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(Rhetorical question.) Updated for 2021 numbers: https://benefitslink.com/cgi-bin/inte-greater/ Not sure how useful it is nowadays, but the free, online "Inte-Greater" determines the integration level that provides the greatest share of the contributions for one or more "favored" employees. More than a bit clumsy on the input end, and no way to save the data, but maybe fun to play with. I enjoyed writing it in Turbo Pascal in 1992. The online version is written in Perl.

It's ok to amend now in my book. Whoever "owns" the plan would sign; sounds like the old employer to me if it was an asset sale. Someone - an IRS agent I think - once told me that rolling tradable securities was equivalent to a "cash" distribution; "in-kind" referred to company stock or other illiquid assets. I don't think that was right but I do think that no one would care.

Agree with CB. Also look at just having the fees paid by the plan and deducted from participant accounts. Likely won't be deducted exactly like they were allocated, but might be close enough. And save a lot of heartache.

Interesting. Does the 401(a)(17) limit come into play here? IOW if someone’s regular wages are already over the limit and then a bonus is declared, can a CB plan even consider that bonus? I’ve seen plans where the pay credit is a function of comp over a certain level, e.g. 200% of comp over $200K. So if a plan contribution is not desired simply keep wages under $200K.

I would look at what the money earned in the DC plan and return the principal and those earnings. (Ignoring questions about what the appropriate DB values were and when payouts should have occured.)

I would speak with counsel but, based on the facts set forth above (there may be other considerations, both legal and otherwise, of which I am unaware), I would NOT agree to sign a certification to the carrier. There is a chance (unlikely as it may be) that it could open you to contractual liability to the carrier if the certification is somehow not 100% correct.

Okay I think I see your point. Correct me if I'm wrong here - you're saying that you can have such a formula, but need to make sure you have proper backup showing proper plan operation in case of examination? I guess that is a valid design - however it seems to me to "push the envelope" a bit based on this wording from the memo: “However, employer discretion that is not expressly stated in the plan document, and that leads to the manipulation of compensation, may result in operational disqualifying defects. If a Specialist reviewing a plan in the determination letter process has a concern about the employer’s ability to manipulate compensation for the benefit formula, the Specialist might consider a referral to Examination (subject to management approval).” And also based on these comments from the ERISA Outline Book regarding the memo: "Any employer that is considering amending its plan to utilize one of the types of formulas discussed in 6.b.2), 6.b.3) and 6.b.4) below, but without the explicit employer discretion language, should be aware of the potential examination pitfalls and be prepared to maintain records that will show proper plan operation. Practitioners designing these plans also should explore other ways to reach the contribution and benefit goals sought by the plan sponsor that are less likely to raise definitely determinable benefits concerns." Anyway, thanks for the thoughts on this topic.

Payments to employees for paid sick leave due to the COVID-19 pandemic should be included when determining compensation under a plan, unless that plan’s provisions specifically exclude this compensation from the definition, e.g., specifically excluding compensation related to sick leave and/or family and medical leave.

What? No FORTRAN?

1. Yes, as long as M remains a separate entity (i.e., it was not merged into S after closing). 2. Yes, but generally it's recommended to appoint someone on the buyer's side if the sellers will not remain involved with M after closing. Also, M's plan cannot be terminated in 2021; if not maintained separately, it would have to be merged into S's plan to avoid successor plan issues.

Thank you both confirming my understanding.

How are you planning on reversing the transaction if the amounts were already distributed? Also who is "we" in this question - are you the plan sponsor, the TPA, or someone else? If the recordkeeper decided on their own to allocate the forfeitures then they may have become a fiduciary, and therefore could have legal liability for their actions. However fiduciaries don't have a duty to reduce costs to the plan sponsor. The only way I can think that they could get in trouble for this would be if the plan sponsor decided to charge the plan-related expenses against the participants' accounts, and a participant sued over those fees. The plan sponsor might want to have their lawyer send the recordkeeper a little love letter - hopefully dropping the "f word" on them might get them to take it seriously. However, the plan sponsor should also carefully review their service agreement with the recordkeeper, and their plan document, especially if the plan document was prepared by the recordkeeper, before doing anything else. There could be a provision that says that any forfeitures remaining in the plan after X period of time will be allocated to participant accounts. If that is the case then the recordkeeper would have been performing a purely ministerial function by allocating forfeitures in accordance with the plan document, or the written agreement of the plan sponsor.

Only pension and profit sharing plans can be set up in a prior year. Not 401(k) plans for anyone.

Depending on where you are, the Clerk of Court’s office might be helpful and accommodating with procedures for filing and approval of uncontested documents. However, substantive matters are usually beyond the scope of such help, and amending a prior domestic relations order is likely to involve substantive issues. In other words, they might help you with the filing procedures but not what goes in the documents or whether the proposed terms are permitted under state domestic relations law.

Assume a medical group that is a partnership of professional corporations, an affiliated service group. The CB plan is adopted by individual doctor PCs who choose to participate in the plan. Each PC has a single board member - the shareholder doctor. So effectively the board decision is also a participant decision. The plan allows "annual discretionary benefits" as decided by "the board", which presumably would be each individual PC's board since the individual PCs are the employers of the doctors. Seems like it would be real easy for IRS to argue that it doesn't meet the definitely determinable requirement, and they might also find the annual benefit grant correlates with profit. IRS might be "backing off" the deemed CODA (which is a separate issue from DD and not related to profit), but that's not equivalent to written regs. I suppose if a plan document had written provisions to the effect and got a DL the sponsoring employers could rely on this. Are there volume submitter documents with such language?

We typically have the sponsor review their formula every three years or so and adjust/amend on that cycle accordingly unless other relevant business (not individual personal owner) conditions or events warrant an earlier change, such as ownership changes, major shifts in business (like pandemic response) or M&A activity. Personally, I think an annual amendment is a blatant pattern of discretion in practice and I don't think it matters whether that discretion is attributed to the individual owners (deemed impermissible CODA) or attributed to the employer (deemed impermissible discretionary profit sharing) and violates the definitely determinable requirement. Maybe if no individual owner was modified more frequently than every third year and/or the frequency of amendments was necessary to add and/or delete individual owners it would be more defensible. Furthermore, we even try to discourage clients from a yo-yo pattern with respect to individual credits even if staggered three years apart. If an owner is allowed to do $50,000 for three years, jump to $150,000 for three and then back down to $75,000 w/o a corresponding business reason for the employer, I think that's a potential issue. Probably less likely to garner attention, especially if among a larger group of owners, but plan sponsors and individual owners still need to be aware of the risk. Without some defensible business reason, I typical recommend an individual's credit amounts be amended on a trend, whether up or down. Note that ANY amendment where it could be argued by IRS that an individual had discretion with respect to their credit amount could be viewed by them as an impermissible CODA. No, it is not your place to allow or not allow amendments, but it is your place to provide prudent advice concerning the risk regardless of past practices.

The regs require pension plans to provide definitely determinable benefits, and that the amount of such benefits is not directly based on profits. Beyond this there is not much to go on AFAIK and I've never heard of IRS raising this as an issue. That said, I tell my clients while there is nothing prohibiting annual amendments to the plan, a yo-yo pattern of amendments to the pay credits could give the IRS an opening to challenge the plan on this basis. I discourage annual amendments, but at the end of the day it's up to the client, it is not my place to "allow" or not allow.

I think there are a few reasonable approaches to this. Just make sure that there is a legitimate business reason for the transferring of the employees. If those underlying facts are sound, you should have flexibility on a reasonableness basis.