my suggestion about looking beyond ERISA to other Federal law, and to State law. The key driver is that there is “a reasonable risk of liability”.

BenefitsRUs21, I agree with CuseFan, but would add that it, e.g., this is a corporation and you have a board resolution adopted (e.g., by unanimous consent or at a meeting of directors) before end of 2018, that may be enough for adoption. Depending on the entity's type and governance, adoption may occur before signature by officer on amendment. often, however, signature is all you have, so the foregoing may not be relevant to your situation.

Determining the top hat group is not so easy. ERISA defines as "a select group of management or highly compensated employees", but the reference to "highly compensated employees" doesn't (necessarily) mean anyone making over 414(q). DoL hasn't provided a lot of guidance, and court cases generally refer to qualitative and quantitative analyses. For example, in Bakri v. Venture Mfg. Co., 473 F.3d 677 (6th Cir.2007), the Sixth Circuit listed the qualitative and quantitative factors to consider when determining whether a plan qualified as a top-hat plan under ERISA section 201(2): (1) the percentage of the total workforce invited to join the plan (quantitative), (2) the nature of their employment duties (qualitative), (3) the compensation disparity between top hat plan members and non-members (qualitative), and (4) the actual language of the plan agreement (qualitative). So, you can't really say that the top 10%-15% in compensation with a title of Director and above will automatically be a top hat group, but that might be a good starting place for the ERISA attorney.

You are not wrong.

I think Mike Preston meant "DOL top hat eligibility," but he'll let us know if I am wrong.

Now Rev Proc 2019-19, 6.02(5)(d) :) DOL is being much more aggressive. While we don't have DOL guidance for ongoing plans, their actions indicate that they are not satisfied with the "search every couple years" approach. IRS/DOL/PBGC are supposed to try to get on the same page this year, but with the new fiduciary rule, electronic notice and disclosure regs, and all the (possible) DOL related sections of SECURE/RESA, I'm not sure we will see anything for a while.

Disagree, with no assets (including accruals) for 2018 the Trust didn't legally exist in 2018 and without a Trust there was no valid Plan so I would skip 2018 and reflect 1/1/2019 as the true effective date on the 2019 initial 5500 filing.