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Not trying to be snarky, but you may be overthinking this. Just my opinion. 1. Who cares why. Answer the Q. 2. Who cares about relevance. Answer the Q. 3. Yes.

Yes. From the plan's point of view, the employee has a $200 lost attributed to the over payment. If the company desires to "fix" it, they can provide him additional $200 in compensation (i.e. bonus) and minus out withholding, FICA, and all of the other deductions. It is want would have happened if the company would not have made the administrative mistake.

Do you have access to the 2012 IRS DC Q&A handout from the ASPPA annual conference? Question 41 was about voiding a mid-year amendment to eliminate the SH contribution. Your timing may not be the same, but you may find it interesting.

Have to say that I'm with Bird on this topic. Some of the confusion is brought about by loose use of the phrase "suspense account". Yes, the IRS doesn't like them. But a deposit in or for year X that is allocated at the end of year X is NOT a "suspense account". It just isn't. Call it "money awaiting allocation" if you will

A final filing needs to be filed for the DB plan to avoid letters from the IRS The 2014 and 2015 filings need to be done for the 401k plan using 002 as the plan number. Then the 2016, 2017 and 2018 forms need to be amended using the correct plan number and with Item 4 completed to show what was used before.

Maybe I misunderstand what you are saying but I disagree. Who cares where the money was held and when it was moved to participant accounts? Let's say for some reason you had a self-directed platform as well as a pooled account. If you throw $100,000 into the pooled account, that is the amount that is allocated (maybe not right away) as a contribution, and the earnings are just that, earnings, and allocated as such. The pooled account could be transferred to the self-directed accounts at some later date. I see no difference between a separate pooled account and a suspense or holding account.

The problem is with whoever designed the plan. When you set up groups that are NOT each person in their own group, you MUST have a final group that is "anyone who isn't in one of the other groups". To leave that out is to have a failure by the plan designer to consider the very issue you have. Yes, solve it by doing a -11g and amending to add a catch all group.

Refund 100% of the deferral as failed ADP, prepare 5330 for the late refund, calculate a 3% TH minimum for the employees who were employed on date of termination. Move on.

And it all goes away with a trustee directed pooled plan; we have lots of clients who put their money in during the year, sometimes in January, to be allocated at year end. The earnings are just earnings of the assets, never 415 allocations.

This is EXACTLY the approach my team determined was the best course of action (a team of 10, seven of whom are ERISA attorneys and the other three being the bright ones, whose sole purpose is to function as subject matter experts to the business, our clients and their advisors). Unfortunately others (notably sales) always come to the table with "everyone of our competitors can do this, why can't we" and undermine the authority my team usually has. Despite the fact that we can show that not all (or even many) of our competitors are doing it, sales drives "product" and the mere hint of "product" causes RMs to promote it - even if it doesn't exist. Just griping - but I've been doing this for 35 years, and for larger organizations, control gets diffused. I'll put my team (part of the line of business - not part of "legal") against any other service provider, and most ERISA law firms any day of the week. Cooperation is still essential, and with too many voices in the client's ear, controlling the message is nearly impossible. If my team gets in front of the client, it's done. If not, its pandemonium.

I'm sorry you have that issue; I understand it. We have much more "authority" with our clients (because they give it to us, not because we demand it). We are willing to sign off a client if what they "demand" is not what we believe STRONGLY is appropriate, but that is a rare circumstance. Here is a restatement of what I said above, but how I would tell the client: "I understand what you want; here's how we'll do it: You can just pay it out as normal (no change needs to be made to the plan) but the ex-employee (under the new law) can treat it on their own return as a CRD anyway. If the payee wants to avoid the 20% withholding, they can do a direct rollover to an IRA and then take it out the next day. No problem, and that gets you exactly what you want with no extra complexity on your part." Look, it's clearly part of being a good idea salesman; I've been a sales trainer for 100 years (even had formal courses in that in the '70's and early '80s) and I don't think I have one client who would push back and tell me they want to do it a different way after hearing this. FWIW.

It doesn't make any sense to do that, b/c they will still be subject to TH and ADP testing for the year anyway. If they are worried about having to make the contribution to satisfy the PPP, just amend to a non-discretionary match calculated per payroll. Then amend out again.

Of course, if you've got an adoption agreement, there might be separate options to exclude bonuses AND exclude taxable fringe benefits. Which would imply some attorney indicated (with IRS approval) they are indeed distinct items, no?

Q: Can a plan sponsor adopt the special distribution under the CARES Act and offer the benefit only to terminated employees? A: Yes, HOWEVER, this would create an optional form of benefit that would need to be tested under BRF testing if there are any HCEs who get it. If the plan adopts CRDs then the participants who take the CRD will not be subject to 20% upfront withholding. If the plan does NOT adopt CRDs then a terminated participant who takes a distribution will be subject to 20% upfront withholding. However, if the participant meets the requirements to be eligible for a CRD, then they are exempt from the 10% early withdrawal penalty and can spread out the taxes for 3 years and they have 3 years to roll the money back into the plan or IRA. This will be determined when the participant files his/her tax return.

Let's break it down. If the sponsor does not adopt CRD provisions, they can take a regular distribution. It would be subject to the 20% WH but if they are a qualified individual it is not subject to the 10% penalty; that is an issue for the participant. If the 20% WH is seen as a problem, then yes, they could take the extra step of rolling it to an IRA first and then taking it from the IRA with no WH. It's not clear what you are asking but if you rephrase "...a plan sponsor should not think about helping..." to "...a plan sponsor should not worry about helping..." then it is pretty close. BUT it now appears that you are talking about recently term'd participants; that wasn't evident in the first post. Are they eligible immediately for regular distributions? If so, then I'd be inclined to not change anything. If not, I might think about opening it up to CRDs, at least for the terms.

Why on earth bother? They can be paid out anyway and treat it on their own return as a CRD. Just to avoid 20% withholding? Then do a rollover and THEN take the money out of the IRA. Their request makes no sense.

If the site will give you single life APRs and a 100% J&S APR, you could use those to calculate the 50% APR. Just let me dust off my life contingencies notes here ... Ax = Single life APR for life aged x Ay = Single life APR for life aged y Axy = Joint life APR for lives aged x and y 100J&S = Ax + Ay - Axy Axy = Ax + Ay - 100J&S 50J&S = Ax + 0.5*(Ay - Axy) = Ax + 0.5*Ay - 0.5*[Ax + Ay - 100J&S] = Ax + 0.5*Ay - 0.5*Ax - 0.5*Ay + 0.5*100J&S = 0.5*Ax + 0.5*100J&S = 0.5*(Ax + 100J&S) So, take your primary annuitant's single life APR, add the 100% J&S APR, and divide that by 2 and you should get the 50% J&S APR. I spot checked this with a few randomly selected ages and mortality/interest assumptions from my software.

Does this help?