Bri

ooh, right, sorry - misread the year in question. (Was dealing with reaction from booster shot)

The IRS usually puts it in a PDF, which isn't great, but if you don't already have software with it preloaded, a search for "YYYY applicable mortality table" should do the trick.

I agree, it might be tough to pass the blink test such that it's not abusive.

https://fred.stlouisfed.org/series/DGS10

(I'm curious if anyone else issues with the "this feels like dirty pool" tactic of spiking known-unvested terminated employees' allocations. It's not really the same as doing an -11g amendment, because the plan already allowed for the allocations, but boy it kinda smells the same. Does anyone have experience with IRS examinations of this kind of fact pattern, where the employees were eligible but the sponsors knew darned well it was almost an abusive free pass on the testing....)

I found a daily update to the 10-year CMT rate on what seems to be the St. Louis branch of the Fed's website. But yeah, you'd update the applicable mortality table annually, and pull the CMT rate as of the first of each month as appropriate, and a spreadsheet can do the calculations.

Doesn't the rule of parity require a minimum of 5 years? In which case, by the time you know you could exclude the years, the 5th anniversary has already kicked in anyway? I did enjoy thinking about a "Narnia closet" for those excludable years, though.

They would be on the new schedule, since they weren't a participant yet as of when the vesting formula changed. Much as coffee is for closers, vesting is for participants.

I was under the impression that the contributions are deductible (and part of the typical 25% limitation) but the earnings amounts are not.

Well, you can, but you do have to amend the plan up to 9.5 months after the end of the year to provide for the increased benefit.

Not necessarily, as I'm finding out. (Oh we hired someone and didn't realize they became eligible at their anniversary date last year....)

I figured this was a brand new plan, maybe with a 3% or smaller ICR, and then the employees are all more than 20 years from NRA, so their benefits are getting discounted at 3.29% for Dec. 2021. So you end up with a smaller normal cost than the allocation credit, because all those years at 3.29% are going to overcome the 3.00% rate expected to tack on for such a long time.

This also could blow up if the HCEs haven't gotten to 6,500 yet but are 1973 or later births.

Ooh! Is there profit sharing? How about doing a QNEC to some HCEs in order to cause the actually-refunded amounts to be correct after all and see if you still pass 401a4? (I'm not feeling well today. Sorry.)

Why can't they return the excess?

I've heard a couple of webinars in the past month or so indicating this was something that "didn't make it in" to "Secure 2.0".

Yes, unless you have a weirdo plan that defines the testing compensation explicitly as something else. If your plan just says "anything satisfying 414s" then full year pay is certainly compliant along those lines.

I always thought of the solution as you do make them "match eligible" - but if the formula means they get zero, then that's still the case. The real impact now is your denominator for your ACP test has gone up by 3.......which may or may not have a material impact on your results. Come to think of it, if your plan has voluntary after-tax, then wasn't everyone covered under 401(m)? So that even if some people didn't get a match, that wasn't the only way they benefited....

Sure - and some plans might even say you don't need a formal amendment. (Definitely an SMM, though.) The document/trust agreement should have language for how to address the removal of a trustee. I typically see it where either the company or the trustee gives the other party 30 days' notice, with the ability to agree to shrink that 30 day period by mutual agreement. The company could send the old guy such a notice that he'll be officially "out" as trustee.

It's been a while since I used RGF, but it might have to do with creating a "repeating" page 2 (which has a different suffix for its import routine compared to a static one "page 2" only situation)....

Tell the recordkeeper they're wrong and that they will fix it. Returns can be amended. Thursday edit: Sorry, I didn't see the part about it being the TPA's error rather than the recordkeeper's. TPA should do a make-good for the guy until he can get his big tax refund!

That sounds like a nondiscriminatory manner, so it might be okay in the document/trust language.

It's going to depend if the document defines it. Assuming we get to use "any definition satisfying 414(s)" (or words to that effect), then it's Administrator's choice whether to use "only as a participant" versus "full year." That being said, I think if you have different ENTRY dates for the two plans.....well, since the normal coverage/nondiscrim rules say to use the lowest eligibility rule between the plans, I'd probably use the pay starting from the earlier of the dates. But that's because I don't bother to calculate the separate plans' portions to the overall test under their own definition of pay and then add the resulting EBARs for each participant. (Does anyone do it that way, as in.....can you?)

Unfortunately you can't use the otherwise excludable rule on someone who has the standard 1, but not 2, years of service. The contributions basis won't work - her contribution rate was already lower than the owners'. I had thought about if she were to get the same 6, then they're good with a uniform contribution rate, at least. (And as the DB plan is still non-PBGC unless/until she enters, the 6 plays nice with the deduction limit still.) (If the "greater of normal/TH" formula argument allows her "well, it's more than zero" to be nondiscriminatory even though it's less than the owners' amount, then my only problem may indeed be the failing 401k test. Ahh, takeovers.)

Just want to make sure I've thought this through properly: Company has 3 employees. 2 owners employed since 2015 or so, and staff person hired May 2020. Staff person is a decade older than the owners, so cross-testing is not a consideration. [Edit: Dang, I wish I hadn't posted this in the cross-tested section then, I suppose.] Generous CB plan has 2 year eligibility, so it has been owners-only so far. 401(k) plan has 2 year eligibility for company contributions, 1 year for 401(k). For 2021, prior TPA was allocating only 3% to the staff person, as a nonelective top heavy minimum (listed as profit sharing on their report). But 6% each PS to the owners. The nonelective test has me thinking. Even though the staff person is nominally only eligible for the 401(k), the TH requirement is forcing her to get a nonelective contribution, one that is not going to pass when compared to the owners' amounts. (As in, it doesn't matter if staff person hasn't met the normal eligibility for a nonelective contribution, the top heavy requirement made her eligible anyway, and now she's subject to her rate against theirs.) If they give her 6%, I suppose they could be done. She's not eligible for the CB plan at all. And the DC plan would have a uniform allocation rate, so each plan passes coverage/nondiscrimination separately. Or are they indeed okay with just the 3? The allocation to the staff person is the greater of the plan's "normal" formula, or the top heavy formula. (Since her share would legitimately have been zero.) And the plan would pass coverage if she were not considered benefiting, because she's not "normally" part of the coverage test anyway, having not gotten the 2 years of service yet. (Thinking 1.401(a)(4)-2(b)(4)(vi)(D)(3) here) Thanks. (Never mind that they didn't get any deferrals out of the staff person, so I've got other reasons to think about the 3% and how it's not enough of a QNEC if they allocated it that way.) --bri