Kevin C

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

We had the same discussion about two years ago. I think it still applies. The title above is a link to the prior discussion.

kwatts, The Employer can correct the situation, but you haven't given us many details. When were the loans taken? What is the loan program's cure period, if any? If the loans are still within the loan program's cure period, it's fairly easy to fix. The missed payments can be made up, with interest, or the loan can be reamortized. If the loans have gone beyond the end of the cure period, they are taxable and the only way to change that is to request a change in the tax treatment as part of a VCP filing. The Employer should be able to get the IRS to agree to reamortizing the loans and having them not be taxable as part of a VCP correction.

How about 1.402(c)-2?

Forms 5500 are freely available on the DOL website. The fastest way to get a copy is to go there and search for the filing. https://www.efast.dol.gov/portal/app/disseminate?execution=e1s1 Please note the search engine they use is really picky, so you will need to exactly match the first part of the plan or employer name as it appears on the Form 5500. Or, you can search using the EIN listed on the SAR. It should bring up all the Form 5500's they've filed since 2009. Find the one you want and you can print or save it. If it was filed very recently, the site may show a message that the attachments to the filing are not available yet. That is normal and the attachments will show up on the site after someone has looked at them to make sure they did not attach something they were not supposed to attach.

From the preamble to the DOL's 1996 Final deposit regulations:

Looks like someone is really cranky. A CEO who regularly makes false promises ends up with a company full of disgruntled employees. However, the transcript of the CEO's comments is irrelevant to the operation of the plan unless they have really bizarre document wording that makes verbal comments of the CEO part of the plan document.

Verbal communication does not supercede the plan document unless the plan document says it does.

We used Datair documents back then. You might try contacting them.

We have clients that have that situation occur each year. For some of them, the spouse fills in for people who are out sick. As long as the spouse actually performs services for the compensation received, I don't see a problem. Of course, the reasonable compensation issue is really the client's issue, not ours. If the spouse is a participant and has compensation, the regs are clear that he/she is in the ADP/ACP test.

The SH mid-year amendment rules prohibit a mid-year amendment that makes someone who was eligible no longer eligible. See Notice 2016-16, III D 2. Before we had that guidance, I think it would have fallen under the category of suspending or reducing the SH contribution under 1.401(k)-3(g), which means no safe harbor for the year of the amendment.

The CE requirements are in Circular 230, 10.6 (e):

Our disclosures do not show a seven-day yield for the money market fund.

FWIW, we had an IRS audit of a 403(b) plan for the 2008 plan year where the agent tried to apply the current (2009) rules. His position was that someone who dropped below 1,000 hours became ineligible the following year and if you included them, regardless of the reason, you were no longer allowed to use this exclusion. At the time, this agent trained other agents in our region on 403(b) audits This conflict between the IRS 403(b) regs and ERISA is supposed to be resolved in the coming pre-approved 403(b) documents, but until then, the only advice I've heard from the IRS is don't use the <20 hours per week exclusion.

It was a question from the person seated next to me. She was convinced that when you amended eligibility you were required to exclude those who did not meet the new requirements. Apparently, she did not like the answer she got from the speaker and the same answer from a couple of us who talked with her after the session. Someone submitted the same question to the Ask the Experts session, saying the prior session audience was split evenly on whether the speaker was correct. I remember seeing a few who looked like they disagreed with the speaker, but nowhere near half. But, I was sitting toward the front, so I didn't see the whole room.

The plan document should address what happens when there is a change in the eligibility requirements. Our VS base document says those previously in the plan, but not meeting the new eligibility requirements stay in the plan unless a certain part of the adoption agreement specifies otherwise. I was in that session, too.

Another slightly different angle: How are they sending the funds and what are they using as the deposit date? The preamble to the final regs has a footnote with a mailbox rule of sorts. For deposits that are mailed, the deposit date is the date they were mailed as long as the check clears. If that doesn't help, you might want to read through that preamble. It contains some interesting comments regarding monthly deposits that might be helpful. I haven't had to deal with this issue since the 7 day safe harbor was established, but prior to that I had favorable results after providing copies of the preamble (with applicable sections highlighted) to DOL investigators. http://www.dol.gov/e...al/96_19791.pdf

Interesting plan design. After some reading, it appears you would not be able to do this using a safe harbor match in the design. 401(k)(3)(A) and 401(m)(2)(B) have language that with HCE's in 2 or more plans of the employer, you count all deferrals and all match in each plan when you determine if the plan passes the discrimination rules. I think that prevents you from having the HCEs receive a SH match in both plans because of the limits on SH matches . 1.401(m)-3(d)(5) is pretty specific that it would cause a problem with the ACP safe harbor. I'm guessing that's why the two examples mentioned used the 3% SH.

I'm not sure I understand your point. The applicable sentence of the cite is: I've never seen a plan document use anything other than "Plan Year" in this context. Our current VS document says: Of course, it becomes, "What does the plan say?".

The rules regarding 30 day advanced notice and giving participants a reasonable period of time to change their deferral elections, etc. are in 1.401(k)-3(f), which deals with mid-year amendments to safe harbor plans. The amendment under discussion would be adopted prior to the beginning of the year, so those rules do not apply. I agree it could be a PR problem.

And for mid-year entrants, their participation is treated as starting on the first day of the plan year in which participation began. 1.411(a)-7(b)(ii)(B).

Not really. We set them up with a default password to start. But, you could login and set your security questions to something off the wall that you don't write down. You can't login later if you can't answer the security questions, unless you contact our office to get it reset. It may be possible to completely remove a single participant's web access, but I wouldn't want to do it. We provide web access in part so they don't have to contact our office every time they want to look at their balance.