Bird

$100K is allocated according to the terms of the document and $5K is allocated as earnings. That's what my FD says.

Maybe I misunderstand what you are saying but I disagree. Who cares where the money was held and when it was moved to participant accounts? Let's say for some reason you had a self-directed platform as well as a pooled account. If you throw $100,000 into the pooled account, that is the amount that is allocated (maybe not right away) as a contribution, and the earnings are just that, earnings, and allocated as such. The pooled account could be transferred to the self-directed accounts at some later date. I see no difference between a separate pooled account and a suspense or holding account.

That is how I see it and I think how most folks are seeing it.

This has been debated pretty thoroughly here and you have summarized it well. It's not settled. I'm in the camp that says if you look to KETRA and Notice 2005-92 you are overthinking it; the difference in the time frame makes it an invalid reference. Others think differently and say the suspension period ends 12/31/20.

Let's break it down. If the sponsor does not adopt CRD provisions, they can take a regular distribution. It would be subject to the 20% WH but if they are a qualified individual it is not subject to the 10% penalty; that is an issue for the participant. If the 20% WH is seen as a problem, then yes, they could take the extra step of rolling it to an IRA first and then taking it from the IRA with no WH. It's not clear what you are asking but if you rephrase "...a plan sponsor should not think about helping..." to "...a plan sponsor should not worry about helping..." then it is pretty close. BUT it now appears that you are talking about recently term'd participants; that wasn't evident in the first post. Are they eligible immediately for regular distributions? If so, then I'd be inclined to not change anything. If not, I might think about opening it up to CRDs, at least for the terms.

Definitely (IMO) not true. That's an issue that will be handled on the individual's tax return; the plan does not determine taxation/penalty. Whether the plan adopts CARES provisions or not affects 20% WH. Does(n't) the plan allow terminees to take their money, at least after the end of the year of termination? If so I don't think any special action is needed; let them take it (but if CARES provisions are not active then distributions are subject to 20% WH).

yes Not necessarily. There is no such thing as an RMD in 2020. We may get an option to let the participant decide (as we did in 2009) but there is nothing that says the participant can say "I want my RMD" (because there is no such thing). If the plan has other in-service options, like allowing a partial distribution of any amount after Normal Retirement Age, then yes. Well, again, the plan may have language that if not amended would force out money that looks like an RMD, and I suppose it would have April 1 in there, so yes, except that we are not talking about RMDs, we are talking about distributions that look like RMDs. But why...?

My understanding is that there are no "RMD"s for 2020, period. The problem arises with plans that don't just reference 401(a)(9) but parrot the language in it, which I believe pre-approved plans must do. So they have language that would force a distribution that looks just like an RMD but isn't. But those plans can be amended to remove or suspend that language and I think most or all will do that.

There's nothing in the code or regs except something about it being reasonable and maybe what another lender might charge; I don't even remember it's been so long and I have blocked those thoughts from my head. I think you are safe between prime and prime plus 2%. My guess is a plurality use prime plus 1%.

By making a 3% NESH for the whole year. No ADP testing. It's all one year. SH match is not allowed so don't complicate things by thinking about what would have been. If the plan says match is calc'd on a per payroll basis, then it is what it is. If it says it is calc'd on an annual basis, then you'll have to review matching contributions at the end of the year and evaluate whether the actual matches made (I like to describe matches made on a per-payroll basis when the plan says they are calc'd on an annual basis as "estimated" contributions) need to be tweaked to comply with the document provisions.

For what it's worth one of the accounting firms that was taking more of an "anything goes" approach is now saying contributions should be for the 8 week period. Either that or I misunderstood where they were coming from originally. I agree that the intent was almost certainly to cover contributions "for" the 8 week period.

I dunno, regardless of how carefully you parse the notice and regs, our plan language is pretty clear that HCEs are (or are not) excluded from the term "Eligible Employee." I don't see how you could change that definition mid-year - it's one thing to discriminate against HCEs, and it's another to cut back their benefits. For the record, most of our plans use the "maybe"notice which if push comes to shove, you could try to argue that nobody has accrued anything until the plan is amended in November, but that is a real shove. More and more we are excluding HCEs from the SHNE and making it up as PS, although that has its downsides too.

I think it's one of those things that in theory you could do whatever you want - write the merger documentation to say "everything but Roth" - but then the question is "is it a good idea?" And I think the answer is no. I'm a big fan of keeping things simple and this would not be. (The thought of trying to deal with the big conglomerate and their admin people for something out of the norm makes me shudder.) Personally I'd suggest accepting the Roth money (and adding the Roth feature). I'd want to know the reasons for not wanting it and try to address them. Otherwise just don't do the merger at all (unless documentation has already been signed, then they are stuck, IMO).

I don't think this is known for sure. I have some accountants that are trying to sync up retirement plan contributions very carefully "for" the 8 week payroll period, and others that are ok with funding 2019 contributions, and some pre-funding any/all 2020 contributions.

What is the justification for Code 2? I'd use 1 or 7 as appropriate. I don't think it is our job to determine what is a CRD for tax purposes. For distribution processing yes. I know it seems like a fine line or no line at all but for me it is pretty bright. I wouldn't even use Code 2 for disability unless I had some rock solid proof.

NO

I heard that. "Sure" if I remember correctly. I think he's wrong. Immediately following that webcast American Funds said no.

That's how I see it. The participant could claim it as a CVD but the plan has no obligation to treat it that way. Sure, there's a lot of misinformation and willful blindness. There is no requirement to offer CVDs.

Not knowing the ins and outs of the doc, it's hard to answer. But I'm confused, if they got bonuses already were they not matched? Or are you saying it's the other participants that need true-ups? If the match is based on annual pay, and you've made matches for part of the year (let's call them estimated matches) then the trick would be to bring everyone up to the point of the highest rate of match, wouldn't it? Which, as the year plays out, becomes a lower and lower percentage...unless someone quits or is let go, then you're screwed. Which is why I'd not run a plan that way. It might be a surprise but I don't deal with matching contributions that much; I think they s*ck for a lot of reasons. I'd hope someone else could contribute here.

no I'd be hesitant to change at this point. It might depend on whether the plan has last day language for the match (I would hope not if they are making contributions each pay period) and if not that argues for not being able to change. More than argues - I think it clinches it. Also such an amendment would have the distinct possibility of being discriminatory as you describe the circumstances.

I'm assuming "EINs" (plural) means "EIN" (singular). It's not a minor point. This is not an uncommon situation. The sellers can maintain the plan and make additional contributions based on their W-2 income. They can terminate it if they want but the date of the sale is a red herring; doesn't matter. There shouldn't be any problem with 5500 filings using the same EIN and a different company name.

I agree. The accountants I am working with are mostly taking that approach (funding "for" the eight week period).

That's kind of interesting. Looking at our (FTW) document language, it says no LATER than the end of the year following the Plan Year in which they occurred. I think it is implicit that you wouldn't allocate a 2020 forfeiture "in" 2019 (and I wouldn't) but can't find it in black and white.

Well, it took you a lot of words to get there. As I've noted before, relying on KETRA rules is not necessarily wise and in fact has caused more trouble than help. I don't see what the big deal is - a plan permits CV distributions, then there is no WH; it doesn't, then there is. As far as certification, administrators may rely on the participant's self-certification. Period.

Yes