Belgarath

I'd have said you can't consider it a 402(g) violation - 402(g) is a dollar amount limit, and as long as you don't exceed that, it isn't a 402(g) violation. I'd vote for 415 violation.

Thanks for the input. Yeah, 45 days seems like an overly tight timeframe, and why it was originally drafted this way I have no idea. Maybe there was a good reason at the time, I don't know.

We've never tracked that percentage - but I can tell you that the true-up is a VERY small percentage - if you forced me to guess, I'd say maybe 2%. That's just a guess, but it most certainly is a very small percentage. At least for us - others may have a different experience.

Thanks.

Thanks Austin.

Plan says that claims must be submitted within 45 days after end of plan year. But the provider doesn't even send bill until the end of February. Would you: A. pay the otherwise allowable claim, as soon as possible but within 45 days of the participant's receipt of the bill B. amend the plan (retroactively?) to provide a longer run out period c. deny the claim, since not received by the deadline d. other? P.S. - I should have put this in the original post, but FWIW, I believe the answer is "c" - as per 1.125-1(c)(5).

Austin - what document are you using, and when you say embed in the "special provisions" - where exactly do you mean? In the "other" section of the compensation definition in the AA, or in an Appendix, etc.?

Just want to make sure I'm not missing something. Had an inquiry from an employer who sponsors a cafeteria plan where the employer (C-corp) has 3 owner/employees only - ALL are Key. No NHC employees. I assume this has no possibility of passing testing, as I'm not aware of any provision similar to qualified plans where coverage/nondiscrimination is automatically passed if there are no NHC employees. So they would automatically fail the 25% key employee concentration test. Agree, or am I missing something?

I would include her.

Deleted.

Give this a try. https://www.law.cornell.edu/cfr/text/26/1.410(a)-7

Without having time to really think about this, my initial quick impression (looking solely at what you have copied, in a vacuum and not looking at associated regs) is that the first sentence means when you are doing 410(b) testing on the 401(k), you disregard the 403(b) employer contributions. The second sentence means that when doing 410(b) testing on the employer contributions under the 403(b), you can take the 401(k) into account. So it appears to say the testing goes in one direction, but not the other. This seems odd, but as I said, don't have time to actually think about it, or do further research. Not sure I want to, either...maybe someone else has wrestled their way through this already!

Yeah, Robert is great. Like many of us, I've dealt with him many times, attended seminars, etc... Glad to know that he has taken over for Sal. I used to worry about what would happen when Sal finally got out of this, and now I have no worries!

Pardon my ignorance, but who is "Robert?" Sounds like he took over for Sal?

Not trying to be a jerk, but I'm not going to describe it over the internet in any form, lest it be viewed/intercepted by people who would then say, "Hey, what a great idea - here's a way to illegally obtain funds."

Even if using safe harbor definition, I would say "no" if it has been 2 years. IMHO...

This type of question surfaces a lot, and there are differing opinions. But it may be instructive to take a look at 1.401(k)-1(d)(3)(iv)(C), which states that it isn't an immediate and heavy financial need if it can be reasonably relieved by borrowing from "commercial sources on reasonable commercial terms in an amount sufficient to satisfy the need." Something to consider, anyway. P.S. - note that this is referring to a non-safe harbor definition of immediate and heavy financial need.

Batman.

Question - under PPA (or anything else for that matter) must a distribution notice to a participant, for a DC Plan (non-QJSA) provide the dollar amount of the total account balance and the vested account balance? Now, this seems like a ridiculous question, I know, but in response to some fraudulent distribution requests, we are considering what possible options might be available to combat this. Among the questions/ideas floated was not putting these amounts on the distribution statement that is initially/automatically sent to the "participant," and somehow adjusting procedures to require the participants to contact the Plan Administrator/Trustee to obtain this specific information. Not saying whether this is good, bad, or indifferent, because we haven't yet begun to explore the ramifications - risk/reward, expense, quality/timeliness of service, what various platforms will/won't do/handle, etc. - only starting to determine if it is even possible. And not looking into any other changes (at this point anyway) so all other PPA requirements are NOT open to discussion right now. It appears to me that this information would be required for a DB plan - (accrued and vested benefit) but I'm not necessarily finding anything requiring it for DC plan. Of course, the statement must provide the verbiage re the effects of delaying distribution, QOSA if applicable, etc., but that's another matter. Anyone have any thoughts on this?

Ah, the light dawns in dark places. Thanks!

Question - Sal has a blurb about the options for elective deferrals if a successor plan exists, and I don't quite understand what he's saying. He gives option (1) as "Transfer the deferrals to the successor plan (most commonly used option)." If a plan is terminated, participants must be given the option to have their funds distributed, either taxable or as a rollover to another plan. But a rollover is still a distribution. So what does this really mean? I'm sure I'm missing something completely obvious, and it is probably a late-week brain cramp... thanks.

There are two separate issues - the "normal" bonding requirement, and the "small plan audit exception" bonding requirement. Assuming all of the children are not partners in this as business as an unincorporated partnership, then bonding is required. In order to claim the small plan audit exemption, then if the "nonqualifying assets" are more than 5% of the assets, the bond must be no less than the value of the nonqualifying assets. Cheaper to get the increased bonding than to do the audit!

Not disagreeing with Lou - just mentioning that the terminology of the Notice is different for different for different people. Many people refer to the "maybe" notice as the notice one gives when a plan utilizes the "maybe" election - that is, the plan is NOT a safe harbor UNLESS the plan is amended into safe harbor status for the year. In your situation with a 3% SH contribution, we would refer to this as a "maybe not" notice, which as discussed previously allows you to amend out of SH status. Sample wording contained in the annual Safe Harbor Notice - we use the FIS/Relius document system. IV. Suspension or reduction of safe harbor nonelective contribution. The Employer retains the right to reduce or suspend the safe harbor nonelective contribution under the Plan. If the Employer chooses to do so, you will receive a supplemental notice explaining the reduction or suspension of the safe harbor nonelective contribution at least 30 days before the change is effective. The Employer will contribute any safe harbor nonelective contribution you have earned up to that point. At this time, the Employer has no such intention to suspend or reduce the safe harbor nonelective contribution.

Too funny! At least it didn't provide that she got the half bottle of Scotch after it was filtered through his kidneys...

Yes. The IRS recognizes that they can't possibly list every possible failure/correction that could happen or be reasonable. The corrections listed in Appendix A and B are deemed to be "reasonable and appropriate" and I would generally use them for those failures specifically listed, if those corrections are appropriate for the situation. Nevertheless, see the following from RP 2018-52, Appendix A: (3) Other reasonable correction methods permitted. As provided in section 6.02(2), there may be more than one reasonable and appropriate correction of a failure. Any correction method used that is not described in Appendix A or Appendix B would need to satisfy the correction principles of section 6.02. For example, the sponsor of a 403(b) Plan that failed to satisfy the universal availability requirement of § 403(b)(12)(A)(ii) might propose to determine the missed deferral for an excluded employee using a percentage based on the average deferrals for all employees in the plan instead of using the rule for calculating missed deferrals set out in .05(6)(b). In doing so, the proposed correction method would fall outside Appendix A, and the Plan Sponsor would need to satisfy the general correction principles of section 6.02 and other applicable rules in this revenue procedure.