Leaderboard

My side note: I have never understood the resistance to handing out SPDs. I have a client that issues 26k W-2s/year. They put it in everyone's on boarding package. I have clients with a few hundred to a few thousand employees and they all put it in the on boarding package or when they become eligible. I will admit most ESOPs want people to think like owner employees so they have a bigger motive to get people to understand the plan but even back when I did 4k plans I just don't remember a lot of push back on this issue like I read at times on this board.

If done properly, you would get two 1099-Rs, one for the (non-taxable) rollover and one for the distribution of the loan amount. The loan distribution would be taxable but not subject to the penalty since it is due to death. If you have enough cash you can roll over the taxable amount into your spousal IRA by the due date of your tax return and thereby avoid the tax. If you're saying that the total account value, including the loan, was, say, $30,000, and they incorrectly rolled over $30,000 in cash...well, anything is possible, but I have to be honest and say I doubt that actually happened. Unless it was a very small plan with a pooled investment fund and an accountant handling things. I wouldn't want to speculate on the 1099 reporting in that case.

Aside from the legal requirements explained by others, Ananda, how is someone who does not elect to contribute going to learn about the opportunity to contribute and what that might mean for his/her future retirement if they don't get an SPD?"

The reason you are confused is this question makes no sense under retirement law or plan documents. If a person is eligible to participate they are a participant 100% of the time. It doesn't matter if they did or didn't complete some form or decide to defer or whatever it is you are thinking of that makes a person a participant. If a person met the eligibility requirements and crossed an entry date per the plan document they are a participant- period full stop end of story. So if someone is eligible to participate you give them an SPD because they are a participant.

For example, assume that a 401(k) plan includes a safe harbor match as well as an additional discretionary match. This plan requires participants to meet a last day requirement in order to receive the discretionary match. Charles is an NHCE who makes elective deferrals into the plan each year, including in 2012. Charles terminates employment in October 2012, and therefore is not eligible to receive a discretionary matching contribution for 2012. Janet, an HCE, also makes elective deferrals to the plan each year, including in 2012. Janet remains employed with the company for all of 2012 and receives both a safe harbor match and the discretionary match. Janet will receive a higher ratio of matching contributions since she receives the discretionary match and Charles does not. The plan is therefore in violation of the rules discussed above, preventing the plan from benefitting from the safe harbor rules and requiring it to satisfy ADP testing, even though the safe harbor match must still be made and be 100% vested. (Emphasis mine) EOB 2021 11.574 and 11.575 same context, same situation... "the ADP test is still waived," .....perform the ACP test for all matching contributions. What nuance am I missing where the link says ADP testing needs to be satisfied and the EOB says the ADP is still waived? later add: EOB 2013 edition 11.568 1.e.1

I am tempted to try and talk call all my Off Cal sponsors and try to talk them into becoming calendar years. I may even just do the short year for free! lol

I agree with FtWilliam's analysis. The cited reg section has not changed since that was written. It refers to a limitation on "matching contributions" for HCE's. Other sections of the reg refer to "safe harbor matching contributions" and "qualified matching contributions". I don't think the reference here to "matching contributions" was accidental. From the article:

Some plans allow changes to the extent permitted by the regs - I believe there are some exceptions in the 401(a)(9) rules. If the owner is still "working" then upon actual retirement he may be able to make a new election. Another possibility, purchase an annuity contract for the benefit, will cost more than remaining PVAB but will provide longevity protection for the recipient. And/or, if not at the 415 maximum benefit, amend to increase the benefit.

Agreed, that's one of the correction actions that you can do via amendment.

The ADP safe harbor is not in jeopardy. However, you will most likely have to ACP test the discretionary match. Is the plan top-heavy? This type of arrangement lends me to think the top-heavy exclusion is lost and the plan may have to cover some non-deferring employees with a top-heavy contribution. I don't like this plan design for a safe harbor plan, but I say that alot.

No. ADP test is still cool.

The plan had to allow loans first since CARES temporarily increased the limits rather than establish an additional type of loan. I think retro amendment is ok as long as long as the loans were made primarily to NHCEs.

Close if is total allocation is $64,500 for PYE 10/31/21 then you've used up 100% of the 2021 catch-up limit for 2021 when you recharaterize for exceeding 415 limit. If he defers another $4K from 11/1/21 - 12/31/21 (which he can) that can't be recharacterized at all in the 10/31/2022 Plan year. That is those deferrals will count against his 415 limit in the 11/1/2021 - 10/31/2022 Plan year with no ability to treat them as catch-up because the catch-up was used as of 10/31/2021.

FMV ≠ CSV. See Rev Proc 2005-25.

But if the assets are at a recordkeeper, doesn't the Schedule R usually reflect the payor ID of the recordkeeper? So, it's not really the ID of the plan, but of the custodian who paid the benefits.