ETA Consulting LLC

Yes, yes, and yes. The first thing I would do is ensure the years of service are actually measured correctly (e.g. the person hired in 2010 actually worked the appropriate number of hours during the appropriate computation period in order to earn the year of service). Once you have the year of service and entry dates, then your approach would be to make them whole my funding the contributions. Do not forget that during those previous years the plan would've been subject to ERISA; so revised Form 5500s may be in order (if for no other reason than an additional common-law employee being covered by the plan). Good Luck!

The key is to understand the parameters for making the determination; it's never a hard no or yes when this only information available is that it's a 403(b). Knowing that it's a church plan does help. Of course, non-electing churches and public school systems are not going to be subject to ERISA. Typically, when dealing with non-church and non-govt 403(b) plans; ERISA status is determined by the control the Employer has over the accounts. If the employer's involvement is "limited" enough, then the account will not be subject to ERISA. One of those "limits" in the determination, is whether or not the employer can direct a transfer to another provider. Hence, if you have a non-ERISA 403(b) plan of typical 501(c)(3), then that employer would not be able to direct a transfer.... because if they actually had that authority, then the plan would've been subject to ERISA (merely because they had that authority). So, given your fact pattern, (unless I'm missing something), the church would be able to direct the transfer and it would have no impact on ERISA status; because employer involvement is not relevant in determining whether the plan is subject to ERISA. I don't know the specific details of your case, but thought I could provide a little insight in how these issues fit together. Good Luck!

If you actually have language that goes beyond how the match is calculated to prescribe when it must be deposited, then you would have a failure to operate the plan according to its written terms. I know this deposit deadline is written by statute (and generally reflects a standard that you must make it by then in order to deduct it or in order to have it considered as an annual addition). I haven't seen a plan's actual language go as far as dictating a deposit deadline. But, if it did, then you have a failure to follow the terms of the plan. Now, if the plan states "In order to receive a deduction, then....."; that's not necessarily an operational provision. But, if the plan (like you stated) says that the matching contribution must be deposited by a certain date (period), then you would have a failure to operate the plan pursuant to its terms by not making the deposit by that date. The documents I use don't seem to go that far in making the deposit timing an operational requirement. Good Luck!

I can see an argument that there are no 'late contributions' that would warrant missed earnings. The notion of 'late deposits of withheld payroll amounts' is driven by prohibited transaction rules (since the DOL considers the withheld amounts to be plan assets at the time they are withheld). This is an important distinction, since matching contributions (typically) do not become plan assets until actually made. Merely filing a return does not preclude the discretion to not make the match (just amend the return). As far as making the match deductible for 2016; I couldn't begin to imagine an approach consistent with the rules. Good Luck!

I meant 401(a)(30); which is my own way of saying 402(g). My bad!

You are correct. If the individual makes over $270K, then his deferrals should continue until his 401(a)(17) limit is reached. Typically, a payroll system should withhold the elected amount and ensure the statutory limits are not exceeded. I can see these types of issues when the payroll system is used as a plan-administration function and try to implement plan imposed limits that (as reflected in this case) may not actually exist. Good Luck!

If you ask a question, then it must be a good one I'm thinking that it could go either way. On one hand, there is precedent that suggests a distribution from the plan is complete once the checks have been mailed. This would mean that the Form 1099R reporting would proceed as distributed, but the check would remain on the outstanding check log for the plan. Hence, the transaction would be complete (for plan purposes) with the net check remaining in limbo. Another approach would be to reverse (and redeposit) the check and merely net the 20% withholding against future withholding amounts. The 945 account will balance at the end of the year. These are merely my 'thoughts'; which is to try and keep the plan as neutral as possible. Honestly, if I were to ever encounter something like this, I would probably reach out to you through PM to seek your advice

You won't see possibilities of a prospective amendment in the plan document. When making a determination, you would typically consider two things: 1) Is there a prohibited cutback (which it's clearly not); and 2) Is the amendment discriminatory in nature with respect to current and effective availability of benefits, rights, & features. With respect to BRF, (like you said), even if the HCEs have already maximized their deferrals and received all the match they're going to receive; such an amendment would only only fail the ACP test (and perhaps lead to a discriminatory rate of match). Obviously, in ACP testing failures, those excesses may be refunded to the HCE and must be forfeited when testing for discriminatory rate of match. With these two things; I cannot foresee an issue with the amendment timing for this type of amendment. Even if only HCEs deferred during the first part (even though NHCEs had every right to do so), I don't think the amendment would fail to meet these two standards. Others may have a different view. Good Luck!

I'm not sure if there is anything can can be provided that would have a significant impact. I think the moderators continue to stay atop of the postings to ensure the posts are within the appropriate section. Other than that, new users would typically get up to speed within a couple of weeks anyway. Good idea, but I really can't think of anything that would add any value. We continue to take care of the 'what does your document say' for many questions; and those questions aren't even from newbies Good Luck!

For some time. I did mine electronically on 4/2/2014. Thanks for the reminder. Good Luck!

Thank you! I was wondering why this wasn't the first approach :-)

Whether or not a contribution is a CODA would seem to be determined by drawing a line between "What happens if the contribution is made" and "What happens if the contribution is not made". In your case (and I'm assuming the PA is taxed as a corporation), the owner has a simple option, either make a nonelective contribution to the plan or pay the amount as salary. That is different from the owner paying a bonus and THEN asking "Do I defer part of this bonus to the plan or not". I seem a big difference. Good Luck!

Correct. They may end up (in aggregate) not to be Top Heavy. Good Luck!

I misread the question. Didn't realize the Safe Harbor Provision. Good Luck!

Do you have an HCE who is not a Key? If so, then did any Key receive a contribution (or allocation of forfeitures)? If yes, then yes; you would give the TH minimum to the non-key employee. Good Luck!

I agree that it cannot be done, but for a separate 'technical' reason. I don't think 411(d)(6) is applicable because the amendment would be prospective. Anytime (in general) that you want to eliminate the true up during the year, you'd just provide the true up through the effective date of the amendment. But, the idea of actually changing the safe harbor match formula during the year would seem to be the point of contention. I wouldn't dream of trying to do something like this during the year; but just don't think it's (technically) a cutback issue. Good Luck!

I'm assuming you're asking because one of the plans are top heavy and the other is not. In any other case, the TH status wouldn't change. At any rate, I think the rules already cover this. You have: 1) 2016 Plan Year being Tested 2) Required Aggregation of plans assuming each plan has at least 1 Key EE 3) Top Heavy Determination Date of the last day of the preceding plan year (e.g. 12/31/2015) What would be a point of contention to having them aggregated? Good Luck!

You should consider the rules for determining whether an employee "normally works fewer than 20 hours per week". There is an overriding caveat for employees who have worked 1000 hours during a previous year. Good Luck!

The short answer would be that they'll likely set up a new plan to cover the union employees. There are some caveats with the union issue (e.g. employees covered under a collective bargaining agreement between the Employer and the 'Union' representative) that would determine if there is a mandatory disaggregation of the Union employees. Good Luck!

That's just lazy on the payroll provider's part. I've never considered a catchup is anything other than an increase in the deferral limit for those who are age 50 and over. If you are, then your limit is $24,000 (and if you're not, then your limit is $18,000). So, my issue would be that the notion of a separate election being required because they arbitrarily decided to curtail someone's deferrals before they met their statutory limit is unacceptable. At the end of the day, this is a reflection of free market forces at work. If you can do this and retain your clients, then good for you. I won't try it :-) Good Luck!

Typically is a key word; which leaves the option open for a document provider to write something different. At any rate [no pun intended :-)] the language may seem to suggest that there is only a single formula (which is discretionary) that is given to a group of employees (who may be discretionary). I do see a how this can be interpreted to mean a discretionary formula applied to each individual employee, but that would appear to be an interpretation issue. Some document providers write their plans to be intentionally vague while others write theirs to be a flexible as possible without ambiguity. Without reading the actual document, I'll caveat my response. I do appreciate this insight and your background. This is a new one to me and I am happy that I now know that this issue is, again, a point of contention. The IRS has evolved over time with respect to what constitutes a definitely determinable formula and they will likely continue to do so in the future. So, it helps you keep up; and I thank you for keeping me up to speed on this :-) Good Luck!

There is an option to allocate a QNEC and merely have the plan fail by a lesser amount. Also, depending on who the HCE is (perhaps the owner), you may provide the Top Heavy and then analyze the level of contributions that may be allocated to this HCE in a manner that would pass 401(a)(4). At the end of the day, it boils down to ensuring the plan document contains the language to do what it is you want to do. Whatever formula you allocate must be definitely determinable. So, whether or not your document has QNEC language that supports an QNEC given to only the TH minimum group should be considered. You know the TH minimum 3% allocation is definitely determinable as soon as the Key Deferred at 3%. If you have a class allocation method (i.e. everyone in their own group), then you may consider giving the individual an Employer Contribution (perhaps at 9%) and see if this passes 401(a)(4) while excluding everyone else. My main point is that you have to ensure that whatever you do is supported by the language in the plan. Good Luck!

No. "Discretionary" is typically the formula that would apply to everyone eligible to receive the match. It does not mean you may exercise discretion with respect to each participant. Contrast this to the way the Employer Contribution (non-elective) formulas are written. You'll see that you have the ability to define various groups; and have the discretion to allocate a different formula to each group. Without this type of flexibility in the Match, your discretion would be limited to the formula itself while anyone who defers and is eligible for the match would receive it based on that formula. Good Luck!

Anytime an HCE receives less than NHCEs, then there couldn't possibly be a non-discrimination issue; because discrimination (itself) involves favoring HCEs at a rate disproportionately higher than NHCEs. Your major issue would be allocating it pursuant to a definitely determinable formula. Most plans are written to provide a consistent match formula where the only variation is who actually receives it. But, if you have plan language that actually supports the different matching contributions you're trying to provide, then non-discrimination wouldn't be an issue. Good Luck!

At the time it is issued by the court, it is only a DRO (Domestic Relations Order). It is written with the presumption that it will become a QDRO, but it doesn't become qualified until the Plan Administrator qualifies it. With that said, it appears as if this may have never been submitted to the Plan to be qualified. Once this happens, then the plan would separate the benefit and track it (under whatever protocol that plan has for handling QDROs). I guess the question for you to ask is whether or not it was actually submitted to the plan to be qualified. If it did, then there may be some account of what has transpired since then. If it wasn't, then this may be the disconnect. It 'may' be the case that it was submitted and paid out. I'm just throwing out random possibilities, but the series of events from the time the DRO was issued by the court to now seems to have some gaps. Good Luck!