MWeddell

Be aware that the promissory notes or loan agreements with the participant may not allow the employer to unilaterally decide to cease collecting loan repayments by payroll withholding.

Sounds like a mess to me. To suspend the contributions to the safe harbor plan and amend that plan so that employees are no longer eligible to contribute to it, employees have to be notified. If they are not notified 30 days in advance, then it is not clear that the notification is effective. Meanwhile, assuming that there are both HCEs and NHCEs in the group covered in the safe harbor plan, if the employees become eligible to contribute to another plan, then you may have a problem with the safe harbor plan too. I don't see any problem with merging the plans' assets. I suggest that the employer talk with legal counsel.

The 410(b)(6)© merger & acquisition transition period ends on the earlier of the last day of the first full plan year beginning after the date the transaction closed or when there is a significant change in the plan or the coverage of the plan. If the buyer's workforce becomes eligible for the 401(k) plan that previously covered just the seller's workforce, then the transition period will end. That doesn't sound like a big deal because the 401(k) plan now covers all employees in the controlled group and hence will satisfy 410(b) coverage testing without the m&a transition period rule. So unless there are other employees in the controlled group that you haven't mentioned, there's not a problem here.

You have my sympathy, Devastatedfamily. Unrelated to the retirement benefits, you should ask the ex-husband's former employer whether there were any life insurance benefits through his job when your ex-husband died and, if so, who was the beneficiary. When you said that the life insurance lapsed, I'm not sure whether you meant an individual policy or any group benefit through the employer. The deadlines for responding to the QDRO are vague. The plan administrator must "promptly notify" you of the receipt of the order and their procedures for determining whether the domestic relations order indeed is qualified. Then, "within a reasonable period after receipt of the order," the plan administrator must notify you of whether the order is qualified. If it is not qualified, then your attorney will need to revise the order and start the process again. If the order is qualified, then you'll need to apply for a distribution -- that's usually a fairly quick process for larger plans, but it sometimes can take a long time for smaller plans that are valued infrequently instead of daily.

You are getting a variety of opinions here. Whether the criteria is written in the plan document has nothing to do with whether there is age discrimination. It just makes whatever discrimination there is easier to detect. My own judgment is that if there is a one-year fix, then you probably are OK. However, if this happens for more than one plan year so that a participant, because he/she grew a year older, had a lower accrual rate, then you have a problem. That being said, I suggest you consult with legal counsel for this issue instead of merely relying on message board replies.

I would say to include them in the 401(m) test. They are eligible to receive matching contributions if they just defer enough. Exclude them only if compensation itself was <= $200 for the year.

To my brain, the last sentence means that a portion of the 11/20/2013 distribution is now deemed to have been a corrective distribution. The introductory clause to the second sentence of that paragraph that masteff quoted means that the last sentence is indeed applicable. In other words, I'm not persuaded by masteff's argument (but perhaps the original poster is).

Yes, you can use a combination of shifting and QNECs. No, QNECs cannot be funded from the forfeiture account. QNECs by definition have to be fully vested at the time they are contributed to the plan and the money in the forfeiture account obviously was nonvested dollars when first contributed. You are going to run into a timing problem making QNECs now when you are using the prior year method for determining NHCEs' ADP and ACP. It's too late. You should know that there are restrictions put in place a decade ago on the bottom-up QNEC method. Whew! Did I answer all of the questions you had?

I agree with Belgarath. The better approach is to follow the letter of the law -- notify the employee that part of the 2013 distribution was not an eligible rollover distribuiton -- then to do what is more convenient.

Yes, for a plan that is not intended to satisfy the 401(m) safe harbor requirements, that kind of match formula is permissible.

Treas. Reg. §§1.401(k)-3(e)(4) is irrelevant because Plan B and Plan A are merging together and there is no plan termination. Assuming both plans use the calendar year as the plan year, then I don't see a way to merge the plans together before 12/31/2014 without monkeying around with the plan years or losing the safe harbor status.

For purposes of determining whether the deferrals and match portion of the 401(k) plan satisfy coverage testing, the 403(b) plan is disregarded. Treas. Reg. 1.410(b)-7(f) is the clearest citation for this. There is no coverage test for the deferral portion of the 403(b) plan but instead is a universal availability requirement. For purposes of determining whether the match portion of the 403(b) plan satisfies coverage testing, the rules are a bit muddy. In my view, it can't be aggregated with the 401(k) plan's matching portion because the regulations governing qualified plans won't allow the two types of arrangements to be aggregated for other purposes. However, if an average benefit percentage test is needed to be performed to get the match portion of the 403(b) plan to satisfy coverage testing, then qualified plans (including the 401(k) plan) are included in the average benefit percentage test.

Whether Plan A meets the Code Section 401(a)'s qualification requirements has nothing to do with whether Plan B satisfies coverage testing. There is no taint.

Suppose that the 2013 plan year has ended, e.g. December 31, 2013 was the last day of the 2013 plan year. In that case, you cannot make a discretionary amendment after the plan year has ended, such as changing the allocation method. Given that the safe harbor matching contribution option is used, any change to the profit-sharing allocation method should not impact the plan's ability to meet the 401(k) / 401(m) safe harbor conditions. I think you are correct that you could set up a separate profit-sharing plan and later merge it in even if the plan year has ended, but it's been awhile since I've researched that.

You are correct. Each plan must be tested separately (at least if there are any highly compensated employees in the first company's plan having access to the better match rate). If each plan separately satisfies 410(b) coverage testing, then you will be fine.

Rev. Proc. 2013-12 substantially improves the situation for you. See Section 6.06(4). The suggested correction method is to take reasonable steps to have the invalid distribution plus earnings returned to the plan. Also notify the participant that the distribution was ineligible for rollover. However, for impermissible in-service distributions, if the participant does not repay the plan, the employer does NOT have to contribute an amount to rebuild his or her account.

Assuming it's not a safe harbor plan, this is probably fine. Tom Poje nailed it.

k man, In my opinion, there is a "significant change in the plan or in the coverage of the plan." In my opinion, there is not a "significant change in the plan or in the coverage of the plan other than the acquisition or disposition." The only change to the plan is to accommodate the acquisition or disposition.

I disagree. From what you've said, you can still use the merger & acquisition transition period rule when performing 2012 coverage testing. The period did not prematurely end because "there is no significant change in the plan or in the coverage of the plan other than the acquisition or disposition." Treas. Reg. 1.410(b)-2(f).

Only if both plan documents so provide and plan B preserves any protected benefits. From what I've seen, if assets are transferred after employees are transferred, typically it is done for all transferred employees, not just those who elect the transfer.

My comments will only muddy up the waters, not clarify the situation. Apologies in advance. As most clearly can be seen in the context of testing for employees employed in collective bargaining units, Code Section 401(k) including the ADP test is regarded as a requirement independent from 401(a)(4). It is not the case that a 401(a)(4) exemption always exempts one from 401(k). When I looked at the issue a very long time ago, even if one concludes that the 401(m) ACP test does not apply to church plans, it is more difficult to conclude that the excise tax on excess aggregate contributions does not apply to church plans.

Company A's plan automatically satisfies 410(b) and other discrimination tests that might apply because no HCE benefits. You have to run a coverage test for Company B's plan clearly. It will satisfy the ratio percentage test (167/215) / (49/49) based on the numbers you showed. The plans can be tested separately now. However, if you have to do general 401(a)(4) testing for the employer nonmatching contributions for Company B's test, then that testing is still based on who benefits out of the entire controlled group's population and you may have some testing challenges there. You mentioned that it is a new comparability plan, which typically means you need to run a 401(a)(4) test. You may aggregate for ADP / ACP testing purposes but (1) you may have benefits, rights or features that differ between the plans and now have to be tested and (2) IRS recently opined that if you aggregate for that purpose, then the employer nonmatching contribuitons need to be aggregated too.

I generally agree. If you perform the testing on a snapshot basis using the last day of the plan year as your snapshot date (increasing the passing thresholds by 10% consistent with Rev. Proc. 93-42), you might be able to avoid doing the extra BRF testing because you might have your entire eligible population getting the same match rate. It depends on your exact facts: is there both an hours and a last day requirement?

No, I don't think so. You would have to change the 2 year eligibility for the match to be just 1 year. Through a cross reference from Code Section 403(b)(12), the 401(m) rules apply to the employer matching contributions made to the 403(b). This includes the safe harbor rules. To satisfy the 401(m) safe harbor rules, all NHCEs who are eligible to make 403(b) elective deferrals generally must receive the enhanced safe harbor match. There is an exception because one can permissively disaggregate employees who as of the last entry date of the plan year have < 1 year of service and are < age 21 and test them separately (of course no ADP test for 403(b) deferrals). However, there is nothing that would allow you to disaggregate those with < 2 years of service and not give them the enhanced safe harbor match.

This issue depends entirely on what the plan document says (and how it is interpreted), so I doubt that anyone on the message boards can help you.