Madison71

Last year, Plan Sponsor amended their document mid-year to change from a safe harbor non-elective to a safe harbor match. A new notice was issued and safe harbor matching contributions have been made ever since. Previously, the plan provided for a discretionary match as well. I understand that this was an impermissible change mid-year re-Notice 2016-16 and needs to be corrected. However, I am inquiring on thoughts on how to best correct this issue. I'm also struggling on the match piece as participants likely signed up once changed to the safe harbor match in expectation that they would receive 4%. Thank you!

What are the document providers doing for those who rely on their canned administrative forms. Are they moving forward with updating the 402(f) notice or waiting for an updated model form from the IRS?

I have also received questions on 1099-R reporting - will this change now that a loan offset has an extended period to rollover? I know it is obvious, but nothing changes with the 1099-R reporting on a loan offset just because there has been an extended period to rollover. What will need to change is the 402(f) notice with the 60 day rollover language for loan offsets.

Belgarath - that is the section I was thinking of. Thanks

My understanding is retroactive amendments beyond the SCP for significant errors is limited to hardships and loans.

My understanding is that you have to do the same facts and circumstances analysis - significant vs. insignificant when beyond the 2 year window. As you stated, this is significant (or assumed to be significant) and beyond the 2 year window, so I believe it would fall under VCP. I believe there is an example of this issue in Appendix A of EPCRS that corrected via retroactive amendment under SCP, but it is within the 2 year window.

The correction is in Rev. Proc. 2016-51. A QNEC to the plan on behalf of the employee equal to the missed opportunity for making an after-tax employee contribution. The missed opportunity is equal to 40% of the employee's missed after-tax contribution. The employee's missed after-tax is equal to the ACP for the employee's group, not to exceed plan limits. The QNEC must be adjusted for earnings.

1. Depends on the current definition of disability. 2. I'm not sure - I have seen articles from law firms suggesting amend by 4/1. 3. I would think the prototype provider should be preparing this amendment....or maybe it is an addendum to the BPD, otherwise you risk losing reliance on the letter. Check with the provider. 4. See #3 above. Again, I would contact the document provider and ask to speak to someone in legal. 5. The SMM should be generated off the amendment. I would check with your document provider. If you have a definition like determined by SSA, then the plan is not impacted. However, I would still check with the document provider to determine if a clarification will be made in this case - for example, determination will be made by a party unrelated to the plan...

Thanks for the tip. I actually read the rules throughout for the first time a few weeks back and learned that rule. Never played that way before. It speeds up the game!

I love this...which reminds me...I have a marathon Monopoly session scheduled with my kids this weekend.

Sorry - I misread thinking the client wanted to exclude commissions from Plan compensation and not the entire class. Sure - exclude the class as long as pass coverage

What is the current definition of compensation in the plan? If it does exclude commissions, then you still have to pass 414(s) compensation testing or do an 11(g) corrective amendment. The gateway must either be 5% of 415 comp or 1/3 the allocation rate (based on a definition that satisfies 414(s))

We are modifying our procedures as ours are subject to the safe harbor hardship rules. I am sure it was an oversight and hope that the IRS will clarify that a casualty loss for purposes of determining whether a participant has experienced an “immediate and heavy financial need” should not be affected by HR 1’s changes to the definition of casualty loss.

Thank you both. I know the book and the person. I have thought many times about buying the book and never pulled the trigger. I know I should....thanks for the reminder.

A have a couple of questions related to PEOs that I hoping to get assistance on: 1. Can the owner of a company and all of his employees be considered a common law employee of the PEO organization that is then a leased employee of the company? 2. Can the company adopt its own retirement plan? If so, are there any issues with this? I assume it would depend on whether the PEO organization currently sponsors a retirement plan and what the agreement between that company and the PEO currently states, correct? Thank you!

I would agree with KarolineWriter. There are court cases that state that just because a person is an employee in one capacity does not foreclose the possibility that same person can be an independent contractor with the same employer in another context. It is possible they have a separate cleaning company with a number of clients and possibly a separate plan.

I believe there is no clear guidance on this and there are different thoughts. One is that because they are not eligible at the end of the year, they are not required to receive a top heavy contribution. The other (which is what I think is correct) is that the former participants are entitled to a contribution because they were participants during the year and are still employed at year end. They are also entitled to contribution on full year of comp under 415 as well

Not at the moment. You should be able find similar language in the plan document in eligibility for participation.

I’m saying that the start date is the employment commencement date which is the date the employee first completes an hour of service for the employer. The termination date is the date the employee has experienced a bona fide termination of employment.

It begins on his first day of employment and termination is last day of employment. The sign-on bonus does not start the clock nor does receipt of last payment signal the last day. There is some debate on last day if 12/31/17 falls on a weekend (which it did) and he was regularly scheduled to work Monday through Friday and ended 12/29. In your example, he terminated employment in 12/28, so last day should not apply.

I think the link below has a nice discussion on this issue with some issues raised on limits above $1,000. BG5150 responded to the other one as well....almost 8 years to the day. https://benefitslink.com/boards/index.php?/topic/44548-minimum-loan-amount/

I would request to be safe. If they deny providing or enough information to prepare, then you can always report that denial. My hunch is you don’t have to report in Schedule A, but that is only because similar ASO services are not reported

Did you receive a Schedule A from the company providing the service? If not, did they provide you with all the information necessary to complete the Schedule? It sounds similar to an ASO contract which would not be included.

If this is a plan on a prototype document, you may want to (unless you already have) check the basic plan document to ensure there isn't special rules on deferrals of bonus amounts. I have seen wiggle room in some basic plan documents permitting the requirement of a separate election for bonuses as long as applied to everyone. Its kind of an oddity to me because the Rev. Proc. provides that to take advantage of the missed deferral safe harbor - within 3 months (or sooner if the month following if notified by the participant)- no QNEC and full match (if any) plus lost earnings if correct deferrals begin along with a notice issued to employees within 45 days of the correct deferral percentage started. The deferral percentage is correct, but it did not include the bonus compensation. Therefore, I would tend to agree with K2 that the notice would have to be sent out within 45 days of the employee elective deferral failure - i.e., when the bonus was paid without deferrals being taken out. There is also a safe harbor beyond 3 months as noted above, but it is still going to come down to the 45 day notice requirement...so not really applicable here.

I recall, but could be mistaken, in this case it will only apply if there is a deviation of the licensed physicians determination - for example, in the case of an adverse benefit determination.