AndyH

Any employee that receives a unilateral reduction in pay because of a SHNEC that is most likely being done to benefit the owner should/would? be looking for a new job pronto. IMHO.

I can't say I have a lot of experience with this (although I do have some). One question jumps out at me - does the sponsor have any assets (e.g. real estate)? There is technically a premium that PBGC will want if there are assets, and it is not small.

Actually both of these sites calculate Joint & 100% but neither appear to calculate Joint & 50%.

All you can do is estimate it in a reasonable manner, and clearly explain that it is only an estimate, and that final numbers will be based on final market rates. One option for an estimate would be to use this site, which I have used for years for rough estimates: https://www.immediateannuities.com/

I messaged you also.

Effen, this may be true if you are a SOA member, but for an ACOPA/ASEA (non-SOA) member it can be very difficult to get that directory updated at all other than name, at least in recent years. I have first hand experience with that.

Congratulations and Thank you! Your work has been very important to a lot of people.

I think they have until 3/15/21 if a 412(d)(2) election is done. Anyone disagree?

Yes, the document should say somewhere that DB minimum is not required if the plan is frozen. That would mean just the 3% DC applies. But I agree you should locate such language in the document to be safe.

Two related companies (A and B) participate in a 401(k) plan that has a 3% SHNEC as well as an enhanced match (not more than 4% and not based on more than 6% of comp and meets the other requirements). No ADP or ACP test is needed, correct? Company B wants to withdraw from the match. What testing is needed in the year following the change? Q1: Presumably the match for Company A must be tested for 410(b). Or is this just BRF? Q2 Presumably Company A now needs ACP testing, right? Is Company B included with 0 match rates, or excluded because they are ineligible for the match? I believe they would be included because they can defer, is that right? Q3 If company B were moved to a separate plan and each plan passes 410(b) then Company B would not be in Company A's ACP test, correct? Thanks for any help.

The accrued benefit post-freeze is not necessarily the same as the 1/1 accrued benefit. Even if 1000 hours are required, if it is a traditional DB plan that uses average compensation, then a short service employee may have a slight increase in their average comp. If it is a cash balance plan, the accrued benefit includes the interest credit which would likely not be the same as of the two dates. So I think the proposed language is inadequate and should say that the accrued benefit is frozen as of x date. And x date must be not less than a "reasonable time" which is generally 15 days for a small plan and 45 days for a large plan.

If at the time of plan term the plan had the language needed to allocate the excess, then I would think it would be 2019. If a post-termination amendment is needed, then I would think the amendment would specify. It could, for example, be needed for 11-g purposes. I don't see anything on the ACOPA board that expresses a different view, but there is not much directly on point (as you probably know). Since the allocation technically must be tested, I don't see how treating it as a 2020 allocation makes sense. Just one opinion.

Being a Solok the plan document might be more restrictive, so you should check that. But in a normal plan the maximum would be the deferral plus .25/1.25 x $25,000 of $5,000.

Finally had a minute to look this up. NRA is the age that the accrued benefit is payable at. Code Section 411(a)(7) (A)(i). And it cannot be greater than 65+5P. Regulation 1.411(a)-7(b) appears to me to be outdated. It says for example, that 10P is ok. I think Effen is right (as usual). I'm not seeing how that translates to NRD. It implies to me (as Effen said) that there would need to be an actuarial increase (or SOB) if NRD is later than NRA but I'm not seeing anything clear on this.

My recollection is that the Code says that NRD is the earlier of the date in the Plan or the later of 65 and the 5th anniversary of participation. But as part of the restatement process, FIS is telling us that the IRS required their VS plans to define NRD as not later than an age plus the first day of the plan year that contains the 5th anniversary of participation. But either way, the end of the plan year of 65+5P does not fly.

This provision is non uncommon for large 401(k) plans. John Hancock's plan, for example, allows this to be done twice per year. It is great for NHCEs, and within limits HCEs or those not within the top 20%.

Just seeing this. jpod, congratulations! You've been a great contributor!

Your comments make sense (as usual) thanks.

I'm interested in this question as well. How do you evaluate whether it is major or minor? Is that just a question of the impact on the net valuation asset? What if the plan has no credit balance and the result is simply for answering line 10 on the SB. Is it ok to change the methodology in that situation but not others? (I confess that I have not researched this - the post caught my attention).

Kind of a similar question. New 401(k) plan adopted in Spring 2019. Effective 1/1/2019. 401(k) 3% Safe Harbor provision effective 7/1/2019. The plan does not exclude pre-participation compensation. 1. First, as written, the document seems to provide that the 3% safe harbor covers pay for the entire 2019. Is this ok? I assume so. 2. Second, a participant who was eligible as of the plan effective date of 1/1/2019 terminates 2/28/2019. Must he get the 3% safe harbor for his 2 months of pay, or is he ineligible because he terminated before the effective date of the safe harbor provision? Thanks for any help.

Mike's been doing this to us for a long time Larry lol.

1. The employer pays the premium, therefore what is there not to accept (other than PS-58 costs)? 2. As shERPA implied, if the CB passes nondiscrimination testing on a stand alone basis (which is rare), the rules would be similar to a regular DB plan, but if it is aggregated that usually means NHCEs get more in the DC plan, so that has to be taken into account to determine whether the insurance is discriminatory, i.e. insurance levels compared to benefits from both plans.

Interesting. How big is the plan? Did they have a funding deficiency or just miss a quarterly?

I agree there is no issue with 411(d)(6) currently but I would argue that a participant's future benefit accrual may not be reduced unless a proper ERISA 204(h) notice is timely issued and it remains unclear to me if the notice that was issued satisfied the requirements of 204(h). This is why I was not willing to go along and agree you can now decrease the hours requirement and expect the new formula to prospectively kick in. But just one (non-lawyer) opinion.

Well I'll agree more facts are needed.