Draper55

An incomplete return can be considered not filed...I would check amended and file also...if you met the deadline clearly no problem...

Section 316 of Secure 2.0 seems to allow the adoption of discretionary amendments improving accrued benefits up until the tax filing due date including extensions. IRC 412(d) seems to only allow reflection of such an amendment in funding if adopted within 2.5 months after the close of the year. Do we think that these new amendments adopted after 2.5 months but before the date indicated in secure 2.0 will fall in the same camp as 1.404(11)(g) amendments adopted after 2.5 months? Does this now trisect the window for retroactive plan amendments in terms of their effect for defined benefit plans?. The secure 2.0 provision is not effective until 2024 years so we have time to digest this...

Is not being eligible the same as the amount one can defer being $0? If I were a HCE by 5% ownership but took no comp in a given year would it be unreasonable to count my deferral % as 0% which would improve the ADP% for HCEs? If I paid myself $1 and defer nothing I get to be counted as 0% but not if I pay myself nothing? I don't know..

The plan passes 401(a)(26) testing in 2023 if noone terminates. However, I think now the plan satisfies the 401(a)(26) relief conditions of the Secure Act. Hence, the main focus is on coverage and nondiscrimination testing.

I have a small defined benefit plan that has been frozen to new entrants for a few years. It is no longer passing the ratio% test. Based on the numbers it would be a nondiscriminatory classification but is the set of employees hired before a certain date a reasonable classification? The formula is a safe harbor formula so the plan still passes 401(a)(4) by itself. Of course if i cannot get the sb plan to pass the average benefits tests I will move onto testing on a combined plan basis with the dc plan for which coverage will not be an issue.

just wanted confirm my understanding that if a plan does not provide meaningful benefits to enough eligible employees for the plan year, but then adopts an amendment after the year end but before 10/15, that this does not impact the valuation for the year preceding the amendment. For example, 10 eligible ees and only 3 have meaningful benefits for year X. In year X+1, a timely amendment is adopted to correct the (a)(26) error for year X. There is no change to the valuation for year X and the 5500 for year X, yes?

profit sharing plan states that in the absence of a designated beneficiary, the spouse becomes the beneficiary and if no surviving spouse, then the children. Plan also states that an ex-spouse can take the spouse's place on death if so provided under a domestic relations order per. In this case, the marital settlement agreement stated that the participant was to name the former spouse as beneficiary under the plan. The participant has died; but there is no executed beneficiary designation form effecting what the marital settlement agreement called for. There is no spouse at death, only the ex-spouse and children. Does it matter that the deceased did not physically name the ex-spouse as beneficiary while alive or was the intent of the marital settlement agreement sufficient? Any insights are appreciated.

Thanks CF and C.B. for your comments. I think Cf that is definitely true for traditional dbs but was not sure if the consensus was that it mapped over to the NRA equivalent for CB plans. That is a good point CB for a fixed crediting rate;my impression has been that in recent years, at least since the 2014 regs, that most actuaries were leaning toward variable rates. I think using the segment rates can eliminate funding whipsaw but may well invite the problem I have raised here.

For purposes of computing the equivalent accrued benefit at NRA in a cash balance plan, can the benefit decrease at a later point in time due to a decline in the projected interest crediting rate? Practically it will likely not matter since a participant will opt for the cash balance account value. There is no early retirement date in this plan for what it is worth. I would think it could decline,but not sure if the IRS has ever opined on this. The 411 regs were written with traditional defined benefit plans in mind so not much guidance there.

I believe you use average annual comp instead of comp in the formulas if you are testing that way.

no..it is an employer contribution to a defined benefit plan...

The code section in the topic is with regard to a corrective amendment for 401(a)(26). It states that the retroactive amendment must be under the same conditions as 1.401(a)(4)-11(g)(3) thru (g)(5). I am puzzled what if any meaning 1.401(a)(4)-11(g)(3)(v)(A) should be given. It is titled "Corrective amendment for coverage or amounts testing". Since the testing at hand is for minimum participation, can this (v)(A) paragraph be ignored? I would think so but I am wondering if anyone else has given this further thought. Generally, a group of ees that satisfies 401(a)(26) may well not also satisfy 410(b) or 401(a)(4). Alternatively, what sense would it make for the additional accruals themselves to satisfy 401(a)(26)? That would seem to be an overkill.

I am confused regarding correcting an excess 2020 deferral post 4/15. 1.) Does being taxable in the year of deferral imply issuing a 2020 1099R for the excess(if so what would be the codes?)or rather making sure the 2020 return includes the excess in wages? 2.) Do we wait and distribute the excess until otherwise distributable or distribute currently with earnings ? If distributed currently, is the correct code E?

were there other similarly situated employees who could have participated? It is applicable in only one year and to one named employee? Should always consider other forms of potential discrimination (e.g., age)?

I remember hearing a veteran speaker at an ASPPA meeting about ten years ago opine that accrued to date testing could be used for determining whether a plan satisfies 401(a)(26). I don't recall whether it was strictly related to the prior benefit structure and if he had a cite. The -c(3)(2) caveats seem potentially ominous with a small group of employees and a short duration period for the accruals.

Wife owns 100% of a recently acquired business. Husband owns 89% of his business with 11% unrelated owner(niece). Minor child age 15. Wife on husband's payroll but will remove to limit the only block to the spousal exception being the minor child. One piece I read by a major insurer indicated that if the parent(husband in this case) ownership was less than 80% there would be no problem(i.e., spousal exception could apply). I think in this situation, that unless the father's interest goes down to 50% or less, the child still has effective control of both businesses(>50%) by attribution and there is effective control of each corp by five or fewer individuals. Is my reasoning correct here? A related question is when determining controlling interest post family attribution, do you count the attributed ownership more than once so that the total ownership can be more than 100%? I have not seen any examples that show how this is done. Thanks in advance for any responses?

I would be concerned absent guidance that since the deduction is with respect to the plan year, an agent might take the position that coverage under ERISA 4021 is required for the entire plan year.

Suppose a small business owner with a db scales back and works final two or three years without ees. Does this cause any 401(a)(4) or 401(a)(26) issues? Not worried about the partial termination issues. I don't think this is BRF issue for 401(a)(4)(note no early retirement subsidies). For 401(a)(26), I am thinking you can't cover employees you don't have so this should be ok as well. Wondering if there is anything I am not considering?

Thanks for your response Carol..very much appreciated...

Tax-exempt org CEO died in svc;two children as beneficiaries.. I believe no required federal withholding on the beneficiary distributions and no rollovers allowed but could be transferred to another tax-exempt 457(b) plan of beneficiary(if it exists) without any tax. Don't do alot in this area so just double checking..attorney provided client with general qualified plan distribution paperwork which I think is no good. Any confirmation appreciated. Plan was funded at a mutual fund company..

Business closed in 2020. Plan to be terminated in 2021. No employees in 2021. Since there are no nonexcludables I would think the plan should pass 401(a)(26). However, since the 2 employees minimum goes to one if only one employee, does that imply that one goes to zero if there are no employees. An ancillary question is can an overfunded plan be maintained in a retiree only mode if the sponsor remains in existence with no employees.

I am hoping that is not the case(an a(26) failure) as well, but do we have any guidance as such?

If a plan is less than 60% funded so that no accruals can take place can this cause a 401(a)(26) failure? Does it matter if the plan provides for restoration of accruals?

Should plan numbers 001,002 etc. be by ein or ultimate parent within a controlled group? It would seem the same ein should not have two plans with the same number. Does it matter though if two separate eins within the controlled group both have a plan 001 or is more proper to name them 001 and 002?

Is it permissible to use a county or city tax assessment value for retirement plan purposes.? This would apply to any plan as far as annually reporting plan asset values on a 5500. For a defined benefit plan, it would also affect the minimum and maximum required contribution amounts each year. It would also be a factor in valuing distributions in kind and be especially important as to whether 415 is complied with for lump sum distributions which include real estate.