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You do not need a "failure" to execute an 11-g amendment. From a Relius write up from a while back: Does the plan actually have to fail nondiscrimination testing before the plan adopts an 11(g) amendment? In other words, must the employer make the contribution, fail nondiscrimination testing and then adopt the amendment, or, can the employer amend the plan without failing the test first? No, the plan does not need to fail nondiscrimination testing before adopting an 11(g) amendment. The preamble to the 1991 Code 401(a)(4) regulations (Note: The IRS reissued the nondiscrimination regulations in 1993 but did not make changes to the rules regarding 11(g) amendments except to add a mechanism to correct a benefits, rights and features problem) states: “In order to permit employers to make practical choices based on administrative concerns, use of the retroactive correction period is not conditioned on a demonstration the plan actually failed to satisfy the nondiscrimination requirements. In addition, correction is not limited to amendments correcting disqualifying defects.” Accordingly, a plan sponsor could amend the plan to place certain highly or NHCEs in different classifications so that it doesn’t have to make as large of a contribution to the NHCEs to pass nondiscrimination

Peter, I think the main difference is in large plans vs small plans. Large CB plans, like BOA will act like more traditional Db plans and will have the same rules upon death that, unless there is a surviving spouse, there is no benefit after death. Almost every small CB plan is there as a tax deferral vehicle for the owner and will pay 100% of the benefit upon death. In my opinion, it's just a matter of what world you're working in.

I don't think the return has to be refiled in this case. IRC 404(a)(6) states that the contribution has to be made before the due date for filing the return. In this case, the return was filed before the due date, and if I understand correctly, the full contribution of $160,000 claimed on the return was made before the due date -- perfectly acceptable even though a portion of the contribution was made after the date the return was filed. Rev. Rul 76-28 appears to deal with the case where a contribution of one amount is claimed on the return, but a larger contribution is made before the due date of the return. That would require a re-filing of the return in order to claim the larger amount. If the return by the accountant only claimed $150,000, then I agree with the analyses above.

Whatever reason that may be professed, the most likely is meeting the requirements for making the bill fit within fiscal parameters which are tied to a 10-year time frame. The same rationale applies to defining a High Paid person for purposes of mandating Roth catch-up contributions. Why $145,000 instead of the HCE limit? Roth catch-ups for High Paids at $145,000 was just enough of a revenue raiser.

This was the first clue that something crazy was happening, as they do what's easiest for them. I'll repeat this forum's mantra - read the plan document and the loan program and related forms to see if they say anything applicable, they may or may not, but should be consulted first. Next question would be how are the interest payments being applied, is it in such a manner that each "source loan" is essentially being amortized separately (less interest into PS as that principal is paid down and more to the sources yet to see principal payments)? If so, and if the plan documentation supports (or does not prohibit) this then it's probably OK. Also need to make sure provisions concerning loan as directed investment (I assume) and general plan investment election provisions are not being violated by this in some fashion.

Peter, I don't think providing/not providing a death benefit above and beyond the required QPSA would have a material impact on the plan's minimum funding requirements. I do not recall seeing a small cash balance plan limit death benefits to the statutory minimum. I have seen one or two larger plans that provided the minimum QPSA only, mainly due to being a holdover provision from the converted traditional plan. That said, we have consulted on and performed many large plan cash balance conversions over the years and the enhanced 100% death benefit for all was a "selling point" that helped cushion what was future pension accrual slow down for older mid-career participants compared to the traditional plan formula. Also, many of our early conversions gave participants the choice of staying under the traditional formula or converting to cash balance (fully, with a converted opening account balance). In addition to the lump sum option, providing the 100% death benefit regardless of marital status was again an important selling point. Finally, in the small plan arena, where many a cash balance plan is designed to benefit one or more owners, I do not think single or divorced owners would view a partial or no death benefit in a favorable manner.

Here is part of the section from Relius that follows with some requirements the plan sponsor may not embrace: "What conditions must an 11(g) retroactive corrective amendment satisfy? An 11(g) amendment must satisfy the following conditions: The amendment may not reduce benefits (including any benefits, rights and features), determined on the basis of the plan terms in effect immediately prior to the amendment. However, see 5.b. below. The amendment must be effective as if the amendment had been made on the first day of the plan year being corrected. The amendment must be adopted by the 15th day of the tenth month after the close of the plan year being corrected. If the plan sponsor applies for a determination letter before the end of the 9½ month period, the retroactive correction period is extended in the same manner as the remedial amendment period. The additional allocations or accruals must separately satisfy the nondiscrimination requirements and the group of employees benefited by the amendment must separately satisfy the coverage requirements using the same rules that apply in determining whether a component plan separately satisfies coverage. A plan does not need to satisfy this requirement if the plan sponsor is amending the plan to conform to one of the nondiscrimination safe harbors. The amendment cannot be of a pattern of amendments being used to correct repeated failures with respect to benefits, rights and features. The relevant provisions of the plan immediately after the amendment with respect to benefits, rights and features remain in effect until the end of the first plan year beginning after the date of the corrective amendment. The corrective amendment either expands the group of employees to whom the benefit, right or feature is currently available, or eliminates the benefit, right or feature to the extent permitted under the anticutback rule.

Cash balance plans are defined benefit plans. They have to provide a QJSA to a surviving spouse. Any other provisions are optional. I personally haven't seen a cash balance plan with limitations to death benefits. I have seen "standard" defined benefit plans where death benefits were payable to the spouse only, and also where death benefits were payable only to the spouse or to the designated beneficiary.

April 2nd joke. Yes, 2 cents

Exactly! A journey of one thousand miles starts with a single step...

I thought it was an April Fool's joke. Two cents?!!!!!!!!!!

The following excerpt is from a Society of Actuaries write-up from way back that I found on the internet, FWIW: Being defined-benefit plans, cash balance plans need only to provide at death the surviving spouse benefits mandated by the Retirement Equity Act of 1984. However, in practice most plans provide more substantial death benefits equal to the full account balance payable in a lump sum or convertible into an annuity, and in this case, there would usually be no difference in the value of benefits between single and married employees, or male and female employees.

Wait a minute, here! Is the spouse still alive? If not, are the children? If not, did they have any children who remain alive? You need to have no answers to all of the preceding questions before you even consider whether the benefit is payable to the participant's estate. The points raised by ESOP Guy are all problems for the decedent's estate and the surviving heirs. If it is payable to an estate, have the executor/administrator certify the EIN for the estate before you pay anything. Also ask to see letters testamentary (if the decedent died with a will) or letters of administration if the decedent did not have a will in force at the time of death. For the last sentence, short forms are ok for the plan to accept in lieu of full letters testamentary/administration. If the estate is too small, there is an affidavit that is filed with the probate court -- have the personal representative provide you with a certified copy of the de minimis estate order. When it is time to issue the 1099-R, you would issue it to the estate's EIN (or if the estate is too small to the persons's SSN name in the order in lieu of administration). Who gets it, in what proportions and all other questions are not issues for the plan to solve -- they are the problems to be faced by the executor/administrator. I know that determining who gets per stirpes can be an issue since the plan would not know who is eligible to inherit. In that case, have the executor/administrator provide that to you. You might also want to get a release that you have a right to rely upon what they are telling you and that you have no liability for making payments pursuant to their direction.

My opinion, upon which you may not rely, is that you can't do this retroactively for a plan on the calendar year for 2022. My opinion also is that if the sponsor wants to avoid an audit, that's a red flag in and of itself and I wouldn't want this employer as a client. Only more trouble ahead.

It looks like the plan allocation formula defines groups of employees versus a rate group for each participant. I don't see how you can modify the allocation formula after the close of the plan year disguised in an 11(g) amendment to add a new rate group for one HCE and a new rate group for 2 NHCEs.

Nope. Roth is either allowed or it isn't, you cant limit it to catch up.

Read the plan document. It should describe what should happen in this situation. Refer it to ERISA counsel. Typically the document says the benefit will be paid "per stirpes", then to the estate.