austin3515

I don;t think that's right, the regs say you can cross-reference the SPD for the definition of comp. So yes, you have to describe what comp is eligible, just not in the notice itself. Tom, I agree with you. But what is surprising is that they didn't just say excluding comp items is the same as a reduction in benefits. I'm doing it 1/1/19. Thanks!

Do we all agree that based on IRS Notice 2016-16, I can amend the Plan to exclude certain items of compensation? I will send out an SMM at least 30 days in advance, but because the definition of comp is not required safe harbor notice content I probably don't even need to do that. Agreed?

HEre is my question. Since the timing of the payment no longer affects what year the distribution is taxed in, and if I have a fax confirmation that I send the refunds on March 13th or even 14th, and it was just processing time on the recordkeeper's side, does anyone really think the IRS is going to hold my feet to the fire on this, all for a 10% excise tax that is the result of administrative processing times??? I can't see it. Now if I fax it over on March 16th, I'm doing the excise tax return, no doubt about it.

Well, if it were me I would have run the report for the date range of the failure period and calculated the actual rate of return for each person. Best performing fund is a windfall for the participants and really punitive to the employer. I imagine there are some scenarios where there is a bit of sticker shock...

You are required to include this in the Average Benefits test for a4 testing. It's the nondiscriminatory classification portion of the AB Test that needs to be passed by treating the other excluded participants as not benefiting. The devil her is in the details. IF each plan passes at 70% coverage ratio, then you're all good. But if below 70% and there is no reasonable business classification for the exclusions, then you're out for Average Benefits FOR COVERAGE. So that's why some have asked "on what basis are you excluding people?" From 1.416.-1T(1)(b): All plans maintained by the employers in which a key employee participates, and certain other plans, must then be aggregated (the required aggregation group). So having a balance would not trigger aggregation. Listen, you are asking all of the right questions, but if you're diving into this with these sorts of question I would strongly recommend you get some external assistance. I recently got back into skiing, and you're on the double black diamond as a strong intermediate. I assume you are working with an actuary? They might be a great resource for you. I know perhaps this will come off the wrong way, but I honestly am trying to give you good advice even if it's tough to hear.

Of course we all know that the rule is you cannot use it unless you use the VFCP program. But as is clear from these discussions, everyone does it anyway, and to no negative consequence I might add. Client missed a deposit and sends it in a few weeks late? I just bang out a quck DOL calc and send them the roster. My God that happens all the time. My questions are a) how do you determine the rate of return? I thought the alternatives were a) calculate the individuals rate of return (Which, OMG...) or use the best performing fund (which OMG OMG!!!). b) What are you charging for all of this work on a $125 problem?

I was only providing a nice write-up on what SpiritRider was referring too. Thanks Carol!!

https://www.napa-net.org/news/technical-competence/case-of-the-week/case-of-the-week-403b-aggregation-rules-for-annual-additions/

I use it all the time, VFCP or not. I only do VFCP in really significant situations.

Now we’re talkin! Thanks for sharing this!

I guess all we disagree is whether passage is implied by the OP.

Not at all. But it also needs to satisfy 415, max deductible, it can't allow contributions from severance, and probably 45 other requirements. That is to say, stating the plan has to nondiscrimination is stating the obvious. Edit: AND there is no nonelective in the other plan, so clearly the non-elective will pass nondiscrimination without taking into account the other plan.

OP said 2nd plan passes coverage on its own, and the first is SH Match for all. But good point!

TH Aggregation is only required of all plans that cover at least one key employee. Because of the last paragraph, this design should work because it is not part of the required aggregation group. Neat! PS I assume you meant to say "HCEs and NHCEs" (not HCHEs). 416(g)(4)(H) (H) Cash or deferred arrangements using alternative methods of meeting nondiscrimination requirements The term "top-heavy plan" shall not include a plan which consists solely of— (i) a cash or deferred arrangement which meets the requirements of section 401(k)(12) or 401(k)(13), and (ii) matching contributions with respect to which the requirements of section 401(m)(11) or 401(m)(12) are met. If, but for this subparagraph, a plan would be treated as a top-heavy plan because it is a member of an aggregation group which is a top-heavy group, contributions under the plan may be taken into account in determining whether any other plan in the group meets the requirements of subsection (c)(2).

So let me get this straight. A 501c3 sponsors a 403b plan. the executive director contributes $24,000 to that plan. We set up a 401a PS plan and contribute an additional $54,000 in that plan (and of course enough to pass nondiscrimination for the ees). Total of $78,000 of additions for the employer and this complies with 415? OMG!!!

I'm definitely more conservative on something like this. Not worth it for me personally to advise anything that might go against the DOL's public comments.

Ha, MSmith beat me to the punch :) But I guess I get the extra brownie points for including the Q&A itself!

Beware! Larry, I don;t mean any disrepsect, but your "arbirtray" bifurcation to me seems the likely target of the following Q&A. The one time I did this was for a union and a non-union plan, and of course there are a hundred reasons to have separate plan for union and non-union (ok just one big one called collective bargaining). I have also seen it done for different legal entities. Anything else and I start to get nervous about the implications of this Q&A. Now I know, I know, this is "just" a Q&A. But still being right will not make me feel any better if I end up in a protracted debate with the DOL. the question was raised at the 2000 annual ASPPA meeting, in the general Q&A session. The questions at this session were answered by Joe Canary, Scott Albert, Lou Campagna and Mabel Capolongo of the Department of Labor: Question 5: A 401(k) plan has 150 participants. The plan must file a full 5500 and have an audit by an accounting firm. Due to the cost of the audit ($10,000 or $15,000), my suggestion to the client is to split the plan into two plans, each with 75 participants. For 2000 there will be an audit. The plans could be split into two plans on December 31, 2000. Therefore, on January 1, 2001, both plans have less than 100 participants and no audit required. For tax qualification testing, they can be permissively aggregated. In fact, my plan is to administer as if it was one plan and just separate for 5500 purposes. Is my conclusion correct? Answer: This question raises issues of avoidance and evasion. It is not certain that you really have two plans for purposes of Title I of ERISA in this instance--even if there may be two plans for Internal Revenue Code purposes. In Advisory Opinion 84-35A, the Department stated it would consider, among others, the following factors in determining whether there is a single plan or several plans in existence: who established and maintains the plans, the process and purposes of plan formation, the rights and privileges of plan participants and the presence of any risk pooling, i.e., whether the assets of one plan are available to pay benefits to participants of the other plan. This Advisory Opinion also notes that the Internal Revenue Service has cited the existence or absence of risk pooling between funds as relevant to the determination of single plan status. See §1.414(1)-1(b) 26 C.F.R. §1.414(1)-1(b). In DOL Advisory Opinion 96-16A, the Department stated its position that whether there is a single plan or multiple plans is an inherently factual question on which the Department ordinarily will not opine in the Advisory Opinion process

There is an outer limit, I forget what it is, but it's more than 2 weeks. And certainly more than 1 week, which is the case here. And anyway it tells you if entered a date that is too far out in the future, and no such warning appeared here. PS the interest rates were released 3/7/2018.

Sure you can. Clients certainly cannot fund the lost interest on the very day it is caclulated. I always go out at least a week if not more.

Unbelievable. I created a Lost interest calculator to mimic the DOL site, but that just has a lot more functionality. So I have built in a way to validate the new interest rates that I enter. Welll, long story short I could not validate this quarter. In the end I figured out that it was the DOL site that was wrong.... Take a look at the attached as proof. The trick is to run an interest calc from 1/1/2018 until April 15th, and then 1/1/18 through March 31st. Same result!!

ASG rules use 318 attribution for ownership, so the age 21/50%ownership stuff does not apply. But even still I don't see an Affilliated Service group since these are not service businesses and there is no suggestion of any affiliation anyway. If my father was a CPA and owned 100% of a CPA practice, and I too owned 100% of my own CPA practice (no overlap whatsoever in the businesses), that is not a controlled group or an affiliated service group. I think everyone would agree without hesitation that this is so. If you go back and read the OP there is absolutely no relevant distinction between my example and the OP. A shared employee is certainly not enough to change this outcome.

I think they would go overboard on their review of loan defaults for example. It should have been just a penalty for X# of loans, no documentation required. Why bother reviewing documentation for crying out loud?? As an alternative, add loans and RMD's to the list of self-correction items within certain parameters. People make mistakes and there should be non--armageddon solutions here when they do. Loans and RMDs seem to be the most common and least egregious offenses IF THEY ARE ISOLATED, or at least if they do not recur in the future. My suggestion of course addresses both the communities need for solutions and their need not to be underpaid for work they were needlessly required to perform. I assume the Self Correction model has born out to be effective and capable of being policed through the IRS audit process. Why not?? (I get it, there are tax consenquences here, I'm sure that is the difference, but still, either self correction is reliable or it is not).

All well and god until you spend 50,000 in legal fees prove that. Why would you ever commingle when setting up 2 plans so easy??

Here is a problem for you. If the one of the Companies goes bankrupt, how do you figure out whose balances go to satisfy the creditors? Wouldn;t the vulcher like debtors try and attach all of the assets in the plan if they are commingled? Sounds so so messy.