austin3515

Right. Imagine the shock when I tell Executive A that because he voluntarily chose to contribute $5,000 to the 409A Plan, he is going to lose $150 of Safe Harbor. See my concern?

https://advisor.fidelity.com/app/proxy/content?literatureURL=/969837.PDF "Income deferred does not reduce any other employer-provided benefits, such as employer matching contributions to a 401(k) plan or benefits under a qualified defined benefit plan. Generally, this means compensation used in determining benefits under the qualified plans should not be reduced below the qualified plan annual compensation limit ($255,000 for 2013)." Am I the only one who feels like this is generally ignored?

Participant makes voluntary deferred compensation contributions to a 409A Plan. His gross wages are $100,000 (just to keep it simple) and he contributes voluntarily $5,000. Is his 3% Nonelective Contribution based on $100,000 or $95,000? Note that "deferrals to a NQDC Plan" is NOT an add-back listed the way other pre-tax deferrals are. I am pretty sure it is $95,000 but can't understand why that doesn't get more press. I've had it crop up as an issue more than once.

http://www.relius.net/News/TechnicalUpdates.aspx?T=P&1=1&ID=1088 Nice write-up from Corbel

http://www.ferenczylaw.com/Documents/FlashPoint/2_2_16_FlashPoint_The_IRS_Giveth_Yay_and_the_IRS_Taketh_Away_Boo.pdf Just wanted to make sure everyone saw this, in particular what the IRS is trying to taketh away...

Compliments to TAGData for pointing me in the right direction, SECTION 6. CORRECTION PRINCIPLES AND RULES OF GENERAL APPLICABILITY .06 Special rules relating to Excess Amounts. (2) Correction of Excess Allocations. ... If the improperly allocated amount would not have been allocated to other employees absent the failure, that amount (adjusted for Earnings) is placed in a separate account that is not allocated on behalf of any participant or beneficiary (an unallocated account) established for the purpose of holding Excess Allocations, adjusted for Earnings, to be used to reduce employer contributions (other than elective deferrals) in the current year or succeeding year. ...

Plan has a safe harbor match only - no other er contributions (other than discretionary contributions). Have a plan with around $10,000 of "forfeitures" being generated related to a correction to Safe Harbor Match (they used comp over the a17 limit). The IRS prohibition of using forfeitures for SH is based on the fact that the contributions needed to be 100% vested "when made." These were, as they were intended to be SH Match. Anyone have a problem using this to offset the match? The Plan is not audited, and $10,000 is about 5 years of my fees! I would assume this has come up before, and perhaps addressed by the IRS?

Participants deferred a significant amount from deferred comp payouts that was ineligible for contributions during 2015. We have done the "pay the distributions in 2016" to correct this sort of thing when the correction was a few hundred dollars or maybe $1,500. This will be almost $10,000. Does that option get pulled off of the table in that scenario?

I agree. Great job IRS! Credit where credit is due! They took off the handcuffs for sure. They applied reason and equity.

It's so long I've been reading it for 3 days and I haven't gotten to the end! BTW, it's polite to warn over spoiler alerts like that!

It was nice of them to put this all down in one place. Great example of how regulations can destroy something that's supposed to be a nice benefit. https://www.irs.gov/pub/irs-tege/irs_reporting_disclosure_guide.pdf

A separate EFTPS account for each client, or are you doing essentially what the recordkeepers do with omnibus accounts? Personally, I would not want to have responsibility for client funds. But I will say PenChecks adds quite a bit of time to the process for all of its convenience.

How do you do the withholding? We had a few holdouts who did not want to go to PenChecks until they mandated EFTPS for the withholding. At that point we told them PenChecks was the only option.

Consider using PenChecks... They handle all the reporting and it eliminates the need for a separate EIN. When it becomes mandatory to report the Trust EIN I Plan on reporting the employer's EIN. I have 1,100 plans under my employer and NONE has a separate EIN.

1.401(k)-1(e)(8) (8) Section 415 compensation required. With respect to compensation that is paid (or would have been paid but for a cash or deferred election) in plan years beginning on or after July 1, 2007, a cash or deferred arrangement satisfies this paragraph (e) only if cash or deferred elections can only be made with respect to amounts that are compensation within the meaning of section 415©(3) and § 1.415©-2. Thus, for example, the arrangement is not a qualified cash or deferred arrangement if an eligible employee who is not in qualified military service (as that term is defined in section 414(u)) and who is not permanently and totally disabled (as defined in section 22(e)(3)) can make a cash or deferred election with respect to an amount paid after severance from employment, unless the amount is paid by the later of 21/2 months after severance from employment or the end of the year that includes the date of severance from employment and is described in § 1.415©-2(e)(3)(ii) or (iii). But then again, this does leave the door open for recognizing otherwise non415 compensation for profit sharing as long as I can pass testing on a 414s/415 compliant definition.

The final 415 regs go on ad nauseum about how post severance comp cannot be included for 415 comp definition. I'm looking for the connection that it can't be used for benefit accruals, such as 401k deductions? I know that it cannot, but where does it say there is a connection between the two? So what is to stop me from making post-severance comp eligible for allocations, and then using a 415/414s compliant definition for nondiscrimination testing? I know there is something, but again, what is that something?

aka I am correct that even if we amended the plan today, and someone terminated in 2025, the first installment could not be paid until 2030?

Is it possible for a deferred comp plan to change from a lump-sum payment following termination to 5 annual installments? The current document indicates that participants are paid 100% of their balance 90 days following termination of employment. There are payment elections permitted of any kind. We want the executives to be paid in 5 annual installments to help ensure that they will be in a lower tax bracket when they receive the payments, as the participants are generally expected to remain until retirement anyway. It seems as though to allow this we are required to defer the first annual installment until 5 years AFTER their termination date. Is that accurate?

Strange I don't have that email.

P.S. Thank you for finding those!

One thing I note is that my piece of Sungard is barely a blip on the radar screen. Hard to see how plan documents fits in with this new company, although I guess the same was true of Sungard beforehand. I still think they should have sent us a reassuring email. People want to know in these situations whether it affects them. That's what I want to know. Is anyone else curious?

Apparently Sungard was acquired in August by a company called "FIS." Have they made any press releases or sent any emails reassuring us that nothing is going to change? For example, what if new management decides to phase out Relius/server environment in favor of its on-line ASP platform? I'm not worried, but I sure would like something in writing telling me I have nothing to worry about. Depending on what you all have to share, I will obviously ask them too. I honestly did not even know about this deal until I logged in to Relius Documents today and saw the new logo.

It seems clear that an in a pooled account they are going way beyond the "safe harbor" role described in the Q&A don't you think?

Unbelievable. So I have RIA clients who have pooled accounts. They are all subject to these onerous requirements? I suppose I should suggest a corporate trustee?

It sounds like there are two possibilities. Changing a calendar year plan to a 6/30 plan during the calendar year. In that scenario, 1/1 to 6/30 is the short plan year, and 7/1 to 6/30 is the next plan year. The other option is to amend the Plan year before the beginning of the plan year to a 6/30 year end. That way, the upcoming plan year is less than 12 months. In that scenario, the Plan would need to be safe harbor not just for the next 6 months, but the next 12 months.