Bri

On the bright side, if the payroll was run for Christmas, you may be able to argue the "lateness" of the deposit didn't start until early January 2018, so this could be one year's 5330 instead of two to prepare.

Well, termination of employment is a distributable event under the regulations. Of course, the plan would still have to allow for distributions that soon after termination. As to whether or not they get full vesting, that's going to speak to the partial termination rules for a plan, and will depend on the actual number of folks affected by the shutdown relative to the plan as a whole.

The plan document should determine when an employee may enroll. Or when they may change their election (0% as of 7/1, but 4% as of 7/15). A fun case is when the document alludes to administrative procedures, in which case the plan administrator can decide whether 7/15 would still be okay :) (on a non-discriminatory basis, of course!)

As an aside - how would you apply the rule in the year you turn 18? What if the hours are before your birthday, but it's the calendar year that you turn 18 in November, as opposed to February?

I'd also be on the lookout for any language that defines the NRA using years of participation, since that actually would mean the 5th anniversary of the first day of the plan year in which participation commenced. (In which case you might be looking at 1-1-20, presuming the Plan Administrator wishes to interpret the plan document in a similar manner.)

I can corroborate ESOP Guy's tale - I too had a VCP submission approved for a retroactive amendment - they never meant to include bonuses, told the employees as much, but their bundled prototype didn't have the box checked properly for PPA after always having it correct when a TPA had done their prior versions.

Isn't it enough to be the participant's primary residence, even if he doesn't own it outright?

Yeah, but if it's payroll-copmuted match, you have to do it quarterly - should be in the doc to that extent.

The trick would have been to define the vesting for year 1 as January to December just like all the future years would be. That way it's still a 12-month period.

Is it the full list of assets? Or just a note that they have the right to examine a copy of the statements issued by the regulated financial institution? (Presuming there's no audit report.)

I also think there's going to be a new code for the loan default on the 1099, that'll indicate it could be eligible for the new delayed repayment deadline.

Clearly not if that means waiting past the end of the filing deadline. And if it's a 12-31 contract year, doesn't the insurer have only 120 days to provide it? And were the commissions actually paid in 2018 rather than actually IN 2019?

I think everything was already finalized and filed with the numbers. I saw the data after the fact, when the admin in the office asked me to have our actuary peek at a potential cash balance plan on top. Those numbers WITH the CB were better (less staff cost) than hers WITHOUT it, so I figured I'd open Pandora's Box and look at her valuation report. Thanks!

A coworker has a plan where everyone's his/her own group, but still has a last day/1000 hours rule. Also there's a safe harbor 3% for everyone. There's a young HCE (owner's daughter) who made 108,000 or so in 2018. And a couple of NHCE terminees who only got the 3%. The profit sharing allocation was run such that each individual's group was allocated the exact same amount they would have gotten if the plan were written to be integrated at $80,000, with the percentages backed into by solving to get the parents to $61,000. (Maybe something like 13% of pay plus 4.3% of excess over 80k.) That, in and of itself, would be a safe harbor formula. But since it's not actually written that way in the plan document, is it enough to simply pass the coverage on the additional profit sharing? I'm concerned that because the integration level is 80,000, the young HCE got an extra "integrated piece" that would not normally have come into play had the actual TWB been used as the integration level. And so, when general testing the actual amounts, her total allocation rate (imputing disparity) ends up being just slightly higher than everyone else's, thus failing her rate group. So - does that matter? In other words, is it enough to run the plan as though it were an integrated formula and hang our hat on that? Or does the fact that the document doesn't actually say it's integrated, mean that we have to general-test it with the actual taxable wage base in those calculations? Thanks! --bri

Lou - Since he could take his IRA minimum from any of his IRAs, does it still matter if this specific IRA issues one prior to the rollover in?

Wait until the "failure to implement the deferral elections" for 9/15 issue comes into play, too! This'll be fun....

I would think she has ALL the rights. Of course, a reading of the plan document is in order.

There's no actual failure of nondiscrim, but it's not required to do an 11g amendment. (Been to enough seminar sessions on the topic to have that committed to memory.) I do realize the 2-year rule could be an issue, though. Thanks.

Looking for some confirmation on my thought train here: Client has a cash balance plan and a safe harbor 401(k) plan. Because the owner is over 70½, he's been taking in-service distributions of his entire vested benefit so that he can use the DC method and have a smaller RMD while the rest of his benefit goes to his IRA. The plans are general tested - DB plan has a $100k credit for the owner against 3% of pay for the staff, so the staff gets the rest of their gateway on the PS side (and the owner's also getting maxed out there in this PBGC-covered setup). Now, because of all the great deductions they've been taking, they've got basically no room for a contribution for 2018. Of course, an -11g amendment would allow the plan to increase benefits, but they must be done in a nondiscriminatory manner. I think that means, if they want to dump more money in, then the corresponding benefits must pass 401a4 on their own - meaning there's going to be a brand new additional gateway requirement to pass, just on the new amounts, such that anything they may have already received doesn't count. I don't expect the new gateway to be an additional 7.5%, but depending on how much more the owner's benefit might be, could I be looking at such a second minimum? And, does an amendment like this actually open up new deductibility on the DB side? Isn't there something where the deduction rules are determined by the plan's provisions as they already were in effect on 12/31, rather than what they're being amended to? Oh right, and basically I need an 'amendment for both plans, right? Is it okay to increase benefits in one plan that are discriminatory, if the other plan's increased benefits take care of the overall 401a4? Thanks in advance for any insight or experience with this. --bri

And of course, it's possible that the plan allows for in-service withdrawals at an age earlier than 70½, which could offer a hint of the odor of these being done at the participant's election.

I'm curious on this, because I want to hear more about the concept of kicking out a sponsoring employer....

How'd she get eligible in the first place?

Then that would be okay.

Forfeit it to suspense, make her whole outside the plan. Or, issue a payment with code E on the 1099-R. Or....if she was an NHCE in an even earlier prior year like 2017, retroactively make her eligible all the way back to THAT date and do whatever corrective contribution would have been needed for that year since she wasn't given the opportunity to defer. (spitballin' - not sure that last idea passes the blink test!)

If nothing else, they really gotta get rid of the 10% penalty tax. Wasn't this in place because refunds used to be taxable for the year of the contribution rather than the distribution, so you had to give the employee enough time after March 15 to complete his taxes?