austin3515

I guess your point is be conservative and treat it as wages. I suppose there is a lot of sense in that.

Someone is out sick and eligible for pay under one of these paid leave rules. I have essentially no knowledge or expertise in what paid leaves are all about but now my client wants to know if they pay it, is it eligible compensation? They DO exclude taxable fringe benefits. Would this be considered a taxable fringe benefit? I'm inclined to say it is because it seems to go beyond the normal "I get 3 sick days a year" type of policy where if someone stays home sick, its just part of their normal pay. But I'm in the dark here...

For sure there will be relief in 2020. There just has to be.

But you agree with me that you would be at a disadvantage if a client had taken advantage of the relief and not distributed the safe harbor notice?

That's not nitpicking at all. Thanks for the clarification! "It is reasonable to expect that the plan will be continued only if the waiver is granted." What is this last one all about? I'm confused because the definition applies in the context of a plan termination? It was not included in the EOB. Maybe you included the full language that I think really applies to a DB minimum funding waiver?

My understanding is to discontinue the SH mid-year the Safe Harbor Notice has to say this is a possibility. The only exception that would allow discontinuance absent the language in the notice is the economic loss exception. So no notice, no economic loss, no discontinuing the safe harbor contributions. So even a sharp drop in profitability is not a good enough reason. Think about a medical practice that is now cancelling all elective surgeries or a dentist cancelling all cleanings. They'll still make money but might still see the need to discontinue. If they opted not to send out the Safe Harbor Notice they would not have the option to discontinue. ie., do others agree that even a SH plan should ALWAYS send the Safe Harbor Notice out for this reason?

The only way to avoid the THM (i.e., the only way to preserve the safe harbor status and top heavy exemption) currently is to terminate the plan, but that only works if it is a substantial business hardship. From the EOB the hardship rule is defined as follows: 2.c.2)a) Definition of business hardship. IRC §412(c)(2) lists the following factors as relevant to a determination of business hardship: (1) the employer is operating at an economic loss, (2) there is substantial unemployment or underemployment in the trade or business and in the industry concerned, and (3) the sales and profits of the industry concerned are depressed or declining. I spent an hour and a half reading up on these rules this morning. I advise everyone to read the section of the EOB that goes over this.

thank you Loius! I actually found that one this morning. What I am hoping for though is an article that discusses specifically whether a layoff or a furlough creates a distrbiutable event. My recollection from past research is that it can be very gray, especall for layoffs. Presumably the restaurateur that laid off the wait staff expects to hire them all back. It's such a gray area.

So an employer furloughs half its work force for 30 days. They are scheduled to come back in 30 days. They are still active correct? And cannot take a distribution? Similarly, they would be considered to be on a leave with respect to their loans?

Personally I would not recommend getting the least bit aggressive on these rules. The client does not have write a check. And the costs of correcting if the Ira disagrees With you would be very costly if you used those forfeitures...

So one of the requirements to disconitnue Safe Harbor contributions is that the safe harbor notice had to say "the employer reserves the right to discontinue the safe harbor contribution." Then comes the SECURE Act and says "you don;t need to send the safe harbor notice for 3% SHNEC plans," If we take that advice do we still get the flexibility of discontinunng the safe harbor? Apparently there is an exception to this notice requirement if they are operating at an "economic loss" but I'm just wondering if they tricked us into eliminating an available option. Note: I have already discovered that this rule is essentially meaningless because we almost always include a discretionary ACP Safe Harbor Match even if we never use it. And in this scenario a SH Notice is still required.

To be more clear, you only take into account involutnatry terminations when determining if there was a partial term. Then you fully vest anyone who terminates for any reason (thats the dumb part; the guy who quit for another job gets a windfall). And because they have already exceeded the 20% threshhold, in this case by a wide margin, there is no way it could decrease from there.

No offense but that is of course easy to say when its not your money. The business that just laid off 35% of its work force needs every penny to leave the lights on.

but you agree with my initial observation, correct?

So lots of partial plan terminations imminent or in progress,. We all agree that in this scenario, assuming it is a calendar year plan, anyone who terminates at any time in 2020 (and for any reason) must become 100% vested. Is that correct? Seems like now would be a good time for someone to challenge the IRS to repeal that dumb interpretation. Even if they solve the problem it will be too late.

BG 150 that means they have to wait until after 12/31/2020 to correct. And I can;t imagine it would be appropriate to intentionally violate the rules for the sole purpose of adding additional correction options.

This is truly an awful month all around.

I think you understood it. My motivation I did not state explicitly. Let say someone has gains of 10% in 2019, but then a loss of 5% in 2020. If I'm the participant I'd be like "hey, I'm refunded all of these gains for 2019, but some of those gains don't exist today, so why aren't you updating the gains through the date of the distrbuition?" If my answer is "based on the law it is impossible to adjust for gap period earnings" then that makes it real easy for me.

Just because I am sure it will come up, there is no way to reduce refunds for losses in 2020, correct? Our notices tell participants that there refunds are being increased for gains and I wouldn't blame them for asking if that should not reduce their refunds. I just want to make sure I am correct when I say it is impossible.

That part I know is OK. I have read the solution you mentioned about the spin-off plan, the one thing that baffles me is how you get around the permanency issue...

Potential client is a non-profit and we want to set up a 403b plan instead. Can they "terminate" their sliver of the PEO 401(k) plan to create a distributable event?

Is there any restriction on transferring assets from a non-ERISA 403b plan of an employer to the newly established 403(b) plan of that same employer? Assume of course that both plans permit such transfers.

That's it! Thanks very much!!

Am I making this up is this a technical term? I though if you were IBM with 10,000 people, if you excluded 2 people out of your test you were still ok becauyse there was a recognition that you were never going to have perfect data, and essentially close enough was ok. I don;t think I made the term up. Anyone have a definition?

PArticipatn termed in 2018. Settlement for backwages was reach recently. Is it eligible compensation? Well outide the 415 post severance comp window but the interesting twist here of course is that theoretically these wages should have been paid in 2018 which presiumably the employer is admitting by agreeing to the backwage settlement in the first place. I figure someone must have written an article on this at some point.