austin3515

Nice! Thanks Larry! That;s exactly what I was looking for!

That all makes perfect sense and is basically the spirit of this sentence in my OP. But is there anything I can point to that speficially says Owners cannot possibly negotiate for their own retirement benefits and can therefore never be excludable? It seems to me that this obvious point must be addressed in some literature somewhere. I agree it is a logical conclusion, but it doesn't seem to be one that bears out in a plain language English reading of the document. Their employment is indeed covered by the collective bargaining agreement because of how the agreement defines covered employment. I'm being told this is not so unusual, so logic dictates this question should hav been answered somewhere in an authoritative way.

I'm thinking some of their comp must be covered by the union and some of it not. So management responsibilities, profitability bonuses, all not covered. Hourly rates for working on covered employment in the trade would be union and eligible for union benefits. Do people think I have that rigth?

This strains the imagination, but it is so. The only employees covered by the union are owners (albeit of a very small percent). The owners make hundreds of thousands of dollars each. They are covered by some union multi-employer plan getting benefits. Has anyone seen this before? I see nothing that suggests that I am prohibitted from maxing them out in this Plan. I assume I have to comply with the 415 limits taking into account both "my plan" and any DC plan maintained by the union. But let's say the union plan is defined benefit. I can give them all the 415 max in this plan and nothing to the employees. If it's true, then yeah for my clients. But this seems to fall into the category of too good to be true. Has anyone seen anything like this?? I went through the regs and found nothing in the definition of collectively bsargained employees that would be problematic. 1.410(b)-6(d)(2). So disaggregation appears to be mandatory.

Employee A is a participant in a hospitals 403b plan and contributes 24,500 to that plan. Employee A is also an employee of a foundation and they also sponsor a 403b plan, to which Employee A makes no contributions (because he already maxed out in the hospital. The foundation ALSO maintains a Profit Sharing Plan (401a) and contributes $54,000 on behalf of Employee A. There is no overlap on the Boards, so no controlled group. I know that any additions to the 403(b) Plans would be considered subject to one 415 limit because the ee is deemed to sponsor their own 403b arrangement. But what about that profit sharing plan? What makes me nervous about 415 is that 415 tends to pull in "all plans of the employer." Does the fact that the foundation sponsors a 403b plan make Employee A aggregate all of his contributions under all plans sponsored by the same employer (i.e., the two 403bs plus the 401a)? Am I over-complicating this?

Not for nothing, Corbel put it into their Basic Plan Document which makes me think the IRS made it a requirement for an opinion letter. Perhaps there is an LRM or whatever they are that says it is a condition of a favorable letter?

So now you understand my sense of humor :) Your question is "Where does it say that the integrated allocation has to be written into the Plan." That reg says precisely that it must be in writing. Precisely. How many trainings have we been to and been told that a plan must be qualified not only in FORM but operation?

Larry, in case you missed it, here it is again: From §1.401(a)(4)-2(b)(2)(ii) (ii) Permitted disparity. If a plan satisfies section 401(l) in form, differences in employees' allocations under the plan attributable to uniform disparities permitted under §1.401(l)-2 (including differences in disparities that are deemed uniform under §1.401(l)-2(c)(2)) do not cause the plan to fail to satisfy this paragraph (b)(2).

You know. Tom, that's not exactly a lot of E&O coverage these days :)

Part of it too I think is for $500 an hour you can buy a better E&O policy than I can!

I guess I just thought that perhaps that "benefit" (i.e., that their future vesting could never be decreased) had to be protected. But I'll let someone who charges $500 an hour figure that out!

I would never do the amendment described above on my own. There is an ERISA attorney we work with regularly on all of the abnormal stuff like this (there's not that much like this, of course). a) because we think he is great; b) we are not lawyers and so are not comfortable coloring outside the lines; c) we can have peace of mind knowing that if the tax cometh, we can provide him with another's information. I know he wouldn't do it if it wasn't possible. Now that I think about, presumably amending the basic plan document to pull out that paragraph in and of itself would be a cutback though wouldn't it.

It's still in the EOB as an acceptable interpretation (albeit one that does not line up with the IRS's position). Something about the fact that the "Conference report" which is the best interpretation of Congress's intent supports Option A. It's the 2017 version of the EOB. At any rate, Sal left the door open a smidge indicating only that "conventional wisdom" suggests Option B.

§1.401(a)(4)-2 Nondiscrimination in amount of employer contributions under a defined contribution plan. (ii) Permitted disparity. If a plan satisfies section 401(l) in form [Note: NOT operation], differences in employees' allocations under the plan attributable to uniform disparities permitted under §1.401(l)-2 (including differences in disparities that are deemed uniform under §1.401(l)-2(c)(2)) do not cause the plan to fail to satisfy this paragraph (b)(2). That oghta do it for you?

A) Integration level (i) In general The term “integration level” means the amount of compensation specified under the plan (by dollar amount or formula) at or below which the rate at which contributions or benefits are provided (expressed as a percentage) is less than such rate above such amount.

ESOP, that scenario is much more complicated than what we have to deal with fortunately. I suppose I COULD amend our Plan for this client to remove that paragraph and do it anyway, and yes of course lose reliance. But how comfortable is everyone that the IRS won't come back and question this. ESPECIALLY since I can't even submit for a DL anymore?

My client cares nothing for cleaner. They adamantly want as much money on vesting as possible. There is a new regime in town and they are very upset that the old regime gave away the store so to speak. I think there are cash flow issues, and some decent turnover.

I just found this in my Basic Plan Document (Corbel Volume Submitter, PT Formatted): (g) No reduction in Vested percentage due to change in vesting schedule. If this is an amended or restated Plan, then notwithstanding the vesting schedule specified in the Adoption Agreement, the Vested percentage of a Participant's Account shall not be less than the Vested percentage attained as of the later of the Effective Date or adoption date of this amendment and restatement. The computation of a Participant's nonforfeitable percentage of such Participant's interest in the Plan shall not be reduced as the result of any direct or indirect amendment to this Article, or due to changes in the Plan's status as a Top-Heavy Plan. Furthermore, if the Plan's vesting schedule is amended (including a change in the calculation of Years of Service or Periods or Service), then the amended schedule will only apply to those Participants who complete an Hour of Service after the effective date of the amendment.

Plan has immediate vesting. Client wants to amend the Plan to a 3 year cliff vesting. I used 1/1/19 for the change date (first day of next plan year) because I felt like the treatment during the transition stage was just to complicated and not really the crux of the question anyway. Option A: 3 year cliff vesting will apply to all new Employer Match money accrued after 1/1/2019. All of the old money will still be 100% vested for everyone who had it, because their accrued benefit is protected. Option B: 3 Year cliff vesting applies to any new participants who become eligible on or after 1/1/19. All of the employees who are participants in the :Plan on 1/1/19 shall forever be 100% vested in any match that ever is deposited to their accounts because the vested percentage is protected. My understanding from the ERISA Outline Book is that the "ERISA Conference Report" which describes Congress's intent might support Option A. But the IRS through some guideline on their website took the position that Option B applies. According to the EOB, "conventional wisdom" is to use Option B. Has anyone ever used Option A?

If I hear you correctly, as long as my allocation is based on a safe harbor design based allocation, it doesn't matter if the document specifies that allocation? I can just use the fact that everyone is in their own group to do the desired allocation, and then claim exemption from testing because the allocation was based on a safe harbor integrated allocation? If that's what you're saying it would not be correct. The 401l rules clearly require that it has to be written into the Plan. If that's not what you're saying then color me confused.

Larry- That allocation will not satisfy rate group testing, so I'm confused as to why I would not need the -11(g)? The whole point of the -11(g) is to utilize the design based safe harbor and avoid the general test under (a)(4) altogether.

I didn;t want to integrate at 100% of the wages base, i wanted to use 50%. So the owner makes $100,000 for example, and the employee makes $40,000. I want to integrate at say 40% of the wage base. This method of allocating contributions will be much more advantageous for the owner than merely imputing disparity at the taxable wage base (I think you will agree based on my example that imputing disparity does nothing).

Props to Mike Preston for this one! B) Corrective amendment to conform to safe harbor. The requirements of paragraph (g)(3)(v)(A) of this section need not be met if the corrective amendment is for purposes of conforming the plan to one of the safe harbors in §1.401(a)(4)-2(b) or §1.401(a)(4)-3(b) (including for purposes of applying the requirements of those safe harbors under the optional testing methods in §1.401(a)(4)-8 (b)(3) or (c)(3)), or ensuring that the plan continues to meet one of those safe harbors. From §1.401(a)(4)-2(b)(2)(ii) (ii) Permitted disparity. If a plan satisfies section 401(l) in form, differences in employees' allocations under the plan attributable to uniform disparities permitted under §1.401(l)-2 (including differences in disparities that are deemed uniform under §1.401(l)-2(c)(2)) do not cause the plan to fail to satisfy this paragraph (b)(2). Does any shadow of doubt remain that this can be done??

Is based on compensation including taxable fringe benefits even if the plan excludes taxable fringe benefits frm the definition of Compensation, correct? The fact that it is a safe harbor exclusion does not matter. Right? I think so but please confirm!

I'm inclined to agree, but it would be awesome to point something that proves the point... I skimmed through the 401l regs and it does not specify that the it has to be in the document on the last day of the year. Just that it has to be in the document (and it would be).