Belgarath

FWIW - it seems like this is the operative phrase. So I agree, for your first example, the credit should apply. When you get into the weeds where some employees were covered and some weren't, then to my way of thinking, since this is a tax credit situation, it is the CPA's call - some of them are aggressive, some conservative - so who knows. I'm not aware of any firm guidance on this question.

That's a tough one. You pays your money and you takes your chances. The statutory language in IRC 410(a)(5)(D)(iii) defines a nonvested participant as one who does not have any nonforfeitable right to an "accrued benefit derived from employer contributions." 1.411(a)-7(2) defines an accrued benefit as "the balance of the employee's account held under the plan." It would seem pretty reasonable to argue that you could use the rule of parity here, even if "vested" assuming there is no account balance. I'm not sure there is any guidance directly on point for this question - and of course, document provisions rule...

So, aside from the fact that IRS guidance is badly needed (anyone heard any rumors of app. date?) I have the following item for general thoughts... If your employers are like many of ours, it is an absolute given that many will screw this up (no matter how much we try to tell them) and will NOT immediately allow deferral opportunities to some people who qualify under the LTPT rules. So, has anyone heard rumors of any special correction for some of these situations, or will it simply fall under the "normal" EPCRS correction procedures? We're not looking forward to the potential corrections for missed deferrals, some (many?) of which we won't find out about until sometime in 2025... I'm always more pessimistic on Mondays.

I've never seen it in a pooled DC plan. As Bird says, "back in the day" I did see it used occasionally in a DB plan, the theory being that it would provide plan assets in the event of a key person death, ensuring that the plan had sufficient funds to pay promised benefits if the business suffered losses due to the death of the key person. That was so long ago that I don't believe the lever or the inclined plane had been developed...

Thanks all.

So, suppose you have a safe harbor (match) plan where some newly eligible (eligible 9/1/2022) participants were inadvertently excluded for the last 3 months of 2022, but were then properly allowed to defer beginning 1/1/2023. Under 2021-30, Appendix B, .05(9), you have the reduced QNEC requirement if you satisfy certain conditions. One of those, in .05(9)(b)(ii) is that the Notice be given "not later than 45 days after the date on which correct deferrals begin" ... Well, we're past that date - they started deferring 1/1/2023. But it doesn't seem reasonable that you would be precluded from using the lower QNEC, particularly since the Safe Harbor correction method is otherwise allowed until the end of the SCP correction period. Now that SECURE has potentially loosened the EPCRS, it seems reasonable to use the reduced QNEC in this situation, other than for terminated participants (and even that piece is debatable, but I'd play it safe). Any thoughts?

Thanks Cuse.

See particularly (c)(iii) of the link. This is idle curiosity only. Does the extension to deposit retirement plan contributions extend to minimum funding deadlines for a DB or MP plan? Please don't spend any time on this on my account, as there's no live case situation. https://www.law.cornell.edu/cfr/text/26/301.7508A-1

Assuming it is not a 403(b) - the OP specified HR-10 prototype. But a good point to remember if a similar question comes up on a 403(b) plan.

If this is the case, then Equitable should be able to provide all (blank) documents and interim amendments since the original document that was adopted. Might be fees involved, but that's the least of the problems. The IRS is usually pretty reasonable on these one-person plans, (I once had an IRS auditor in one of these situations just make the client adopt a current document, and closed the audit!) but I'd also be prepared to prove compliance with incidental limits, etc. You could also try the pre-submission conference - see Section 10 in RP 2021-30. Might end up saving you and your client time and money. Good luck! "You never know where the wheel may go..."

The DB experts here will give you much better advice, but I'll toss in a thought, going from memory WAAAY back. I do seem to recall that it was possible to have a NRA earlier than age 62. I believe a determination letter is required for this, and there would obviously need to be pretty solid evidence that the age chosen was representative of the industry. Just for example, I think it is likely that the IRS would approve such an age if the plan was sponsored by a professional sports team. Probably a stupid example, but you get the idea. Likely this is not the case in your situation, but I think it is at least possible.

Thanks Bird. That's the "common sense" answer I was coming up with, but it seems like there's a little gray area on this, so I appreciate your opinion!

The question is - if an employer using a 5305 model SEP hasn't contributed for the last three years, and hasn't contributed anything this year, can the employer establish a 401(k) for this year? IRS instruction doesn't truly address this. Terminating a SEP Plan Do I need to amend my SEP for the new law before I terminate it? Generally, the IRS has not required employers to amend their SEPs for new law prior to termination. Check with your plan professional. Do I have to fund my SEP in the year of termination? SEPs can be terminated at any time. You can stop funding your plan once it is terminated. What are the notification requirements when a SEP terminates? When you terminate your SEP plan, it is a good idea to notify the employees that you are discontinuing the plan. You may need to notify the financial institution that you chose to handle the plan that there will be no more contributions and that you will terminate the contract or agreement with it. Do not notify the IRS of the plan's termination.

Barring additional guidance/technical correction, this falls under the "life ain't fair" exception to life.

Yes, there is a Santa Claus!!!

Time. It takes longer (perhaps depending upon automation capabilities) to do an amendment/SMM than it does to perhaps have a "canned" paragraph or three that can be used to communicate the change in a less formal manner.

I'm a little puzzled by the date by which a discretionary amendment must be adopted, and the real life effects of this fun stuff. First, my understanding is that adding Roth is a discretionary amendment, and as such, should be eligible for amendment by the end of the year in which it is operationally implemented - so in this case, by 12/31/2004. CB, why is it that the NHCE wouldn't have the ability to make a Roth election, if it is operationally implemented and communicated as of 1/1/2024? I'm missing some crucial piece here. Thanks! (P.S. - it would certainly be nice if the IRS would opine that you could do this operationally and make it part of the SECURE/2.0 amendment by 12/31/25...) Excerpt from RP 2016-37: 04 Except as otherwise provided in sections 15.05 and 15.06 of this revenue procedure, the deadline for the timely adoption of an amendment for any pre-approved plan is determined as follows: (1) In the case of an interim amendment, an employer (or a M&P sponsor or VS practitioner, if applicable) is considered to have timely adopted the amendment if the plan amendment is adopted by the end of the remedial amendment period described in § 1.401(b)-1(b)(3) (determined without regard to the extension under section 15.03 of this revenue procedure). See section 2.07 of this revenue procedure. (2) In the case of a discretionary amendment (that is, one that is not an interim amendment described in section 15.02), an employer (or a M&P sponsor or VS practitioner, if applicable) is considered to have adopted the amendment timely if the plan amendment is adopted by the end of the plan year in which the plan amendment is 21 operationally put into effect. See section 8.02(1) of this revenue procedure for examples illustrating this deadline.

2024 increases to $7k. Suppose plan currently uses 1K. Can the plan operationally go ahead and use the 7K for 2024, or must it amend to 5k, which then increases to 7k? The latter seems absurd, but an interesting question...

Yes, can exclude until 21. But you can allow them in at regular age if you choose. One of the many decisions that will have to be made shortly re the LTPT.

Depending on the amount of the desired loan, a bonus of that amount may not be feasible, but I've seen a lot of employers take that route if the amount is small. I've also seen employers actually loan the participant money instead. As to the amendment, I'm usually on the conservative end of the spectrum for these things, and you've gotten valuable input already. I absolutely would not recommend hiding it so that only this employee can take advantage of it - as Cuse said, just because you CAN do something doesn't necessarily mean you should - a lot depends on the size of the plan. If it is a small plan, perhaps notify employees in advance that this loan window will be open only for a couple of days? Most people won't take a loan anyway. I don't know the dynamics of the situation. Remember that if you modify the hardship withdrawal provisions to include non safe harbor reasons, you can't rely on self-certification for a withdrawal of other than the safe harbor reasons.

Ok, thanks! I was just curious.

I'm going to say that it would only be for active employees. The statutory and regulatory language refers to "employees" rather than "participants." So I think if terminated, just a regular withdrawal, and premature distribution tax, if otherwise not exempt, would apply.

General question for you attorneys out there who deal with health insurance claims and "clawback" of expenses paid, if a legal settlement is reached I was talking with someone a few weeks back, who had sustained some significant injuries in an auto accident that was the fault of the other driver. Her health insurance had paid significant amounts for medical bills. She was in the process of suing the at-fault driver. I have heard that many health insurance policies require repayment if the injured party receives a settlement, but I don't know anything about it. I asked her if her attorney had mentioned any such thing, and she admitted she didn't know. So I have two general questions: 1. Is it in fact a common clause in health insurance policies to have some sort of "clawback" or repayment clause in the event of the injured party receiving a settlement? 2. If her attorney DIDN'T mention it, if there is such a clause, would this likely be some sort of legal malpractice? I mean, if the settlement is completely or nearly eaten up by clawback and legal fees, why would anyone go through the agony of a lawsuit? Again, I freely admit I know nothing about all of this, so I my be asking stupid questions here, in which case, my apologies!

Makes sense to me! Naturally barring further guidance. With all the other garbage that we have to deal with before this issue, I thankfully can't get too concerned yet. With luck I'll be retired by then!

To be very nitpicky, the 415 limit is based on the calendar year limit in which the limitation year ends, right?