Belgarath

Agree.

See my first post.

Hmmm - in order to be eligible for the credit, the employer cannot have maintained a plan during the immediately preceding 3-year period, to which contributions were made, or benefits accrued, for "substantially the same employees." If some NHC's will be covered - say it is a safe harbor nonelective plan for example - I'd be inclined to say the credit is available. Up to the accountant, of course...

I believe FIS is doing one. I have a question for those folks who work a lot with ESOP's, and/or draft the ESOP documents. Do you think that most existing ESOP's will "fit" into a pre-approved plan document? Probably impossible to answer without seeing the pre-approved document...

No, that's not what I'm saying. I'm not talking about a "draw." I'm saying that "guaranteed payments" are not the definition of compensation - I am saying they would normally be included in arriving at net earnings from self-employment. However, it is possible for NESE to be less than the guaranteed payments. So if deferrals were being made based solely on guaranteed payments, and it turns out that NESE is less than the guaranteed payments, then you have a problem. Again, I suspect we are all agreeing on the final result, and it is just semantics in arriving at the final result.

Luke - maybe a matter of semantics, but I read C.B.'s statement as meaning that "guaranteed payments" - in and of themselves, are not the measuring compensation. Rather I understood him (her? Can't tell gender from initials) to be saying that you use net earned income - which is correct. The guaranteed payments are generally (but not always) used when arriving at earned income. So I suspect we are all agreeing, albeit stating it a little differently.

I agree with C.B. - but FWIW I'd be a little cautious on the "Guaranteed payments" question. Sometimes this terminology is used on a blanket basis, but certain "guaranteed payments" are included when computing net earnings from self-employment, and some (see IRC 1402(a)(10)) are excluded. And as C.B. notes, you can get into trouble if the "net earnings from self employment" turns out to be less than the guaranteed payments.

If no ownership, then based on this information he is non-key for 2020. Key for 2021. As an aside, you don't say when he was hired, and if employed prior to 2019, what was his compensation then? If he was hired in 2018, and his compensation exceeded the threshhold, he could be Key for 2019. I expect that isn't the case, but you need to be sure.

Agreed. I made an unwarranted assumption (assumed he was an officer, given that level of comp) re Key status for 2021...

Muchas Gracias. Always nice to find out I'm not entirely senile.

Based solely on the information you have provided, and ASSUMING he had no ownership in 2019: Non-key for 2020. IRC 416(1)(A) provides that the key employee tests are made for the plan year that includes the determination date. IRC 416(g)(4)(C) defines the determination date to be the last day of the prior plan year. except in the case of the first year of the plan. So if no ownership in 2019, and with the comp level you provide, non-key for 2020. Will be key for 2021.

I'm a little (a lot?) confused on this. So, say an ESOP plan that was individually designed (weren't they all until relatively recently?) applied for and received a determination letter in 2014 - back when individually designed plans were on a 5-year cycle. That letter said it expired 12/31/2019. But, didn't Rev. Proc. 2016-37 eliminate the 5-year cycle, and isn't it true that you generally cannot file for a determination letter currently (except for initial qualification, plan termination, etc.)? So even if the plan sponsor wanted to apply for a determination letter, they can't? Or, is there a special situation for an ESOP that I'm missing?

Interesting. Thank you all for the input.

Never seen this one... client wants to NOT allow prepayment on participant loans. Not seeing anything in 1.72(p) or 2550.408(b)-1 specifically prohibiting this, but it seems wrong on so many levels that I've got to assume this has been addressed somehow before. First, it doesn't seem like ERISA would pre-empt state law on this question, so if state law doesn't allow for such a provision on loans, then that nixes it, perhaps. Then I start thinking about fiduciary issues - if a participant wants to pay it off early, and the plan/fiduciary won't allow it, then the participant is, in essence, being forced into an investment that is perhaps "underperforming." Etc., etc., - anyone ever heard of this question coming up?

Unanswerable questions. No way for me to know what the attorney would or wouldn't do, what the client gave to the attorney for information, what the VCP filing said/asked for, etc., etc...

Well, at least in theory, you can attempt almost anything in a VCP filing. However, whether or not it will be approved is another story. Did the IRS already approve such a correction? Without full facts, census, information from the VCP filing itself, it's nearly impossible to say. And the IRS can only approve or not based upon the information submitted in the filing, which may or may not be accurate.

FWIW - our general procedure is that we're not restating if official plan term date is prior to 8/1. For your categories 2 & 3, we are restating. (Of course, client has the ultimate choice one way or the other...)

Thanks Peter. Is there any authority/citation for this, or is this an intelligent and common sense approach? P.S. hi Peter - this HSA thing isn't anything we have anything to do with - just a question from a retirement plan client. But I just this moment received another tidbit of information about it - apparently the HSA custodian has formally said they won't accept the 2019 contribution now, so that sort of negates your solution. Sounds like no option left other than issuing a corrected W2? (I'm going to refer them to their own tax counsel anyway...)

Curious to know what "fix" - if any, might be available. Say an employer withheld HSA contributions in a prior year (let's say 2019). Never deposited them into the HSA. W-2 for 2019 showed the deductible HSA amounts. Now the error is discovered. Is it just a case of "so sorry, too bad" and a revised 2019 W-2 must be done, or is there a "correction" such as depositing the HSA funds now (although I suppose the HSA custodian might not allow it anyway...) In the 401(k) world, these things can be fixed, but I don't know about HSA's...

Also, check the Trust provisions carefully - many say that there must be a specified advance notice (e.g. 30 days) prior to the removal being effective, unless the (soon to be former) Trustee consents in writing to earlier removal, or the employer reasonably concludes that earlier removal is necessary to protect plan assets, etc., etc...

Lou - are you allowed to offset the loan in this situation? I'm frankly confused on this issue. So two situations: A. Plan allows Covid distributions. Is this considered a "distributable event" if you default on the loan, such that you are allowed to offset? B. Plan does not permit Covid distributions. Same question, can you offset defaulted loan? P.S. - I suppose I should add that I'm assuming there has been no OTHER distributable event that would allow the offset...

NYET. Unless the sub meets one of the other definitions of eligible employer. See 1.403(b)-2(b)(8)(ii) - if my magic thumbs typed the citation correctly...

In the context of the original question, if your rounding method gets you to 1 or more, then at least theoretically ok. However, there are potential document and timing issues with the timing of the "election" and whether you can simply "elect" it or must amend plan, possible anti-cutback provisions (although I would say that's generally unlikely) - facts and circumstances issues to be determined for each plan.

Bingo! We used to call it stepping over a $20 to pick up a $1. Of course, on the other hand, since most of the experienced personnel are salaried, employers sometimes couldn't care less if those folks have to work 80 hours a week for the same pay - until people start leaving, they will keep piling it on. I hasten to add that by no means are all employers like that, but you know they are out there.

We generally say something to the effect of, "Sure, we'll be happy to forward those. Would you please tell me why you need them?" Honestly, these days when it is as simple as attaching a PDF to an e-mail, we don't find it much of a burden. Maybe we are just lucky that we don't get too many of these requests. Wasn't as easy in the old days - then these were a thorn in the side.