Belgarath

The ERISA 204(h) Notice you are referring to does not apply to profit sharing plans - only to pension plans. See ERISA 204(8)(B) and IRC 4980F(f)(2).

The initial response by Nate S is one of my favorites. Put it in the Hall of Fame.

Fascinating.

Yes, and be careful if there is "prior pension" money in the plan. For example, if this plan has been around a while, and was originally a Money Purchase plan that was amended and restated to a Profit Sharing plan, you could have one bucket of money subject to QJSA, and the rest not subject to QJSA. Still a fair number of those out there, although the recordkeeping/accounting is sometimes poor or nonexistent.

I was wondering - not that it matters, 'cause I only really care about results in all of this, not the "why" - but trying to give the IRS the benefit of the doubt - maybe something in the statute doesn't allow their regulatory authority to extend those 2202 provision amendment deadlines? That's a legal question above my pay grade. Otherwise, however, it certainly seems an odd decision.

Amen to that!!

It's interesting. We had a lot of clients who basically said, "If someone asks us to do it, we'll allow it" (amend plan as necessary) but very, very few participants actually requested the employer to allow Covid distribution/loan options. We had to amend a few plans to even allow loans at all, and then no one took a Covid loan. No matter how you slice it, it'll be a PIA, but it is a big help not to also have to worry about SECURE amendment right now just for sheer volume, although truthfully, it seems like the SECURE "defaults" will be probably easier and more standardized. However, SECURE 2.0 or whatever, if passed, will likely be a %$$# show.

Yeah, Peter, we also saw some of this, or something similar. “If we do not receive your instruction by {date}, you instruct us to perform our services assuming your plan adds or omits provisions as stated by this email’s defaults.” Question for discussion: Suppose a default amendment for CARES is done at the document sponsor level allowing pretty much everything, but suspending RMD's unless requested. But in fact, let's say loan payment suspensions weren't allowed, or perhaps the plan doesn't even allow loans. Or Coronavirus distributions were never allowed, in spite of what the default amendment says. What are the ramifications? The participants were never notified of these supposedly available provisions (that the amendment says were available) - is the entire amendment (including the RMD suspension) negated? Are there specific penalties? There's no nondiscrimination/BRF issues, since these provisions were not available for HCE's or anyone else. Operational error with plan not operating according to its terms? I'm certainly not advocating such an approach! Just curious. It would not surprise me to see some very strange things with these amendments.

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Another TPA has asserted that this is possible. I think this is dead wrong, and I can find no support for such a position. However, I'm always willing to question myself. Does anyone believe this is possible?

I think I got overly excited a bit too soon. I was just looking at the brief summary. When actually reading the Notice, it appears that the CARES extension applies only to Section 2203, which is the RMD piece. Doesn't apply to 2202, which is the distribution/loan provisions. So it appears that plans must still be amended by 12/31/2022 for this piece? Am I reading this correctly? Rather obnoxious if this piece isn't extended as well... Hopefully I'm reading it wrong!

Perhaps I should know this, but I don't. Suppose such a bond reached its maturity date in 2020. Suppose in 2020 the municipality is insolvent, and can't pay. Now fast-forward to 2022. Now the municipality is solvent again. Do bonds maturing in 2022 get full payment, and 2020 bondholders are out of luck or only receive a portion of what is due? Or do the 2020 bondholders have claims that get paid first? Etc., etc.? Maybe there are no consistent "rules" on this anyway? Just curious. One of the few virtues of not having a lot of investments is that you don't have to worry about it...

Agreed. But having just completed restatements, the thought of another large amendment project to be completed by 12/31 was not an enjoyable prospect. That, coupled with the possibility of yet more amendments for SECURE 2.0 (or whatever is passed, if anything), makes this reprieve all the sweeter. Possible if SECURE 2.0 or something similar passes, we can roll the whole thing into one project, rather than two separate ones. Haven't considered ramifications yet, as I just found out about this at 5:00 AM... As an aside, there are employers who don't know what they did. With all the Covid confusion in 2020 particularly, and the fact that some recordkeepers took it upon themselves to offer some of the Covid features, coupled with the fact that some clients are less than stellar about providing information to us, it is sometimes difficult to determine who did what and on what date. Might make the determination of the "best" default amendment somewhat challenging.

"and if I claim to be a wise man, well, it surely means that I don't know" - Kansas. Showing my age here...

Agreed. See 1.401(m)-2(a)(6)(ii).

Most of you probably get the BenefitsLink Bulletins, but if not, see the following. I expect a huge sigh of relief from many places... https://www.irs.gov/pub/irs-drop/n-22-33.pdf

Without attempting to elaborate on the already fine points made by many folks already, I'll just say that I like Luke's suggestion: "just add crypto to 408(m)." Problem solved.

Thank you - yes, this can all get tricky. I do believe that the for-profit, (and it turns out that they do NOT currently sponsor any plan) if it does implement a 401(k), will only do deferrals and match, and not profit sharing. This would make things a lot easier. But all is in the investigation stage at this point.

Is your answer the same if a Governmental non-ERISA plan, which is not subject to 5500 filing requirements, files a 5500, but files it "late" - you can't turn a Governmental plan into an ERISA plan by filing a 5500. So suppose a penalty is imposed. Is that the IRS reviewer "correct" that since a form was filed, and filed late, a penalty is imposed as mentioned in prior posts? Seems counterintuitive, but maybe that's the way things work.

Thanks M. A couple of things - this IS the first for-profit entity, fortunately. As to the ABPT testing in the 401(k) plan, essentially the ABPT is stand-alone for the 401(k) plan, right? So no more difficulties passing than if it was just an unrelated business? Or am I missing something else? Muchas gracias!

Without doing any research, I would agree with you, and I think the IRS person is full of (something). I'd ask to speak to a supervisor. But, I may the one who is full of it...

I've never actually run into this situation before, (wish I hadn't now...) and I'm struggling with the implications. A 501(c)(3) non-profit (let's call it Loquacious Lumberjacks) intends to purchase 100% of the stock of a for-profit corporation (let's call it Anteater's Anonymous). Clearly a controlled group under 1.414(c)-5(g), example 1. LL sponsors a 403(b) plan, that includes a match. AA sponsors a 401(k) plan, about which I know nothing at this point. Now, LL can continue to satisfy the Universal availability requirement of 403(b) by excluding employees of AA as permitted under 1.404(b)-4(ii)(B). However, when it comes to coverage/nondiscrimination testing, I'm not 100% sure how it works. It appears that under 1.410(b)-6(g)(3), for coverage testing, AA is permitted to treat the employees of LL as excludable employees, as long as they meet a couple of requirements - (1) no employees of LL are permitted to participate in AA's plan, and (2) at least 95% of AA's employees are permitted to participate in AA's plan. Let's suppose they meet these requirements. And under 1.410(b)-7(f), for AA's purposes, contributions to LL's plan are disregarded if AA makes profit sharing contributions (although oddly, the reverse does not appear to be required). LL does not make PS contributions, so that leaves only matching contributions. For the matching contributions under LL, it would seem that nothing in testing would change, since AA's employees are excluded for Universal Availability purposes, so cannot receive the match. I'm not at all certain that I'm not missing something. Any comments would be VERY appreciated.

Hah! Now I've got that stuck in my head for the rest of the day! An enjoyable little ditty. Better than some thing that they played on the radio while I was driving into work this AM - some oldie called, if I got it right, "She made toothpicks of the timber of my heart." It was charitably described as a "song."

Thanks Cuse.

I haven't seen any official guidance on the following situation, and I wondered if there was something that I missed? Suppose a plan excludes "truck drivers" for all purposes. They are excluded even if they have satisfied the plan's 1 YOS/1,000 hour requirement. Plan passes coverage with flying colors. Now skip ahead to 2024 (*or possibly 2023 if SECURE 2.0 further complicates things). Must the LTPT truck drivers be allowed to defer? It seems like the grossest type of stupidity if they must be covered, while excluding people in the same employment classification who satisfy a 1 YOS/1,000 hour requirement. If there hasn't been any official guidance I've missed, anyone have a pipeline with some IRS folks for "unofficial" conversations that they might have had?