AJ North

Thank you to all that responded. It turned out there was a misunderstanding on a coworkers part that while age 65 is generally the max age permitted for NRA, you can add a max 5 year service or participation requirement. That has been resolved.

We have a plan amending to add the profit sharing/nonelective contribution account as eligible for in plan Roth Rollovers. This will apply to both distributable and non-distributable amounts. The plan only permits a participant to withdraw this money in service if they have reached the plans NRA, which is 65 plus 5 years of participation. This in service withdrawal provision should be carried over for any profit sharing amount that is covered to a Roth Rollover. I am being told that for amendment purposes, we can only have age 65 and not the 5 year requirement as the inservice withdrawal provision. I am not seeing this restriction in the plan document. Is this a regulatory restriction on in plan Roth Rollovers? Any insight is greatly appreciated.

Again, thank you all for responding. No this is not a class year vesting situation, class year vesting has not been permitted for 30 years or more. Whether you are 100% immediately vested all the QACA match allocated to your account, or whether you are subject to a 2 year cliff for all the QACA match allocated to your account; is determined by the date you were hired. This is the first time I have seen a SH plan with different vesting for different groups of participants where permissive disaggregation is not a factor. The QACA formula is the same for both groups. But from what I am finding out, there appears nothing to prevent it.....yet. Definitely a BRF situation that may become an issue down the road.

First, thank you to all that responded. Bri has it correct. The plan has a QACA, however, depending on your date of hire, you would be either 100% immediately vested or subject to a 2-year cliff. I do not believe I have ever seen a SH plan with two different vesting schedules and yes it appears to be a separate BRF issue. Since this does not fall under any of the permissible exclusions, can you do this in a SH plan. I understand you can do this with a non SH vesting schedule, but with a SH vesting schedule?

I am working on a plan that has a QACA. The plan has one group of participants hired before a certain date as 100% vested in the QACA match. The group of participants hired after that same date is subject to a 2 year cliff schedule for the QACA match. Is this permissible? The two groups do not fall under the permissible disaggregation rules as the difference is based on hire date only. Any thoughts?

Good afternoon. We have a safe harbor 401(k) plan that uses the top-heavy exemption due to the fact that the only employer contributions to the plan are safe harbor contribution. They are merging with a non-safe harbor plan January 1, 2023, that is going to be deemed (more than likely) top heavy on December 31, 2022. The question is if the top-heavy contribution is going to be made to the surviving safe harbor plan sometime in 2023, does the safe harbor plan loose it's top-heavy testing exemption? Both plans are calendar year. I am understanding because the non-safe harbor plan is considered terminated, they should make the final top-heavy contribution. Any comments are greatly appreciated.

I understand that a safe harbor contribution can be made to plan other than the plan where the 401(k) salary deferral was made. Is a money purchase plan considered an eligible plan to receive a safe harbor contribution? I guess I am getting hung up on the pension aspect and minimum funding standard of a money purchase plan.

Is this executive still an employee of the plan sponsor? If no, then they would most likely not be eligible to contribute to the the plan and the definition of comp may end up being a moot point. Is this individual still eligible for other employer sponsored benefits? Complex topic.

Thank you for responding, Larry. That was my understanding as well and the answer I always give. If you come across the citation, please post. If the employer wants a different answer, they can pay the cost of obtaining one. I am sure that there is an attorney out there that will have a different answer. Thanks again.

We have a plan that experienced a partial plan termination that resulted in some participants being made 100% vested. The employer has since rehired one of those participants made 100% vested. The question is does that rehire remain 100% vested in contributions going forward, even though the accrued years of service to calculate vesting does not add up to enough to be 100% vested? I cannot find anything that specifically addresses this situation. Comments would be most welcome.

Thank you for responding.

I have a client that did not remit some salary deferral contributions deducted from participant paychecks on a timely basis to the plan. The excise tax was calculated, Form 5330 filed and the excise tax was paid. It was subsequently discovered that the excise tax paid to the IRS was over stated by several thousand dollars. Apparently close to half the late contributions were actually allocated to the plan on time. Has anyone dealt with this issue before? Can the excise tax over payment be recovered from the IRS? Thank you.

If the plan language is specific stating the "maximum" is up to the 402(g) Limit only; would you have an potential effective availability issue? Depending on the employee population, would only HCEs practically be able to take advantage of this kind of provision?

The SH plan in question will be increasing their match at some point during the 2020 plan year (plan year is calendar year). The match is calculated on a per payroll basis and that will not change. The plan will need to apply the new matching formula back to the first day of the plan year and re-distribute an updated SH notice. If the increase happens after the first quarter of the plan year, will the plan also need to consider providing earnings as not all of the match would be deposited on a timely basis (i.e. quarterly)? I believe that this is the EPCRS fix for late SH contributions when they are calculated on a per payroll basis but not allocated in a timely manner. I would greatly appreciate any commentary on this. Thank you.

Thank you, that would also be my understanding that refinancing and re-amortization are two different transactions.

If a loan is delinquent with loan payments (or in default for that matter), the situation can be corrected by either making a lump sum payment to bring the loan current or re-amortizing the loan within the maximum loan amortization period permitted for the type of loan. Or in the alternative a combination of both methods. My question is can the loan be re-amortized if the plan specifically does not permit a participant to refinance a loan? Could you make a distinction between re-amortizing and refinancing if there is no addition amount added to the loan amount? Say for example the participant or the plan sponsor pays any accrued interest on late loan repayments and only whatever remains of the original loan amount is re-amortized? Thank you to anyone who wishes to respond.

Hi. We have a plan that currently is a safe harbor 401(k) using a QNEC. The plan now wants to change mid year to a safe harbor using a match. I do not believe this is possible, since it reduces the amount of the required QNEC. Notice 2016-16 indicates that changing types of safe harbor plans mid-year is prohibited and uses the example going from a tradition 401(k) to a QACA 401(k). Most literature out there cites this as the only prohibition, but the IRS Notice indicates that this is an example, which would seem to indicate that there are other prohibited changes. Is there anyone out there that has dealt with this question? Thank you.

I have a money purchase plan with an attorney drafted plan document. The employer wants to amend the plan to not permit buy backs and not to permit forfeiture to be restored, even if the participant is rehired before not incurring 5 one-year breaks in service. I think I am OK with the plan not permitting buy backs, but I believe that they must restore forfeitures if the participant is rehired before incurring 5 one-year breaks in service. Any 411 experts out there? Thanks

Thank you for the cite. I did previously understand that the plan actually receiving the contribution must provide for the formula and the plan "sending" the contribution must have a provision indicating that contribution would be made to another plan. I am not sure it answers whether the sending plan needs to have the SH formula as well. Sorry to be so literal here.

One of my 401(k) Safe Harbor plan sponsors has elected to send the SH contributions to a ESOP they also have. Both have the same plan year. And both plans have existed for several years. And this will be effect for the first day of the 2014 plan year. Which plan should have the SH employer contribution formula provision? Or should both have it? Both Notice 89-52 and 1.401(k)-3(e) are not 100% clear. We did one plan with the ESOP only have the formula, but now I am not so sure and having second thoughts. Thank you.

Thanks to all for your comments

Thank you to all who commented.

I am having some trouble getting my thinking clear concerning rehires who have a 5-year break and vesting. Specifically, the difference between the Rule of Parity and the Defined Contribution plan exclusion rules. The plan in question used the DC plan exclusion rules and elapsed time vesting. The participant was 20% vested when they left and was rehired 7 years later. My question is would the participant retain any prior years of vesting to calculate contributions made to the plan after rehire? Or would they be disregarded? I do understand that any future years earned to calculate vesting would not be used to "recalculate" the non-vested account balance earned before the 5-year breaks in service. Hope this makes sense.

Thank you for the response ETK. To follow up, the future distributions will be based on the spouses age only if they roll the deceased account over into an IRA or other retirement account (that are in the spouse's name). This is probably a moot point as the spouse has already attained age 70.5 and will need to begin RMDs either this year or defer until April 2014 If the spouse chooses to leave the money in the plan, they would have to continue to take RMDs based on either the deceased age or their combined ages. Have I got this right?

We have a terminated participant who turned 70.5 in 2012 and made a decision to defer their first RMD until April 1 2013. However, the participant died a few weeks ago. The sole beneficiary is the spouse who will turn 70.5 during 2013. My questions are; is this participant considered to have died before their RBD? Does the RMD scheduled to be paid out before April 1, 2013 still need to be paid and if yes, would the RMD be paid to the deceased participant or would it paid to the spouse beneficiary?