30Rock

this is funny at least!

I agree but I remember Bob Kaplan last year at ASPPA annual stating there is no guidance on amending a QACA. I am concerned about the different levels of deferral % - new hires in 2019 at 6% tier but 2017 and 2018 new hires at lower tier without a reason liike hardship, 415 limit, rehires after a year can start over.. But I would like to make it work!

Ok so no compensation limit like 401(a)(17) which this year is $275,000 and no limit similar to 415(c) like 100% of compensation.

I do not think there is clear guidance for amending a QACA. Sponsor set up QACA in 2014 with initial rate at 3% and escalator of 1% after the end of the uniform period. Now sponsor wants to amend the plan 1/1/19 to set a 6% deferral rate to only the new hires on or after 1/1/19. I do not think this will result in a uniform QACA or it sets up 2 QACA designs in one plan. I think it blows the safeharbor. Any comments?

Is a 457f plan subject to any regulatory limits on compensation? For example a plan has a formula of 5% of annual compensation and executive earns $300,000 can we use the full compensation? thanks!

I have a calendar year plan with auto enrollment that missed auto enrolling certain new hires in 2016, 2017, 2018. The plan has 3 month eligibility for deferrals and match. The auto enrollment % is 5%. I have reviewed Rev. Proc 2015-28 and the IRS Fix It Guide and there are a couple of variations. I want to make sure all the facts are in order. For example the Fix Guide mentions fixing the failure promptly and also that in order for the reduced QNEC to apply, the employee cannot be terminated - if terminated then the 50% QNEC rule applies. Here are my views and corrections on these missed deferrals and match based on this guidance: 1. 2016 failures - they did not get corrected by 10/15/17 (9 1/2 months after the end of the plan year in which the failure occurred) so the QNEC is 25% of the 5% missed deferrals to date(?), plus earnings, and 100% of the full 5% match. The deferrals will get started by 3/9 the next payroll period, the notice will go out within the next week. The corrective contributions and earnings (through date of correction) will be calculated and posted as soon as possible. Did I miss anything? 2. 2017 failures - as illustrated in the IRS Fix It Guide Example 2, no QNEC is due for the missed contributions during 2017. And for 2018, no QNEC is due for missed deferrals, since we are in the first 3 months. However the missed match is due plus earnings. The deferrals will now be started at 5% by 3/9 the next payroll period, and they will get a notice within the next week. 3. 2018 failures - no QNEC is due since we are in the first 3 months, but any missed match is due. The notice will go out and deferrals will start on the 3/9 payroll. For any terminated employee, if a QNEC is due for missed deferrals is it 50%? What about for 2018 during the first 3 months, do we get a pass? Example 4 in the Fix It guide has illustration for a terminated employee - a 50% QNEC is due since none of the safe harbors apply. Sorry for the lengthy fact pattern, hopefully it reads quickly! Thank you for any help! rp-15-28.pdf 401k-plan-fix-it-guide-eli.pdf

Yes I saw that as well!

Good point

Thanks, hope so!

I found a cite where the IRS stated the cure period could apply to the last payment even at the end of the 5 year period - but it was from an IRS Q&A in 2003. Does the cure period apply to the last payment due on the loan? A question often arises as to whether the cure period can apply to the last loan payment, even if that payment is due at the end of the maximum repayment period (usually 5 years) permitted under IRC §72(p)(2). According to IRS in a Q&A session conducted with the American Bar Association on May 9, 2003, the IRS says that it does apply to the last loan payment, too. See Q&A-1. In its response, the IRS says that the plan “can use a cure period even at the end of the sixty-month period.”

I was wondering if you could help with this question. I cannot find any definitive regulation or other site. The 72(p) regulations do not discuss what happens if the cure period ends after the 5 year period. My question is: on what date should {redacted participant name} Loan #2 be DEEMED? The end of his 5 yr. period is 7/10/17. Should the loan be deemed on 7/10/17, or can the grace period (qtr. end following of 12/31/17) extend BEYOND the 5 year max period? And so question 2 is – if the end of the grace period can be used and the missed payment was not made, is it defaulted on 12/31/2017 or 1/1/18? Name Loan # Issue Date Payoff Date End of Grace Period Default Date? {redacted participant name} 2 6/12/2012 7/10/2017 12/31/2017 1/1/2018 Regulation 1.72(p)-1 Q&A 10 - (no reference to the 5 year period) Q-10: If a participant fails to make the installment payments required under the terms of a loan that satisfied the requirements of Q&A-3 of this section when made, when does a deemed distribution occur and what is the amount of the deemed distribution? A-10: (a) Timing of deemed distribution. Failure to make any installment payment when due in accordance with the terms of the loan violates section 72(p)(2)(C) and, accordingly, results in a deemed distribution at the time of such failure. However, the plan administrator may allow a cure period and section 72(p)(2)(C) will not be considered to have been violated if the installment payment is made not later than the end of the cure period, which period cannot continue beyond the last day of the calendar quarter following the calendar quarter in which the required installment payment was due.

Thanks Luke, I agree. They are stuck between a rock and a hard place right!

I found it in 1.401(a)(4)-11(c)

What happens when a collective bargaining agreement differs than the terms of the plan document? Possibly the CBA was amended to provide a different match and employer contribution and the plan document was not amended accordingly, which I think can happen often. Some pre-approved documents have a check box to defer to the CBA. However, if the plan does not have this provision, which takes precedence? The plan or the CBA?

There is not a partial termination, just granting 100% vesting to a group of employees. Thanks!

Sponsor would like to provide accelerated 100% vesting for a group of employees who are terminating in order to work for a new hospital. There are a mix of HCE's and NHCE's. How does the BRF test get performed - I understand that 2 tests are involved - 1. Ratio % test, and 2. Nondiscriminatory classification test. For the Ratio test, what numbers do I look at - for example # NHCE's who are benefitting under the 100% vesting divided by # NHCE's not benefitting who are not already 100% vested, and likewise for the HCE group? The plan has 3 year cliff vesting, so obviously many HCE and NHCE are already vested and staying with the employer. Thanks!

Most of our plans use the LRM definition which is based on the Committee determination, and not an outside party.

Do employee military leave make-up contributions have to be made on prospective W2 pay or can the employee write a check to the 401k account? For example it is 12/19 and employee wants to contribute $18,000 for 2016 and $18,000 for 2017. She has 2017 W2 income after returning from military. Does the $36,000 contribution have to be make from her remaining 2017 payroll or can she write a check? Thanks!

Thank you both!!!

If you have any thoughts from prior experience please share. I realize it is not legal advice, etc. Thanks!

Correct - one plan has a tiered match the other plan no match. Is this a matter of coverage testing even though other parts of the plan are being permissively aggregated in order to pass coverage?

Both plans have mirror safe harbor provisions using the 3% nonelective. One plan has a tiered match which does not qualify for the ACP safe harbor match and thus it must be ACP tested and BRF tested. My question is do I run coverage and exclude the non-benefitting employees of the other 401k in the controlled group? Or do i include them in the ACP and BRF test a 0? The BRF test has 3 match levels and they do not fall in any level since they are not match eligible. It seems that coverage test for the match is what I need? Thanks!

My question is on how to run the ACP test and the BRF test for 2 401k plans that are related but have different components - 2 related employers each have a safe harbor 401k plan providing the 3% safe harbor non-elective, but one 401k plan (401k plan 2) does not have a discretionary match (and this match formula is a tiered match based on years of service which requires a BRF test). The plans are being permissively aggregated to pass 410(b) coverage for the deferrals and safe harbor 3% non-elective purposes. It appears that the match component would have to be tested on a disaggregated basis because 401k plan 2 does not contain a match feature. So if the 2 plans pass coverage for purposes of the match by excluding the non-benefitting employees in 401k plan 2, then the ACP and BRF test for match would be run on the single plan level in 401k plan 1? Any help would be appreciated. Thanks!

Thanks I just added this to that forum!

Are employee and employer contributions to an HSA grossed up for 415 plan compensation purposes? I am not too familiar how contributions to these arrangements affect plan compensation. It looks like they can be run through the cafeteria plan - if so then I assume they would be considered Section 125 pre-tax amounts and then gross up the 415 compensation? Another way to set up an HSA is like an IRA and then take the deduction on your 1040. In this way, I assume the compensation is also included as 415 compensation in the employee's 401(k) plan? If an employer wants to exclude them, I think they have to be excluded under the plan compensation definition in the document? Any suggestions to assist me would be greatly appreciated!