Bri

Same here - the plan doc / trust agreement will explain how trustees can be removed from either side of the agreement, possibly with that 31-day period as Bill references above. I had one I used with Relius documents and I really only had to change the Section reference to use it with ASC documents.

I know the IRS has said you can define your otherwise excludable employees either by direct reference to 410(a)'s statutory dates, OR you can use the plan's entry dates, OR you can ignore entry dates (like one might do under a strict reading of the carve-out rule). I normally like my exclusions as defined under 410(a). But, I've got a testing situation where a 2021 HCE was hired early January 2020, made his 200K in earnings, became match-eligible as of APRIL 1, 2021 (one YoS, age 21, quarterly entry), and then terminated a few weeks later after becoming eligible for a big hunk of match. So, before his July 5, 2021, latest possible entry date under 410(a). And therefore, I'd normally deem the guy excludable. This is not for ADP purposes - his plan is safe harbor. But, it needs to be aggregated for 410(b) purposes with a second plan within the entire controlled group. The other plan is slightly different because its match eligibility is one YoS, age 18, and monthly entry dates. (And its SH match formula is slightly different, too.) The hundred dollar question (oh, we'll bill them more than that) is: Should I be defining my excludables based on whichever plan the employer sponsors? For instance, since my HCE guy is in the quarterly entry plan, he's not excludable because he properly came in on April 1 after his year. But let's say I have two employees, one each at separate companies in the separate plans. Let's say they both started 5-15-2020 and terminated 6-12-2021. The guy in the quarterly-entry plan would be excludable (terminated before 7-1) and the guy in the monthly-entry plan would not (entered 6-1), presuming I'm using a "plan's entry date" approach. Does that sound like an appropriate approach, as opposed to using one set of criteria for both groups of employees? I have to pass the average benefit percentage test for the quarterly-entry plan because its ratio percentage is in the 40s (SH % = 23.75) so I need to be sure who's in the "main" test out of both groups of employees. And I don't want that lone HCE on his own, as the otherwise excludable test for his plan would also fail 410b and require extra employer contributions for ABPT purposes....maybe a lot. --bri

True, 408b2 is not typically an annual disclosure.

Yes on 408b2 (service provider contract with sponsor), no on 404a5 (individual expenses against a participant's balance)

So the plan sponsor is late to distribute their otherwise-timely-prepared Q1 statements? It's the end date for the statement which determines which day's 10 year CMT rate to use. (A March 31 quarterly statement would use the rate from the first business day of March. The June 30 statements have now long since had the June rate to use, although waiting for a software vendor to incorporate that could certainly be an issue. I found the rate online by Friday, June 3, though.) I'm inferring from your post that the sponsor just never sent out the March 31 statements with the disclosure based on the March rate. For the June statement you'll need the June rate but that's already available to work into your disclosure. But we're talking about the usual 45 day deadline for statements in this case, right? Perhaps re-do the disclosure to be part of the June statement (if you only need to do one batch a year with LII) and separately worry about the failure to distribute March statements (with or without LII). At least that way you know your LII disclosure was done and distributed properly, even if the regular March statement wasn't distributed. That kind of thing.

(Just wondering - is the 100 shareholder limit done with treating the plan as one investor, or as whatever number of participants are IN the plan?)

You would use the last valuation date on or before 12/31. So if that's 3/31 without any daily val language or interim valuations, then that's what you use. (Although any contributions/distributions allocated "by" 12/31 could adjust that dollar figure.) And any 2023 RMD age updates won't affect 2022's calculations.

I don't know what to do for that specific fact pattern, since DC plans usually don't have leftover suspense accounts at plan termination time.

^^ I like this, as long as one can prove it was actual fraud rather than the ol' misunderstanding.....

Wait, what date did THEY fill in as the general restatement date, then? Normally I'd be using the first of the year the plan is restated, unless I had anything that definitely was different in terms of when the plan operated that way. Most Cycle 3 Plan Overhauls (C3POs) are going to end up with a 1/1/22 effective date in my case.

I could see the problem if the QRP has already accepted the excess assets. Feels like they're trapped there, not eligible to be re-spun somewhere else. (The original QRP was DC, I'm guessing?)

Isn't the corrective step a VCP application at that point if we're outside the SCP window? Anyway, I think the options are either: - you failed 410b but there's failsafe, so you bring the person in at what they would have gotten normally. And as a safe harbor target design, that's enough. - you failed 410b but there's no failsafe. In that case, you add the NHCE at any level you want via an -11g amendment. If there's an amount which passes full-on testing that's lower than what they would have gotten if they had just been eligible, then so be it, although any -11g amendment can give "more than necessary" - so if they'd rather just give the normal formula allocation, that's fine, but if they can pass as something lower, they could do that as well.

Well in that case there's no need for the wife's business to adopt the plan, I suppose. They're either getting PBGC premiums and the 25% DC limitation, or they're not, so it may come down to their real preference!

I'd have a hard time buying the "revival" of a form which was superseded upon the marriage. But, I could readily believe that if the spouse disclaims, that the "next in line" would have then be determined under any default language in the document....which could possibly make the decedent's issue he whom would be next to consider, anyway.

What's the exemption from the PBGC coverage if it's the employee as the second person covered? At least if you had just the owners of the husband/wife firms as the participants, that would be pretty straightforward. But I've not typically seen real estate agents as exempt/professional employers.

It's to keep some HCE from terminating early in the year with all 20,500 deferred but maybe only 60,000 in wages earned to date making a mess of the test and causing ALL the 20,500 people for the year to have to take a refund.

I'd say no, because a 0% benefit for the wife means you only have one out of a total of three people benefiting. Throw her in at a 401(a)(26) minimum and you're probably good to go on that. 2 out of 3 participating, then do the rest of the numerical fun to exclude the employee from the DB completely (to avoid PBGC) but benefit him/her enough in the PS plan for testing.

If the IRS doesn't sic the DOL on the sponsor to prevent a DFVC filing at that point, it's on them....

Data Entry Routine for importing/exporting data into/out of Relius's database.

Ha, this is the "common" difference between W-2 wages and "wages for withholding purposes" under 3401, since that amount is typically not part of the 3401 definition. A quick peek over at the EOB indicates the amount is typically included in 415 compensation, if not explicitly excluded separately. But the prime consideration would be your plan's definition of Compensation.

I remember taking over plans from a former TPA office that would do their owners-only on the SF via EFAST, but neglected to check off the "one-participant plan" box. So everything was out there on the DOL website for these plans even though they woulda/coulda/shoulda been shielded from public view.

It's probably the only thing I'll defend ASC's admin software on, but they let you assign employees to components and test that way. I had a DC plan where an owner's kid was younger than everyone but they at least wanted him to get the same 5% gateway floor the NHCEs got, while the owners were up at like 20%. So Component 1 was on allocations, Component 2 was on a benefits basis.

I agree with you Nate - it's also why I used to like AAs putting the integration level at "80% plus $1" even though you'd have to manually calculate/override that number each year in the admin software.

I believe you actually have to - and see if your document has any overriding language in the section permitting the waiver indicating as such that the sponsor may have to make contributions anyway.

I suppose that since 5330s are typically mailed, they would therefore be subject to manual data entry. In which case the expository details would indeed get picked up by someone at the Service. Whether that actually helps, though......