Belgarath

Very nice of you!

You are correct. And your company SHOULD be more terrified of the consequences or potential liability for knowingly administering a plan in violation of the document (which almost certainly states the parameters of the exclusion) and in violation of the regulations. Refer your supervisor to 1.403(b)-5(b)(4)(ii), and (iii). And in (iii)(B)(1), have them note the "reasonably expects" clause that you alluded to above. The IRS also provided some additional guidance on this subject in IRS Notice 2018-95. Good luck!

Revisiting this with a slightly different question. Page one of the 8955-SSA instructions, final paragraph in left-hand column on first page, says that you have to report deferred vested benefits if they were previously reported as deferred vested benefits on another plan's filing if their benefits were transferred (other than in a rollover) to the plan of the new employer during the covered period (using Entry Code C in Part III, line 9, column (a);... So: How do you know if they were previously reported on another plan's filing? Do you simply assume that they were reported, and do your filing anyway? Are you obligated to inquire? (P.S. - or do you just use the Code A)? Also, by "rollover" I assume they also mean a direct rollover at the request of the participant? I don't see how it could be otherwise.

Wow, good question. I haven't seen anything from the IRS on this either.

Smart kid! I'm green with envy!

For us, virtually never. What happens more often is that within a year or two, someone is cleaning out the house, apartment, garage, etc., and they find a file or a box containing an annual benefit statement, etc. - they then inquire, and most of the time the total distribution took place prior to death so thankfully there is no benefit remaining. But we do primarily small plans.

Ugh - I'd forgotten all about that question. Chalk it up to CRS Syndrome...

Not having time to do any research on this, I can only give you my gut impression. I'd think it would be the plan year ending within the lookback year of the plan being tested. However, no degree of confidence in that answer. I've never run into it either.

I assume you mean for the compensation test? (The ownership in each corporation is not aggregated for the 5% owner test.) I'm not certain without some research, but I assume (always risky), since the compensation IS aggregated, that it would be the lookback year compensation from both employers. Is the Plan A using the calendar year election? That would probably be too easy...

I'd strongly recommend that the client (whether or not they are, in fact, crooked) seek ERISA counsel.

Are you certain that you don't already have such an amendment? A lot of document sponsors/providers/practitioners adopted this amendment on behalf of their clients.

Hi Lou - nice idea, but it was all deposited in 2020.

Thanks. I did know about the netting for SECA purposes. And I agree that "C" is the safest approach...

Curious as to what approach you take. A sole prop has Schedule C from two different businesses. One has income of $100,000, one has a loss of $50,000. Defined contribution plan. Do you A. calculate based on $100,000? B. Calculate on $50,000? C. Give your opinion (mine is that you do not net the two, so $100,000) to the CPA/Client and let them choose?

Say you have a sole prop with one employee. Sole prop's Schedule C is low enough so that taking into account the contribution for the employee, and the earned income reduction, the sole prop's net "plan" income is, say, $25,500. Sole prop is catch-up eligible, and deferred $26,000. Now, under IRC 414(v)(2)(A)(ii) the sole prop deferral can't exceed $25,500. So I assume the excess $500 is considered a 415 violation? I don't see what else it could be - not a 402(g) violation nor an ADP failure...

No idea whatsoever, but I offer the following: https://www.songfacts.com/facts/the-beatles/when-im-64

The following is just some general blathering as random thoughts occur to me. What recourse might you be talking about? Unless I'm misunderstanding, the participants just have to pay what they are otherwise required to pay, right? Granted that they might not be EXPECTING it at this time and it may be inconvenient, etc. - but they received the full distribution, so the state withholding that they WANTED withheld is still in their pockets, or is part of their new living room set that they are sitting on, etc. They probably don't owe any interest, but if they did ('cause they didn't make any quarterly estimated payments if required by the State, or something like that) then perhaps they would have an argument, and I suppose other scenarios could be created. But I suspect that any recourse requiring legal action would likely be either unwarranted or far more expensive than the "damages."

I've found conflicting opinions. Some say yes, others say that you fail the 25% Key employee test. Seems to me the latter is correct based on a literal reading, but maybe I'm missing something, or perhaps the IRS has opined informally on this, etc...

Thanks!

Way more information is needed. Don't assume anything at this point. For example, has this ownership been the same for all years, including 2017? Was company B acquired in a 410(b)(6)(C) transaction, so that a transition period might apply? Are all of the employees ELIGIBLE employees? Perfectly ok to exclude some or all employees of a Controlled group IF you can pass coverage testing. Based upon the ownership you give above, it would appear to be a controlled group now.

Ok, thanks!

I'm a little confused by this. So let's say you have a plan with a Health FSA, that has a rollover provision, but NOT a grace period. It does have a 30 day "runout" period to submit claims for prior year. Now assume they executed a CARES amendment, which states, to paraphrase, that the plan's claims procedures and other statutory deadlines are temporarily extended by the "outbreak period" , and the outbreak period extends until 60 days after the end of the National Emergency, etc... We of course are not past the end of the National Emergency. So, would you interpret this as allowing the 30 day "runout" period to be extended, for submission of 2020 claims?

Agreed. IRS Notice 2009-65 sample amendment for a non-EACA doesn't include any limitations either. https://www.irs.gov/pub/irs-drop/n-09-65.pdf

Hi Luke - thanks. By the way, how did you find 94-101? I couldn't find a link to the blasted thing anywhere - obviously looking in the wrong places!

Hi Luke - I know there was something, but darned if I can find it. Could have been made obsolete by later guidance, etc. The issue is discussed in the IRS audit procedures, but not in great detail. I tried to see if the EOB has anything on it, and there is an extensive discussion, and there is reference to an an IRS Announcement 94-101, but I can't find that. At any rate, I agree that it is a thorny issue requiring careful consideration!