Belgarath

Thanks all.

Question - what have you been getting for asset statements/information in prior years in order to do the administration? Typically the TPA would have this information. It's a starting point. As far as a Successor Trustee being appointed, the plan document should provide specific information on how this is handled, or it may require a court-appointed successor. You need to have the wife contact an ERISA attorney for assistance. As a TPA, chances are you can only help point her in the right direction. Also very important for her to contact the institution where the assets are held (once you tell her where that is) to have her explain the situation, and ask them what THEY need in order to change Trustees, release information, etc., etc. - and make sure she gets in in writing. The ERISA attorney should be able to assist her with this. Other things may occur depending upon specific facts and circumstances.

Assume none of the deferrals are Roth?

No problem - I didn't specify this properly in the OP.

Yes, they can allow multiple investment vendors/advisors. As a practical matter, as most plans grow, they will limit the number to something reasonable. If you have 50 participants and 50 different vendors/advisors, it gets administratively untenable. With 2 or 3 participants, I don't see it as much of an issue. Of course, some vendors are difficult to work with under any circumstances, but that's a separate issue.

USERRA is very clear about the make-up rules, coverage/nondiscrimination/deduction/etc. issues for make-up contributions upon qualified reemployment. What about the year the employee leaves for qualified military service? Example, active participant in a Profit Sharing plan that has a 1,000/last day requirement. Participant leaves for qualified military service in July 2019, having worked 800 hours. So this person does not get an allocation of profit sharing contribution for 2019. I can't find any dispensation for coverage/nondiscrimination testing for the year the individual terminates employment for qualified military service. However, it "feels" wrong to include this person, to the detriment of testing results. Do you include such an individual in the testing, or just toss them out altogether for 2019? My heart says to toss them out, but my head isn't agreeing. Interested in any thoughts you might have. Thanks.

The particular plan that caused this question to be raised is a 501(c)(3), but the many would be private for-profit businesses.

401(k) plan has terminated, (August 15th term date, small plan!) and all assets have been distributed. But the plan is still going to be restated. Here's my question: New pre-approved plans do not include the Trust document - the Trust document is now separate from the plan document. Since all assets have already been distributed, is it really necessary to execute a Trust document? I can't, offhand, think of any reason, other than at some later date a dividend or mutual fund settlement or something is suddenly distributed to the plan. Thoughts? It probably isn't a big deal to get this client to sign the Trust document, but it seems like a waste of time.

Some states are paying certain front-line employees a "grant" or "extra payment" or whatever you might want to call it. This comes from the state/federal funds, and it is run through the employer as TAXABLE wages. The employer doesn't pay this out of their own pocket. Is this considered eligible compensation for deferrals/profit sharing/whatever? The "simple" answer is that the plan in question defines compensation as W-2, so it would seem that as long as this is being reported/taxed on the W-2, it should be eligible compensation for plan purposes. But since nothing is normal this year, I thought I'd see if anyone has different opinions?

I like that solution! Thanks for looking into this!

Ah, I get it. I'd be ok with changing the participant count to remove them, (again, assuming meeting the FAB requirements) but like you, I'm just not sure about the asset accounting. Agree, see if anyone else knows!

Good question. I'd start by asking the auditor. Regardless of what you think, if the auditor insists that they must continue to be reported, then that's your answer for this client. My inclination is that you don't have to continue to report them, if they satisfy the requirements of FAB 2009-02, and 2010-01. But I have no idea what is the most reasonable approach from an asset accounting standpoint. Personally, since the information on these contracts is obviously available, I'd probably continue to report them. But maybe not, if your approach turns out to be reasonable!

Not certain what cross-testing has to do with it. If there are no NHC, and everyone is in their own "group" then the plan automatically passes nondiscrimination and coverage. No gateway, no coverage testing. Just allocate whatever you want to each HC on an allocations basis, and there is no cross testing necessary. Again, I don't know all your specifics, what your current document says or allows, etc. - I'm just speaking in generalities. When you say an actuary sent you over specs, do you mean that there is also a Defined Benefit Plan involved? If so, you need to ask the actuary. Anyway, this is general "discussion" based upon almost no information, so it may be of limited use to you. Good luck.

There isn't enough information here to really answer your question. The immediate question that comes to mind is: When, if ever, will there be any other employees? If there won't be any, there's no reason for any eligibility requirements at all. P.S. - but if you ARE utilizing this provision, due to whatever the facts and circumstances dictate, then I would generally waive the eligibility requirements for anyone employed on 1/3.

Depends upon your document. Many allow the safe harbor contribution to the HCE's to be discretionary - any amount from zero up to the SH amount contributed for the NHCE's. But perhaps I'm misunderstanding your question.

I'm interested in actual audit experience with this. We have never yet had an auditor ask for it. I'm not advocating not doing it, just saying that certainly some auditors don't request it. Also, just FWIW, I had posed this question (probably 3 or 4 years ago) to a prominent ERISA attorney, and he said he wasn't aware of any such regulatory guidance that mandated this. All that said, I still think it is good practice

Yup, we don't have a set in stone answer for this either. We recently had one, very small, and I think it just got thrown into other income, but I'm not certain about that.

Hi Bird - the PLR provided that the plan would be AMENDED to offer this program. I'm talking about utilizing the flexibility of each participant being in a separate group to do this WITHOUT amending the plan. The idea being that you wouldn't necessarily have to take a plan out of pre-approved status by amending it to implement such a program. A "side door" approach in a manner of speaking. Not saying I like the idea, and not saying I think it is valid - just a discussion. P.S. - just random thoughts bouncing around - if in a given pay period someone participating in the program has a 2% or more student loan repayment, they are not eligible for the matching contribution. Instead they get the 5% nonelective. Is this a BRF issue with regard to not being eligible for the match?

With regard to the whole issue due to PLR 201833012, and a 401(k) plan with a new comparability formula with everyone in their own group: During discussion, an idea was floated about not formally amending a plan, but (if limited to ONLY NHCE's) if an employer could simply make a contribution to the accounts of anyone who made student loan repayments. This is an interesting question. It doesn't pass the "smell" test, but based upon the PLR's analysis of the contingent benefit rule, what rule(s) might this violate? Certainly won't hurt coverage/nondiscrimination testing, if limited to NHCE's. No requirement for a participant to defer to receive this benefit. It's hard to imagine that the IRS would allow this willy-nilly for all situations. Car loans. Mortgages. Whatever. Since it is a PLR, they could simply say "no dice." I'm just curious about general thoughts. (I wouldn't even have raised this question in the old days of definitely determinable benefits, but with documents that allow for employer discretion to each participant, subject to coverage/nondiscrimination testing, it raises some interesting discussion.) Thanks.

Yes.

Sure. The IRA contributions will just be (most likely) either partially or all nondeductible. But that's their issue, not the TPA's issue.

No - if the parent owns >50%, then the adult child's ownership is attributed to the PARENT. If the adult child's ownership is >50%, then the parent's ownership is attributed to the adult CHILD. This is for Section 1563 attribution. Very different under Section 318 attribution.

There was a discussion thread on this very recently. You'll see differing opinions in that thread, so you "pays your money and you takes your chances."

Hey Luke - Sorry, I meant to say fixed. I was working on a proposal and had "discretionary" on the brain. So it seems like you are basing this more on the implied "promise" to employees that they will receive a match? What about a Money Purchase plan, which certainly has a "fixed" formula, and therefore an implied promise that you will get a contribution if you are there until the end of the year? Do you believe that the Money Purchase formula can't be amended prior to the end of the plan year if it has a last day/1,000 hour requirement (with appropriate 204(h) Notice, of course, since it is a pension plan)? Anyway, I think we'll just agree to disagree on this one.

Agree, subject to the normal caveats about option attribution, separate stock classes, etc., etc.