austin3515

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.

To me, just expand SCP a little more. The only high volume transaction missing is RMD's. You give me RMDs and I'll get over the rest of it. The rest of it is really really rare. And people will still correct the same way - they just won't submit the application anymore. I mean don;t get me wrong, it is shameful that they are killing VCP. I hate to say it but it sounds like a very Trumpian method of "saving taxpayers money" (i.e., consequences be damned). I guess it's hard to deny the truth of it, but these plans are such a huge part of wealth in this country that some accommodations are warranted.

Now that you mention it, I'm pretty sure someone was using that as a guideline for a minimum time frame that would be considered "substantial." But you don;t have a problem with what I laid out above?

I really like that system periodically is sending out reminder emails to this client. Definitely will need to get a demo. Following up on missing data definitely takes time and can be hard to keep up with... Reminds me of the 5500 software that sends out weekly reminders so we don;t have to. And we use Sharefile for secure file transfers but generally can;t stand it.

https://pensionpro.com/solutions/features/plansponsorlink/ Thank you Lois Baker!

Client sent me a screen shot of their prior TPA's data collection module. It seems to be called "Plan Sponsor Link". There are several tabs across the top of the screen, including one that says "Annual Data Collection". Underneath there, are a series of "Steps" including General Information, Principal information (e.g., owners and officers listings), Family relationships, Other Businesses, etc. Green Checkboxes appear for steps that are complete. It's obviously a program someone built for TPAs. And it looks awesome. Really awesome. Does anyone know the name? I figure some of you are probably using it too.