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Regarding the initial question ... an SoB Notice might be needed because the actuarial adjustment described in your plan falls appears to fall short of the adjustment that's required when a Notice isn't provided, at least for a plan that is not frozen. As I recall the actuarial adjustment that's needed if a Notice is not provided is not simply the equivalent of the NRD benefit, but the result of a "rolling up" process. Suppose NRD is 7/1/18, plan year is calendar year, and retirement is 9/1/20. Start with accrued benefit at 7/1/18, actuarially increase it to 12/31/18, then actuarially increase the larger of that result and the accrued benefit at 12/31/18 to 12/31/19, then actuarially increase the larger of that result and the accrued benefit at 12/31/19 to 9/1/20. Participant then gets larger of that result and accrued benefit at 9/1/20. Regarding your second question, this seems like one for the attorneys. In most contexts I'd expect them to say that the added SoB clause can apply to participants who joined before the clause was added, but only to the portion of their benefits that is earned after the plan was amended ...

The answer is in the reg: 1.402(g)-1(e)(1)(ii) Treatment of excess deferrals as employer contributions. For other purposes of the Code, including sections 401(a)(4), 401(k)(3), 404, 409, 411, 412, and 416, excess deferrals must be treated as employer contributions even if they are distributed in accordance with paragraph (e)(2) or (3) of this section. However, excess deferrals of a nonhighly compensated employee are not taken into account under section 401(k)(3) (the actual deferral percentage test) to the extent the excess deferrals are prohibited under section 401(a)(30). Excess deferrals are also treated as employer contributions for purposes of section 415 unless distributed under paragraph (e)(2) or (3) of this section. TH minimum is triggered by the excess deferrals, even if refunded.

I agree with the auditor. There might possibly be an argument that it was timely if it was mailed (with PROOF of mailing) on some date reasonably before the 12/31/deadline - say it was mailed on December 23rd, for example, but didn't arrive until January 4th. That's grasping at straws, however. I don't know the specific details of your situation. Anyway, my take is that given the generous timeframes that IRS allows for the corrections, they are unlikely to be overly sympathetic.

Diversifying should be a situation you explore based on your individual circumstances at the time and preferably with the help of a qualified trusted advisor, and NOT based on what "everybody else" or "most people" do because most people often make the wrong decision and for the wrong reason, even if they get lucky with the outcome. This is not a decision to be made in a vacuum - you have to consider all your retirement assets and income sources, the company's health (which may not be so apparent), and a whole host of other retirement decision tree criteria.

thepensionmaven, as C.B. Zeller explains clearly, it lets you stop making SH for rest of year, with 30-day delay of were doing safe harbor match, no delay if SHN. This gives all the relief possible with respect to employer's cash flow. Your implied complaint seems to be that ADP and ACP might not be passed for 2020, but that is not a cash outflow for the employer, so the relief is real. Also, IRS cannot rewrite the Code, only interpret it, so that was all the relief possible. A couple of months ago several BenefitsLink participants were posting about whether you could stop SH match or nonelective just for HCEs, and lamenting that it did not make sense that you couldn't, but that appeared to be the rule. Others thought you could, now the IRS has said that it's interpretation of the law is that you always could amend to stop SH just for HCEs. It's good.

Your employer is doing this correctly. This is NOT an employer plan contribution. This is technically an employee contribution and so should be run through payroll and deferred for income taxes but not other payroll taxes (FICA, Medicare etc). This is not contingent on a decision by you about making deferrals. If you don't make deferrals, you simply have more taxable income than you did before this transaction.

I'm inclined to agree with your colleagues. 1.416-1, M-20 states that elective contributions on behalf of key employees are taken into account in determining the minimum contribution under 416(c)(2). The fact that these 402(g) excess distributions are not considered annual additions is a 415 issue, and I don't think that trumps the treatment otherwise applied to deferrals. What if the ADP for Keys ended up being 1%, but due to catch-up deferrals (which don't count against 415) the Key defers 4%. Would you still maintain that TH should only be 1%? I don't have time to do any in-depth research on this, but I suspect the IRS might take the approach that the top heavy is required. I know that for, say, an ADP failure where deferrals are distributed, those deferrals still apply for calculating Top Heavy. I also happen to think that requiring Top Heavy in the situation you posit is clearly a ridiculous result, but that's where I believe the guidance leads. Of course, I may be all wet, and I'll be interested to see what other opinions may be.

It's no help for 2019. For 2020, it lets the sponsor suspend the SHNEC without the 30 day advance notice. It also lets the sponsor suspend the SH even if they did not provide the "maybe not" cause in their notice, and without regard to whether they are operating at an economic loss.

The cost of negotiating an administration contract that results in lower fees for the plan holding the forfeitures would be an administrative cost and maybe offset.

I would just like to also mention the confusion about compounding. I have heard in the past that people talk about compounding when discussing investments (see Motley Fool). But I don't think you can consider investing and compounding in the same vein. Compounding is when you earn money and then that money earns more money - i.e. interest in a bank account. To a certain extent, you do get compounding due to the dividends being reinvested - which is the norm in a 401k. But many people confuse investing with compounding, because you earned X% in Y year and then earned W% in Z year. That is not necessarily compounding, that is just investment growth. Especially because when you think compounding, you are only thinking about growth. And we all know that investments don't always go up. So please don't think your investments are having compounding growth, they just have growth (or declines).

Jared, an important consideration in your decision will be whether the company also has a 401(k) or other type of retirement plan in addition to the ESOP. Obviously, if there is another type of plan and you have, or are accumulating, substantial funds in it, that already gives you a measure of diversification before you even get to the ESOP. If the ESOP is all you have, then you would have to think longer and harder about not diversifying.

Most flexible benefit (or cafeteria) plans have "cash-in-lieu" options which it appears you've elected. That means that you technically elected cash rather than a healthcare plan. Their plan also appears to then require that "cash" to be contributed to the 401(k). So, that's how they're handling it. Since 401(k) contributions don't enjoy the exact same tax benefits as a cafeteria plan, running it through payroll ensures the appropriate taxes are paid (ie FICA).

I am not even sure I understand the first question. Are you talking about the stock compounding or the cash in the ESOP account? If you are asking about the stock the value of that part of the account is simply the number of shares times the price. If the company isn't publicly traded they get an appraiser to help determine the price each year. You should be able to see from your annual employee certificate if the number of shares you have is going up each year or not and why you are getting more of them. As for how many diversify it is a real mix. It depends on how much stock they have and what other kinds of retirement plans they have to keep them in a good mix of investments.

In my very limited contact with ESOPs, most participants do not diversify. Many of them have regretted it. Other folks here who deal more with ESOPs will undoubtedly chime in.

Wow. Your second paragraph contains the answer to your first question. So does the Summary Plan Description, if the SPD is properly drafted. The short, short answer to #1 is "no" and the fuller explanation is in the SPD.

Yes this will work. Payments made before the due date of the tax return will count for that taxable year, so the first payment could even be made in 2021 on behalf of 2020. We haven't seen 8915-E yet, but Notice 2020-50 details repayment with examples. CRDs are subject to voluntary withholding, so participant can waive the 10% withholding Notice 2020-50.pdf