Leaderboard

I agree that it could be done, but I would recommend against it. A better approach is to exclude all HCEs from the safe harbor, and rely on the plan's individual-groups allocation formula for nonelective employer contributions to make an allocation to some or all HCEs, if desired. This is a little bit more complicated (but only a little bit) and it gives the employer much greater flexibility.

A hardship is not an eligible rollover distribution, so there is no mandatory withholding. There is 10% automatic withholding but that can be waived. I don't see a problem here.

If the document says that HCEs get the safe harbor then HCEs have to get the safe harbor. If they want to change that, it will need a plan amendment. Whether you can do that mid-year for the current year or whether it will have to wait to take effect until the next plan year is circumstance-specific. Did the safe harbor notice say that the employer may reduce or eliminate the contribution mid-year? Is the employer operating at an economic loss? Regardless, you can't eliminate benefits that have already been accrued. The anti-cutback rules protect both HCEs and non-HCEs alike.

You must follow the terms of the written plan. Look at the notes or other parameters around the safe harbor and see if the employer has any discretion there. If not, follow the written plan provisions, as a plan must comply in operation with those terms to retain its tax friendly (tax qualified) status. The plan may be amended prospectively to exclude HCEs from safe harbor, of course.

Early retirement in the DCP - no harm, no foul for combo testing - and there may be employer objectives for having as David notes. CBP - do NOT include early retirement in the plan and test the combo as you would otherwise.

no can do - from a good Mercer article on QRPs: A number of PLRs say that surplus assets transferred to a QRP can’t be used to fund matching contributions earned after the transfer. This is because the transferred surplus is treated as a contribution, and Section 401(m) regulations prohibit employers from funding matching contributions before an employee’s elective deferrals have been made or before the employee has performed the services to which the contributions relate. In most cases, surplus assets are transferred to a QRP before participants have earned a match, so the surplus can’t be used for matching contributions. The article did suggest that some of the surplus could be used in the year of transfer for current year match on deferrals already made but for which matching contributions have not been funded.

There is a larger issue here. When creating ANY plan, the sponsor (and by extension, anyone who thinks/acts as a consultant) should ask him/herself if there is ANY need for an Early Retirement definition. If you don't understand my point, note that E.R. came into vogue many decades ago when there was a need to "clear out" the workforce to make room for the post-WW2 workers (the parents of the baby boomers and then the baby boomers themselves). If there is no similar demographic "bubble", there is likely very little need for any set E.R. provision. Alternatively, an E.R. definition should (probably) include a significant minimum service requirement (e.g., 20+ years). (Yes, this could vary by industry and/or geographic location.) Do not fall into the habit of including E.R. provisions just because "it's always been that way".

I don't see a BRF issue unless there is some benefit, right or feature that is available to HCEs but not to NHCEs. Getting rid of the ERA for everyone shouldn't be a problem. There might be a 411(d)(6) issue but again, what is actually being removed if you eliminate the ERA in the DC plan? Not the availability of distributions, since you can still have that at age 59½. Not full vesting, since the definition of ERA already requires 6 years of vesting service. Is there something else that is granted by the attainment of ERA in the DC plan that could be a cutback if eliminated? Read the document to see, but I can't think of what that might be.

At least some pre-approved documents provide for an "other" election for excluding participants from the Safe Harbor contribution, where they specify that it must be "an HCE, or" ............... so I don't see any prohibition about specifically naming an HCE as excluded. But I'll ask this - why? Given that documents can provide complete flexibility to exclude all HCE's, but make a "discretionary" Safe Harbor to "any or all" HCE's - what would be the point of limiting the flexibility by specifically naming one HCE?

DSG, it’s unclear whether the other spouse’s lawyer is ignorant or trying a negotiation ploy. Either way, you won’t fall for it. Consider drawing on your deep experience with the different law that governs the Federal Civil Service Retirement System and the Federal Employees Retirement System and their regimes for a court order acceptable for processing (COAP). 5 U.S.C. §§ 8339(j)(4), 8419; 5 C.F.R. §§ 831.601 to 831.685, 838.101 to 838.1121. An attempt to specify a former spouse’s shares by reference to a factor other than a percentage of the employee annuity would get rejected as not a COAP. And even if one were to imagine that the former spouse’s COAP-paid benefit might be the employee’s income, an attempt now to negotiate the former spouse’s fixed percentage of the employee annuity by using assumptions about the employee’s marginal income tax rates for Federal, State, and local income taxes is nonsense because not only might incomes changes but also any of the tax rates might change. What might Maryland’s income tax rates be in 2034, 2044, or 2054? What if the former employee retires to Texas? What if the US decreases Federal income tax rates?

I think manually checking the box on the hand-signed copy of the form that gets attached to the e-filing is fine. What I think is a problem is you modifying a document after it has been signed by the plan administrator. Either have the plan administrator check it themselves before they sign it, or send them a new copy with the box already checked. No problem. I probably wouldn't but ultimately I don't think it will make a difference.

If I'm understanding the original question correctly, I believe CDA TPA intends to file a 5558 and mark the 5558 box in the software, but the client has already been provided with a copy of the 5500-SF for manual signature without that box checked. CDA TPA is asking if they can check the 5558 box on the paper copy of the 5500-SF after they receive it back, signed by the plan administrator, before scanning it and attaching the scanned copy to the electronic filing. I would not advise you to modify a document after it has been signed by the plan administrator in any way. However I would have no problem if the plan administrator manually checked the 5558 box before signing the 5500-SF. As long as all of the data elements on the manually-signed 5500-SF match the electronically-filed 5500-SF then, in my opinion, it is a valid and complete filing. I don't see how it matters whether the "X" in the box on the paper copy was placed there by your 5500 software, or a PDF editor, or a pen in the plan administrator's hand. It might be easier to send them an updated copy with the box checked, and say "If you don't get form back to us by X date, we will put you on extension and you must sign this attached form instead of the earlier one."