Kevin C

The issue is that under 1.401(k)-1(d)(4)(i), deferrals can not be distributed upon termination of the plan if the employer sponsors an "alternative defined contribution plan". SH non-elective and SH match are QNEC's and QMAC's respectively [1.401(k)-3(b)(1) and 1.401(k)-3(c)(1)], which are subject to the same distribution restrictions as deferrals (see their definitions in 1.401(k)-6.) So, in the situation Vlad describes, the deferrals and SH can not be distributed and must be transferred to the alternative defined contribution plan. For the other contribution sources, it would depend on how things are done. If the old plan is merged into the new one, there would be no distributions. If the old plan is terminated, they probably could. Their treatment in the new plan would depend on how the funds got there. They would only be a rollover if the participants had the option of receiving a distribution. But, what you are describing seems like a lot of trouble to get in-service distributions of the PS and regular match sources, when you could just amend the existing plan.

If Company B is a sponsor of the multiple employer plan, I don't see how company B can avoid 415 aggregation under 1.415(f)-1(a)(2) of both of the DC plans it would be sponsoring. If Company B was not a sponsor of the multiple employer plan, then I think you can get a different answer.

The exclusion is for participant directed transactions in a DC plan.

We only have a couple of plans that allow loan payments to continue after termination of employment. One main reason is, as ESOP mentions, no one wants to deal with the checks. We also had one client that used to allow it, but changed their loan policy after a group of employees took $50,000 loans and used the funds to start a company to compete against them.

Thank you, Dave. It is very useful.

Yes, 403(b) distributions to ministers can be designated as housing allowance. I haven't seen it done in a plan document. The examples I've seen all had the designation made in a Resolution by the Church. The ones I've seen designate the entire distribution as housing allowance and it is up the minister to determine how much of the distribution actually qualifies as housing allowance. Our Church clients that have done this included language like this in the Resolution: If you google minister pension housing allowance, you'll find lots of information, including this IRS webpage https://www.irs.gov/businesses/small-businesses-self-employed/minister-audit-technique-guide From the IRS web page:

Maybe you need a new document ASC's VS document has this in the base document:

Austin, what part of the regs are you reading as requiring the increases to take place on the first day of the plan year? I see that the minimum percentage requirements change on the first day of the plan year, but that's only the minimum. It seems that with the increases taking effect earlier, you wouldn't have any problem satisfying the minimum percentage requirements.

If the SH match is calculated separately for each payroll period, the deposit is due by the end of the next plan year quarter. 1.401(k)-3(c)(5)(ii). Although, as mentioned, there could be discrimination issues with depositing later for some than for others.

Your non-profit clients are different than ours. The ones we have that are large enough to have HCEs typically provide enough employer contributions to the employees that safe harbor 401(k) isn't a problem. Several of them also had the choice between an audit size 403(b) and a small plan 401(k). We give them their options and let them decide. Now, if it's a Church plan, it's definitely a 403(b).

All attachments should be included with the filing on the DOL website, after they have been reviewed by the DOL.

ASC also allows an "Other attachment" option, although I would be concerned that the DOL might think it is an IQPA audit.

When was the loan taken? From Rev. Proc. 2016-51, Section 6.07(2)(a): ... "The correction methods described in section 6.07(2)(b) and (c) and section 6.07(3) are not available if the maximum period for repayment of the loan pursuant to § 72(p)(2)(B) has expired." ...

Hmmm, Safe Harbor Plans, new regulations and differing opinions on what the regulations really mean. I'm having a deja vu moment.

A 401(k) offers more flexibility in plan design, too. That's the main reason we suggest 401(k) instead of 403(b) for most non-profit prospects. Our non-profit clients typically have a core group of employees that have been there long term, but also have a significant number of people who work only a few hours per week or work only certain times of the year. Most of them are on limited budgets, so they appreciate being able to apply eligibility requirements and limit turnover of participants. We also have a few non-profits with an HCE or two that sponsor safe harbor 401(k) plans.

Another ERISA attorney's opinion came out today in Sal's eRISA Update,Winter 2016/2017, Issue #57. He says Pre-approved plans that prohibit the use of forfeitures towards SH, QNEC or QMAC will need to adopt an interim amendment under Rev. Proc 2016-37. He also says that while the IRS did not address operational compliance prior to an amendment, it would appear that as long as you don't violate 411(d)(6), operational compliance should be permissible. He does not specifically mention 2016 years, although he does say you should be able to rely on the proposed regulations for periods prior to their 1/18/2017 publication date. That's not as clear as some would like, but not a restrictive as the other known opinions. I'm sure there will be more to follow.

John, I'm not suggesting an interim amendment for this can be effective retroactively, I'm asking if it can be done. Reading through the remedial amendment rules for interim amendments gives me a headache. Fortunately, we use ASC's VS document that has the language described in my original post. So, while this turn in the discussion is interesting, it doesn't affect us.

You left out a word. They are proposed to be effective for taxable years beginning on or after the date the final regs are published. For calendar year taxable years, that won't be before 2018.

I wasn't implying that the FTW document folks were not ERISA attorneys. We have their opinion. I was asking if any of the ERISA attorneys on this site would care to comment. The phrase " for periods preceding the proposed applicability date" can also be interpreted to mean including years back to 2006 when the ridiculous language of "when deposited" became effective. While the controversy didn't start until about 2011, our plan provisions were not following the regulations from 2006 through the PPA restatements. I read the proposed reg as correcting this issue back to 2006. Others obviously have a different opinion.

Any ERISA attorneys out there? Can an interim amendment reflecting a change in regulations be applied retroactively if the regulation says it can be applied retroactively?

I have to wonder if FT W is reading the same proposed Regs we are. For calendar year plans, the proposed effective date will be no earlier than 1/1/2018. However, it clearly says the proposed regs can be relied on for prior periods. Proposed Effective/Applicability Date These regulations are proposed to apply to taxable years beginning on or after the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register. Taxpayers, however, may rely on these proposed regulations for periods preceding the proposed applicability date. If, and to the extent, the final regulations are more restrictive than the rules in these proposed regulations, those provisions of the final regulations will be applied without retroactive effect.

What does the plan say? Our VS document says you can't use forfeitures for SH contributions unless provided otherwise in IRS guidance. With that language, I feel comfortable using forfeitures towards 2016 SH. The new guidance also gives me more comfort in our decision prior to our PPA restatements to rely on the EGTRRA Opinion letter and use forfeitures towards the SH contribution. We restated all our SH plans effective 1/1/16 because of this issue.

If you don't think your document allows you to use the new rule, you should ask your document provider. It's something they should be looking at now, anyway. If the document language is a problem, you can ask them if that is something that can be fixed retroactively with an interim amendment. Our VS document language is clear, so I haven't gone down that road.

Tom, even the IRS didn't realize the implications of what they had done in the regulations until after the EGTRRA pre-approved documents had been approved. So, most, if not all, of the EGTRRA documents allowed the use of forfeitures towards safe harbor contributions, QNECs or QMACs. Our document provider took the position that because the Opinion letter covered that provision, it could be used until the plan was restated for PPA. The IRS made everyone change their PPA documents to say forfeitures could not be used towards QNECs, QMACs or SH. Fortunately, our PPA VS document anticipated that the IRS might change their mind.

Scheduled to be published tomorrow. Looks like we can go back to using forfeitures to fund safe harbor contributions, as long as your plan allows it. Fortunately, our VS document has the phrase "unless provided otherwise under IRS guidance" at the end of the sentence about not using forfeitures towards SH contributions. https://www.federalregister.gov/documents/2017/01/18/2017-00876/definitions-of-qualified-matching-contributions-and-qualified-nonelective-contributions