Belgarath

Thanks. Brings up an interesting side question - suppose this person never satisfied the 1 YOS (1,000 hour) requirement to eligible to receive a PS allocation in the first place. They are "benefiting" under the employer nonelective portion of the plan, so still receive gateway, right, even though not eligible for any other PS contribution? And GOOD LUCK in the coming days.

Grrr.... I thought I understood this, but some discussion recently now has me questioning myself. Calendar year plan. Participant terminates employment 12/31/18. Receives final paycheck - just normal wages only - on 1/4/19. Plan uses W-2 compensation, and the determination period is also calendar year. Plan uses the "defaults" for 415 post-severance compensation purposes - that is, normal qualifying post-severance compensation categories are included for 415 purposes, and the plan does NOT utilize the "administrative delay" rule - also commonly referred to as the "first few weeks rule." For PLAN compensation, the plan includes, for all contribution categories, the allowable post-severance compensation categories - regular pay, leave cash-outs, etc.. So, the payment of wages received on 1/4/19 should have deferrals withheld, and the participant should receive a 2019 safe harbor nonelective, and therefore, for a cross-tested plan, also receive gateway. But since 1000 hour/last day, receives no other PS allocation. Participant Included in all other 2019 testing. Am I off my rocker on this?

I know Tom is in Florida, and many others as well. We'll be thinking about you - best wishes for all of you and your family, friends, and neighbors, and hopefully you will be relatively unscathed by the hurricane. Good luck!!!

So, suppose you have CG, consisting of Corps A, B, C, and D. A & B sponsor plan #1, and they run on a calendar plan and fiscal year. C & D sponsor Plan #2, and they run on a 10/1 to 9/30 plan and fiscal year. The numbers are such that either plan, no matter how you look at it, passes 410(b) and 401(a)(4) EASILY, as very few HCE's participate. However, as an academic exercise for future reference, suppose you are testing Plan #1 (calendar year) and you wish to determine the HCE's for 2019. When doing the 5% owner test, are you looking at 5% owners only in 2018 and 2019, or, would an owner who was a HCE in plan #2 in the 2017-18 plan year by virtue of ownership in December of 2016 be included? Seems like it should be the former and not the latter. Same type question for compensation test - for Plan # 1, are you looking solely at compensation during calendar year 2018, and HCE status under plan #2 for the plan year ending 9/30/19 is technically irrelevant? Maybe to try to condense the question, for plan #1, is the HCE determination made solely under the normal plan #1 timeframes (but taking into account all employees of all members of the controlled group)? I believe this is how it works...

Anyone have a pipeline to the IRS on the likely date for approval of DC docs and the opening of the next restatement cycle? Is smart money still on 2021, or is there any likelihood of 2020? Would obviously make a big difference in our planning...

Thanks.

Brain cramp! Participant terminates with outstanding loan - rolls loan note over to new employer's plan. Reported on 1099 as code G, or not reported at all?

Good grief! That was a wonderful, lucid and clear response, but I can't help thinking this blizzard of form numbers sounds like a M*A*S*H episode. "Sign this form to show that you initialed the other form instead of signing." Reminds me somehow of many, many years ago when we refinanced a mortgage. Sitting in the lawyer's office, we spent, actually, 20 minutes doing nothing but signing and initializing forms. The best part was that after all of this, we had to sign an affidavit saying that we were who we said we were when we signed all the other forms! Like if we lied on all the other forms that we would hesitate to lie on the affidavit...

As Sherpa alluded to earlier, will the rank & file have this option? The BRF testing must pass both current and effective availability. Current availability is a mathematical test, which might pass. I'm dubious that in a typical plan with rank & file employees that the "effective availability," which is a facts and circumstances test, will pass. If no rank & file participants, then scratch my comment.

Take a look at Revenue Procedure 2019-19, Section 6.07(3)(d). This may help you out.

Without doing any research whatsoever, my off-the-cuff opinion is that there is no basis generated due to the nondeductibility in this situation, and the distributions are an eligible rollover distribution to the extent they exceed RMD's. Again, I caveat this heavily that I haven't actually done any research to back up my thoughts.

Hey Tom - I echo all the good comments and sentiments that you have received, and will continue to receive. You're also one of the few people who appreciate (or at least somewhat understand) my own bizarre sense of humor. Good luck as you waltz through this next chapter in your life. It would be lovely if you have the time to occasionally post something humorous, but if not, it has been a pleasure corresponding with you on this board. Enjoy every day!

As far as my limited understanding goes, I agree with Mike that it is not excluded from the bankruptcy estate. But then there is an exemption under Section 522 of the Bankruptcy code. I defer to the attorney/actuary experts as to the practical difference, but I believe it has to do with the fact that under an exclusion, the bankruptcy Trustee has no jurisdiction. Under an exemption, I'm not sure what, if any, authority the bankruptcy Trustee might have, and if any authority, under what circumstances. Way out of my sphere...

Thanks all. I appreciate your time and expertise.

Thanks!

As to your first question, yes, absolutely. As to the second, I'm asking because sometimes the funding companies charge a separate fee "per plan" - just looking, at this point, to minimize fees at the request of the broker. We're just at the initial "feasibility" investigation, and I want to get my ducks in a row. Thanks.

Yup, I've been saying ASG all along when I should have been saying CG. Sorry about that. But I don't think it alters the question, or the results. Perhaps, as Peter notes, I just can't make the leap to use this in a 457 context. Seems crazy to have to set up two plans, but maybe that's where it ends up.

Hi Peter - point well taken. I had considered this, but in this case they are both eligible employers. Two 501(c)(3) non-governmental employers, who do, under 1.414(c)-5(b), constitute an ASG. Granted that the documents we are using are not "pre-approved" by the IRS, they do contain language for "participating employers." Do you think it is being too aggressive to have such an employer sign on as a "participating employer?"

Actually, to me it was more a question of whether another member of the ASG COULD sign on as a participating employer if they wished to. And it would appear that they can. I wasn't concerned about discrimination/coverage in a Top Hat plan anyway, but my original post didn't specify why I was asking the question, so I certainly can't expect anyone to read my so-called mind... Thanks for the response.

Thanks Peter. After taking a little time to peruse the regulations under 1.414(c)-5(f), and (g) - see Example 2, it does appear that the ASG rules would apply to a 457(b) plan. Agree/disagree?

The boilerplate language in our preapproved plan states that the terms of the CBA are incorporated by reference and attached to the AA as an Addendum. If it is good enough for the IRS, good enough for me! I probably should have specified this in my first response. Does this alleviate your concern?

Is there any reason why the ASG rules wouldn't apply? Never happened to see a situation where a non-profit member of an ASG sponsors a 457(b) plan, but I wouldn't think it is unheard of.

We have language like that. It isn't a specific election in the AA, but you'd use an "other" choice, and the language is in the boilerplate section of the document. I suspect most preapproved plans do have some type of provision such as what you want, these days.

Our document permits the Employer to OPERATIONALLY elect to use any definition of 414(s) Compensation provided such definition satisfies the nondiscrimination requirements of 414(s) and the regulations thereunder. I'm just guessing that yours may be similar. Your approach is interesting, and seems valid to me - I've just never happened to see it used. But I may be missing a crucial point - I haven't looked into it in detail!

I think 1.414(s)-1(d)(2)(ii) permits excluding only a portion of the bonus. The question, I think, is whether your document gives you the discretion to arbitrarily choose the portion of the bonus that is excluded/included from year to year?