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BG is this it, from 2015? 7 Participants in own Allocation Group Question: A plan document provides that, for allocation purposes, each participant in his/her own group. There is one participant who will be receiving $0 contribution. Does this preclude the plan from using the average benefits test to pass sec. 410(b) coverage (we know it doesn't preclude the use of that test for general nondiscrimination testing)? The issue is that excluding someone by name is an unreasonable classification for purposes of the average benefits test (Treas. Reg. sec. 1.401(b)-4(b)). Proposed Answer: It's a facts and circumstances determination. If in a single year a single participant fails to receive a contribution, it is not considered to be an exclusion of the individual by name and, therefore, it is not an unreasonable classification. If, however, a participant receives a zero allocation consistently for a period of years, the plan's allocation procedures may be considered a de-facto exclusion by name, which is an unreasonable classification for purposes of the sec. 410(b) average benefits test. The plan would be forced to satisfy IRC sec. 410(b) by meeting the ratio percentage test. IRS Response: To be discussed from podium

I cannot answer that question for a couple of reasons. Firstly, the information provided is not sufficient even if I were a CPA. And secondly, I am not a CPA but just an actuary

There's no 11-g amendment available here. They are excluded by an artificial rule, so there are no conditions to waive.

I agree with Peter. Rather than trying to justify why the intra-family transfer falls within the default 409A change in control definition, why not just specifically state in the plan definition of change in control that it does not include such intra-family transfers. As you stated, as long as you are narrowing the definition (which you are here), it will still be 409A compliant.

I found this an interesting issue and so I googled and found a nice summary here: https://www.paychex.com/articles/payroll-taxes/what-is-on-demand-pay There are other provider summaries as well. This seems to indicate constructive receipt doctrine, but that tax withholding still happens when the regular pay check is issued. Say my bi-weekly pay is $2,000 and $500 is typically withheld each payroll period for taxes and benefits (medical, 401k, etc.), and I get a full $1,000 advance mid-cycle, then my regular check will net $500 (and maybe less any fees if those get charged to the employee). I'm not sure how else that would work unless they treated the $1,000 advance as a paycheck and then applied withholdings - but that makes it complicated for employee who is targeting a specific amount and must calculate withholdings to gross up the requested amount. I think this only becomes a TPA issue if an advance is paid before year-end on a paycheck issued and otherwise taxable in the following year. I would hope plan/benefit design would prohibit that potential nightmare.

I was curious about ChatGPT and threw it a few EB questions, below. With further prompts it would probably have gotten me closer to what I was looking for, which was a discussion of fundedness and the DOL trust non-enforcement policy. I haven't sorted out how I feel about this device. I do know that my mom won't use ATMs, and I think that the uptake of legal information from AI will be rapider with each generation. Whether it will ever fully replace legal advice and strategy remains to be seen.

You seem to be looking for some reasoning that a within-the-family transfer would not be a change-in-control as the § 409A rules define it. But why? If the provision the persons negotiating the deferred compensation agreement want might be narrower than what the § 409A rules allow for a change-in-control trigger, what tax-treatment harm would result from the narrower provision?