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1. Yes as there is no requirement that the plan year and the fiscal year be the same. This could be continued indefinitely. That said, if you also have a DC plan and need to aggregate the DBP with the DCP to satisfy coverage and nondiscrimination testing, then those plans MUST have the same plan years. 2. If I remember correctly, and someone will correct me if I'm wrong, but I thought you had three options (1) deduct the PY contribution in the tax year in which the PY ends (so $275k for PYE 7/31/2020 would be deducted on 2020 return), (2) deduct the PY contribution in the tax year in which the PY begins (so $275k for PYB 8/1/2019 would be deducted on 2019 return, presumably the short 2019 tax year), or (3) a proration. I also thought that you had to apply whichever methodology consistently from year to year. I don't know how the short fiscal year affects this. Unless you had a aggregated plan testing need, I don't think you can do a DFVCP or EPCRS filing for what amounts to forgetting a discretionary amendment to make administration easier.

If SEP is on IRS model Form 5305-SEP, that document precludes having any other retirement plan, so he might also have the headache of finding and paying for a provider's SEP document in addition to a 401(k) document. Seems like a lot of hassle to avoid a very easy/minimal 5500-EZ (until such time as the final return is needed).

The exemption has no change after October 12, 1979. I’ve considered the exemption only once. (And it was longer ago than your experience.) I explained that the exemption does not relieve a plan’s fiduciary from its responsibility to act loyally and prudently for the exclusive purpose of providing the plan’s benefits. A fiduciary must get the best deal the plan could obtain. The insurance agency decided that its fiduciary responsibility required it to negotiate the life insurance contract to zero the commission with the insurer lowering the premiums for the contract’s death benefits and increasing the cash values. An actuary reported to us that the insurer’s profit margin on the negotiated contract was equal to its margin on the commission-loaded contract.

My understanding is that if it was deemed, then a 1099R should have been issued. The loan can be paid off, but then it creates a basis which will need to be tracked properly. Depending on the loan provisions, if the participant ever wants to take a new loan out, they generally would need to pay this loan off first to do that.

Thank you!

Feedback. Of any kind!

Sounds like a 415 excess correctable under EPCRS. He has $0 415 compensation his 415 limit is $0. Check your document for waht happens when you have a 415 excess, you probably refund the deferrals with earnings.

The first question you're going to have to find out, then, is whether you can get the recordkeeper to issue a corrected 2020 1099-R. It may be difficult or impossible depending on their systems. If the participant was a qualified individual, and the default occurred after the effective date of the CARES Act, then you could probably say that the final payment was deferred for 1 year. It would have to be increased with interest, of course. Notice 2020-50 said that the scheduled repayments had to begin in January 2021, but since there were no scheduled payments in 2021 I think you can make an argument that she would get a full year suspension from the original final payment date. If she was not a qualified individual, and she is past the 5-year limit from the original loan date, then she is out of luck. However if she is still within the 5-year period, then the plan may be able to correct the defaulted loan under SCP by having her repay the amount with interest.

Hi MoJo - no, that's not what I'm saying (or if that's what I said, it certainly isn't what I was trying to say). I'm merely saying that the Appendix ALLOWS the plan sponsor to include language to modify/override certain plan default language. It's a normal IRS pre-approved plan. As to WHY they chose to do this, and whether on the advice of counsel, etc., and whether it as smart, stupid, criminally stupid, or worse, I cannot say. Hence my questions to the legal eagles on this board. I would not presume to advise a client on this - that's a matter for counsel, which I ain't. I was just curious about it for my own background information. The discussion has been informative! Thanks.

The Labor department’s website has a listing of prohibited-transaction exemptions, organized by EXPRO, class, and individual exemptions. Under class exemptions, the website shows the history of an exemption, with Federal Register citations for each proposal, adoption, and amendment or clarification. (For example, the display on the Qualified Professional Asset Manager exemption includes eight citations.) Under “Insurance Agents In-house”, the display shows citations for the proposal and adoption (both in 1979) of PTE 79-60, and nothing further. https://www.dol.gov/agencies/ebsa/laws-and-regulations/rules-and-regulations/exemptions/class Here’s the government’s posting of the portion of 44 Fed. Reg. 59018 (Oct. 12, 1979): https://s3.amazonaws.com/archives.federalregister.gov/issue_slice/1979/10/12/59015-59020.pdf#page=4 If it’s hard to read, better images are available from HeinOnline and other publishers.

QNECS are subject to both 100% vesting and the distribution restrictions of Regulation 1.401(k)-1(d). To amplify Bri's response, the PW contributions also would need to be subject to the distribution restrictions in order to be treated as a QNEC (or as an ADP safe harbor contribution). That is why there is typically a specific election when drafting a document to treat such contributions as a QNEC (which would generally include treating them as an ADP safe harbor contribution).

That is correct - every non-key employee who is in the plan for some portion/money-type and is employed at year-end must get at least 3% of annual 2020 compensation from employer contributions to satisfy top-heavy.