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or start at 10% and no escalation

The political speculation is that providing the bigger catch-up amount beyond 63-year-olds would result in more revenue loss than the appropriations bill then would bear.

10%

or what I said in response to Peter's subsequent question.

Yes, legislators are just pulling numbers out of their backsides, the same source as for all their political commercials.

If you HAVE to aggregate to satisfy coverage then you must aggregate for nondiscrimination and then there are no safe harbors. If each plan has an otherwise safe harbor formula, if the DB can pass coverage by itself using average benefits, then you're OK.

100% agreed. There are just so many pitfalls, I rarely see real estate in done well in small plans. I wonder about the improvements - are they developing land? improving buildings? putting up buildings? etc. What is the real estate currently used for? is it literally just a tract of land held for investment? is it rental property etc? Are they flipping the properties? leased farmland? etc. They should discuss those with someone who deals with real estate in plans.

I am not an expert on UBIT but what I know is if there is leverage used in a plan you need to seek expert advice to see if UBIT will be due. If they have to pay a type of income tax on income inside the plan my guess is this idea will be less popular. I would add finding a CPA that knows how to file a UBIT return of a 401(a) plan is not easy. Because of that it isn't always cheap. One has to really watch out for any idea that makes it look like they are trying to run a taxable business in a qualified plan and if they get clever and try to use Roth dollars so they never pay taxes on the income ever gets the IRS' upset and they can be aggressive. Too many people try to get too clever. If it was real simple to never pay taxes on your business' income more people would be doing it.

So they are using the trust to engage in real estate business? That's what is smells like... are they reporting UBIT? This isn't just a large pension plan that happens to hold some real property as part of a diversified portfolio. It sounds like people whose business in general includes real estate investing and they are also using the plan for that purpose. Beyond the myriad of possible prohibited transactions, the anti assignment wrinkle, and just burdensome issues of having real property in the plan such as making sure all the property taxes are paid by the trust - how would they ever expect to get a mortgage for those properties? A mortgage requires payments, credit, etc. The trust doesn't have a credit score, or income statements like paystubs, would they co-sign the notes? that would be terrible I'm sure someone else with better experience will chime in with a more thoughtful answer, but my instinct would be to walk away. Even their current set-up seems ripe for issues.

If any portion of the plan is cross-tested, then all benefiting NHCEs over 21/1 (those who are not OEEs) must receive the minimum gateway. Call that the over 21/1 'plan'. Those who are OEEs (under 21/1), if tested separately from the over 21/1 plan, are in a group that is almost never cross-tested (call this the 'under 21/1 plan'. Instead, it is contributions-tested, also called allocation based testing, so that 'plan' is not required to get gateway (again, if tested separately from the over 21/1 plan). If not cross-tested, no gateway. If a plan is cross-tested, the benefiting NHCEs must have the minimum gateway (perhaps even more to pass testing overall) but the gateway is not restricted by an allocation conditions like last day or a minimum hours requirement. If the plan is allocations-tested, not cross-tested, the 'EBAR' is replaced for testing with this: the employee's total nonelective allocation divided by the employee's testing compensation. Compare these rates HCEs to NHCEs and the rest of the math is the same.

The auditors we work with look at every period on a spreadsheet to determine the number of days it took for each withholding to be deposited. If they determine the company can reasonably make the deposit within say 3 days, then that is the standard for that company. No, nor should they.

RBG and all others down there - keeping our fingers crossed for you! My cousin lives in Sarasota, and Helene left 3 feet of water in his house, and he was luckier than many. It doesn't sound good for this one. Be safe!!!

In the absence of any specific guidance, I do not think a plan administrator can be faulted for relying on the plain language of the law. My recollection is also that past disaster relief declarations have been for areas designated for individual assistance, but that does not appear to be the case for QDRDs.

I agree with EBP's comments (and others). That's why I was asking the year the contributions were missed. At least they can stop the bleeding, but still on the hook for 2023 and partial 2024. They should have set-up a maybe safe harbor. The side note from EBP is key re: ADP/ACP testing....and speaking of keys - top-heavy as well?

In addition to agreeing with others' comments, if the plan's safe harbor notice contained the language allowing suspension or reduction of safe harbor contributions mid-year with proper prior notice, I would suggest they at least amend the plan to suspend contributions prospectively (with at least 30 days' notice to participants and an effective date of the amendment that coincides with the expiration of the 30 days) to stop the bleeding in 2024, so to speak. They'd still be on the hook for the 2023 contribution and the 2024 contribution through the suspension date, but not for the rest of 2024 and not on an ongoing basis. And it sounds like they shouldn't have a safe harbor plan in the future anyway as they obviously don't understand it and aren't willing to comply with the requirements. On the downside, I suppose giving participants a notice highlights the fact that they were supposed to get a contribution. Side note - I assume that not making the contribution subjects them to ADP/ACP testing. Do they pass testing? If not, does the cost of fixing the ADP test mitigate the cost of SH contributions? I don't do testing, so thinking out loud about another possible approach.

I'm a pretty big fan of autoenrollment. I'm not a big fan of auto escalation. I encourage clients to implement auto enrollment at 10% (requiring no subsequent escalation). It usually solves the problem of getting the forms back timely.

The correction for a missed deferral opportunity in a plan with automatic enrollment is extremely liberal with plans having up to 9-1/2 months after plan year end to start deferrals before penalties kick in. Without the AE feature, the charity will at best have 3 months to offer enrollment to and start deferrals for eligible employees before some significant corrections are required. If they are not up to the task of managing eligibility and enrollment, the AE feature provides some time for their service providers to keep them out of serious trouble. Just a thought.

The news release cites sources about which acts might get a delay. Those include: 26 C.F.R. § 301.7508A-1(c) https://www.ecfr.gov/current/title-26/part-301/section-301.7508A-1#p-301.7508A-1(c). A health plan’s administrator might want its lawyer’s or certified public accountant’s advice to find that the PCORI “fee” is an excise tax and is administered by the Internal Revenue Service (unlike a firearms tax or harbor maintenance tax, which are administered by other agencies). This is not advice to anyone.

Another consequence might be an unavailability of a professional—lawyer, accountant, actuary, enrolled retirement plan agent, third-party administrator, or otherwise. Some professionals might accept such a client if one is paid her advance retainer in an amount one estimates as enough to cover more time than one expects to work, after carefully considering the extra difficulties of working for a troublesome client. With the advance retainer periodically replenished, to avoid a risk of nonpayment for the next bit of work. Others might be unavailable no matter how big a fee one might earn.

Potential DOL audit?

Potential plan disqualification.

operational failure in accordance with plan doc terms, potential failure of ADP/ACP, potential failure of TH test, and I hope a need to find another TPA

oooh, I'll start with the easy one: Failure to follow the plan's written terms. Hopefully that triggers the "we don't have to be your TPA anymore" clause in the service agreement!