30Rock

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!

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? To exclude these amounts under plan compensation, I assume you need to exclude them in the plan document? 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? Any suggestions to assist me would be greatly appreciated!

Employer safe harbor matching contributions were distributed for a hardship distribution.

Yes the plan allows for hardships, but the regulations do not allow safe harbor contributions to be withdrawn for a hardship.

A safe harbor plan distributes a hardship under IRS safe harbor hardship rules, to a participant. We know this is an operational failure. What is the correction and consequence? I can see it being treated under the overpayment rules and ask for the distribution to be returned (lets assume there are no other sources that can fulfill the amount of the hardship need). Does this distribution blow the safe harbor status of the plan by any chance, and are there any other consequences? Thanks!

Thank you all!

Yes the plan is governmental