Kevin C

"Industry debate" is a good term for it. The "no amendments at all" side are holding fast to their stand, but their numbers are declining. Hopefully, we can keep the "it's only allowed if it is specifically permitted" view from becoming "industry debate" in other areas. 1.401(k)-3(j)(1)(iii) has a definition of ACA that is used as part of the QACA definition. But, I don't see any rules in 1.401(k)-3 that a plain ACA must satisfy, so I don't see that the -3(e)(1) mid-year prohibition applies to an ACA. If the published guidance doesn't prohibit it, then it becomes a matter of opinion whether you can amend and the answer is determined by where you stand in the debate. Bill, keep your fingers crossed that none of your clients die or sell their companies mid-year.

You missed part of the highlighted text. "...and must benefit a group of employees that separately satisfies section 410(b)" You are wanting to do a corrective amendment to add a group of Key Employees to the plan. I don't see how that can possibly satisfy 410(b) separately, since the Keys will almost certainly be all HCEs. You also missed my note that the amendment you want to do would result in the Keys being improperly excluded from the plan for 2014, since they were not allowed to defer during 2014. If you don't correct that, you have disqualified the plan. The EPCRS correction sets the missed deferral rate for improperly excluded HCE's as the average deferral rate for the included HCEs in the plan. In other words, the correction does not change your ADP test results. You do not get to include them in the testing as zeroes. If the plan has a match, they would also get the match based on the missed deferral rate.

You may want to go back to the prior document. The NRA change was part of the 2007 interim amendment from our document provider at the time. I don't remember if the due date was 2007 or 2008 to avoid cutback issues for the change. Our interim amendment was adopted at the document sponsor level, but the default provision did not change the NRA if it was under age 62. If the NRA was changed in 2007/2008 and the restatement put back in the old NRA, you might be able to convince the IRS there was a scrivener's error in the restatement. It's a long shot, but it would be worth a look.

My first step would be to push for replacing the service provider who was responsible. Then, if the affected participants did not have other accounts that were eligible for in-service distribution at the time, I would turn to Rev. Proc. 2013-12's correction method for overpayments.

Is it possible you are missing an interim amendment that changed the NRA?

No, you can not do a corrective amendment to retroactively include the Key Employees. Even if you could, they would not be included in the ADP test with zero deferrals. After the amendment, they would retroactively be improperly excluded from participation, which would need to be corrected under EPCRS. So, they would not help your ADP test even if you could amend to retroactively add them.

There is no such thing as an IRS pre-approved mid-year safe harbor plan amendment list. The prohibition on certain types of mid-year amendments to safe harbor plans is in 1.401(k)-3(e)(1) and 1.401(m)-3(f)(1) If you are talking about a QACA, as much as it pains me to say it, I would agree with Paychex. If you are talking about an EACA or an ACA, the answer might be different.

I would think both could be in trouble. The plan for an operational failure for failing to deem the loan and for failing to issue a 1099-R. The participant for failing to report the income.

The cite is Rev. Proc. 2013-12, Section 6.05:

I think the worst case would be worse than that. Under 1.72(p)-1, Q&A 4(a), the loan becomes a deemed distribution at the time the loan first fails to satisfy the loan rules. If the loan doesn't qualify for a longer than 5 year amortization, the 30 year amortization fails to satisfy the repayment term requirement of 72(p)(2)(B). I think in this case that would happen when the deal on the house fell through, not after 5 years. Depending on the plan's loan provisions, the cure period might buy him a few months to reamortize over the remainder of the 5 years before the loan is deemed.

If you need one more person considered as an HCE, 1.414(q)-1T Q&A 9 (b)(2) might help.

Dade Behring 2007 5500.pdf Freeerisa.com has a 2007 Form 5500 for a plan with that name. See attached. I only have the free search access and it does not show any other filings for that plan. I tried the DOL website and there are no filings for that EIN. If this Form 5500 is for the correct plan, you might try calling the PBGC and ask them if they can help you find out what happened to the plan. The Plan will be listed in their records under the EIN and Plan Number listed on the first page of the Form 5500.

Would your corrective amendment meet the requirements of 1.401(a)(4)-11(g)? EPCRS is not available for corrections that can be done under the Code or Regs. (Rev. Proc. 2013-12, Sec 6.08).

Going a bit outside the box... You didn't mention 401(k) for your wife. Could she work somewhere that has a 401(k)? Once she becomes eligible, she could defer $18,000 on as little as $20,000 of compensation. That helps with your savings and could be a huge help to the testing for her employer. As long as she doesn't have more than 5% attributed ownership, she would be an NHCE deferring 90% of pay.

When did the ownership change happen? The timing will determine when the sisters become Former Key.

Bonuses for those not eligible might be another option. You did not mention the size of the company. Changing to immediate eligibility can dramatically increase your participant count. If your plan is filing Form 5500 as a small plan (<100 participants), you'll want to at least consider the consequences of an increasing participant count. We are seeing audits for plans slightly over the large plan threshold running $10,000 - $15,000. As Tom mentions, at least one document provider and a couple of frequent ASPPA speakers are still saying absolutely no mid-year amendments are allowed for safe harbor 401(k) plans. Two of them mentioned at the 2014 Annual Conference that they are still waiting for the IRS to bless amending to change Trustees mid-year. Other speakers and at least one document provider have taken what in my opinion is a more reasonable interpretation of the existing guidance. This subject has been beaten to death repeatedly here in many threads. The respective camps are deeply entrenched and positions rarely change.

It also wouldn't hurt to check the deduction limit. It's usually high enough that it doesn't affect things, but every once in a while, it applies before you reach 415.

When the loan was originally taken, what sources were used to fund the proceeds?

It wouldn't surprise me if that investigator didn't know there is a small plan safe harbor deposit timing rule. He/she may have been trained on large plans. In previous disagreements with DOL investigators over deposit timing, it became apparent to me that none of them had actually read the rules. I've never been bashful about politely giving them copies of their own rules (don't forget the preamble) with applicable passages highlighted.

From Notice 2013-74, Q&A 5: They don't say which provisions satisfying the rules of 1.401(k)-3 they think the in-plan Roth amendment would change. Personally, I think they are stretching things in reaching this conclusion. But, it is published IRS guidance saying that they consider an in-plan Roth conversion amendment for a SH 401(k) to be prohibited mid-year after 12/31/2014. So, yes, I would say the Roth conversion amendment needs to be adopted before the beginning of next year and be effective on the first day of next year.

The rule you are thinking of is in 1.411(d)-4 Q&A 2 (e). If the plan has any money purchase balances, you can't eliminate the QJSA option.

The service spanning rules for elapsed time are in 1.410(a)-7(a)(3)(vi). I would expect to see them in any document that allows the use of elapsed time. But, I think you would have to follow the regs if they apply regardless of your document language. Of course, if the document had more generous language, you would have to follow the document.

We have several clients with dba (doing business as) names. But, your client is the only one who can tell you if both names apply to the same entity.

Thank you for the replies. I'd already seen one of David's prior posts with those cites. So, I was expecting to see FICA applied when the benefit vested or if not, when the payments were made. My first thought was that maybe the SERP benefits vested at retirement. We requested a copy of the document, but as mentioned above, there is nothing in the SERP document addressing vesting. I don't want to provide tax advice either, but I've been asked to look at this to see if it warrants further inquiry.

They are calculating FICA as 7.65%. I'm not sure if she will have other income subject to FICA this year. There is nothing in the SERP document about FICA or taxes in general. It does have a reference that benefits payable shall be subject to additional provisions set forth in one or both of the Rabbi Trust agreements used to provide benefits. I don't have a copy of either trust agreement. Is FICA something that would typically be addressed in the Rabbi Trust agreement?