Mike Preston

Is that wishful thinking or have you seen anything published that addresses what will and what won't count? Hit reply button and I had more to add: Since PPA, DB plans have typically migrated to where the maximum deductible is often very high. So much so that a plan sponsor is likely able to contribute an amount for either 2019 or 2020 during the applicable 8 week window that would ensure 100% forgiveness. For those that sponsor a DB plan (or adopt one before the end of the 8 week window) is it really that simple?

To recap, this thread is discussing two different issues: 1) In a balance forward defined contribution plan where allocation of contributions takes place on the last day of the plan year amd where EOY employment is required to receive a portion of the contribution, is it prohibited for a plan sponsor to make a contribution before the last day of the year? 2) Whether a balance forward plan or an individually directed plan and assuming a deposit before the end of the year is not prohibited, do the earnings which accrue on those deposits attach to the contribution in some way? Given that the earnings in question do not constitute annual additions. My answer to (1) is a very strong NO. MoJo seems to be a very strong YES. My answer to (2) is a bit nuanced. In a pooled environment, strong NO. In an individually directed plan I can go either way.

What kind of things would somebody in the pension/401(k) business use it for?

Ahhhh, reinforcements have arrived!

Congrats.

Are you aware of what the plan year is? If it is 4/1 through 3/31 then your account received earnings through 3/31/2019.

Yes, with proper notice as you indicate. All participants with an hour of service on or after the effective date will be 100% vested, For this purpose the effective date can be earlier than the adoption date.

Thanks for closing the loop.

Every conversation with a client regarding loans and withdrawals needs to start by reminding them that the new allowances are not mandatory. Since they are voluntary they can be fully implemented or partially implemented. The fly in the ointment of partial implementation is that there is concern regarding the document provisions that will be incorporated into the plan by the end of 2022. Not a lot of concern, but enough to mention it to clients.

I don't think so. He left the impression that his "cite" is his own 40 years of experience. I've got 41 years in pensions but you don't see me responding to a request for a citation (and my request was easier to satisfy than an actual citation) with me saying that my experience substitutes for one.

Crickets from MoJo. Is arm waving really all he has?

Queue the naysayers re: deemed coda, etc. But add one thing: in my neck of the woods of counsel are treated like independent contractors, which opens a whole new can of whup whatever.

I'm slammed at the moment, but are we sure a new plan can't be layered?

That method seems fine to me.

There is legal precedent that bears on your question. It was Delta airlines that "knew" various pilots were going through with sham divorces to gain early access to retirement plan benefits and therefore took the opportunity to fire some of those pilots. Long story short is the the courts and the DOL basically said Delta had no duty or even right to challenge a divorce's quality.

I'm just saying that the first time anybody suggests a course of action to a client that is integral to the employee/employer relationship without making it clear that the course of action should be blessed by client's counsel will usually be their last. The least they can expect is a strong letter from said counsel. The real danger is a client that has no relationship with an attorney versed in employee/employer relationships. That client is quite likely to take your suggestion and run with it without thinking it through. And while it is not likely to end up in a situation where your E&O gets involved, if you are aware of the risk, why take that risk on when a simple suggestion to run it by the client's legal advisor reduces the risk dramatically? Sorry you were offended by my remark.

I think the standard is not just to "believe the participant is not eligible." I think the standard as stated in official guidance is much more in the direction of firsthand knowledge, or some sort. I'm running out the door or I'd look it up.

The 100 k gets allocated per the formula. It does not get allocated per the account balance. Was that a test? Did I pass?

Only the hardest of hard-you-know-what's could interpret a 10% pay cut as not enough.

You are preaching to the choir on the inadvisability of pre-funding. There are a bunch of my postings that rail against it. What we are talking about here is labeling the pre-funding as disqualifying. BTW, get rid of the "minus a year's worth of interest" because that is not allocable as a contribution. But you know that.

But we might not know that (generous) Bob has been supporting his father for years (Bob doesn't ever feel the need to share that information) and who just happens to be diagnosed with CV.

I've lost track of the partial termination question. Are you sure it is not in another thread? IAE, something seems off. The existence of a partial termination is plan year based. So, the relevant issue is whether an individual is an affected participant with respect to a given plan year. If yes, then they are 100% vested in the account as of the last day of the plan year. The account AS OF the last day of the plan year INCLUDES all amounts allocated on an accrual basis for the plan year.

For those that understand, no explanation is necessary. For those that don't, no explanation is possible. Might I refer the concept to the client's counsel? Sure. But that suggestion isn't coming from me.

It is NOT a tough issue. It isn't even close to a tough issue. Other than arm waving nobody has provided anything that puts the above into any sort of prohibited activity. Here's a slightly different example. Take the case of a plan that defines employee grouping as "everybody in their own group". Putting aside the (red hering) as to whether it is individually directed or pooled, since the issue is the same in either case, the IRS is on record as saying that there must be a written instruction to the Trustee/Administrator from the Plan Sponsor that evidences who gets an allocation from the funds deposited. So, the question is when this written instruction must be made? I believe there is a direct reference in the IRM that makes it clear that this written instruction must be made no later than the due date of the tax return of the Plan Sponsor. Given the (obviously false) assertion that the actual allocation must be made when contributed there would be absolutely no reason to define such a deadline. None. This question came up towards the end of the Ask The Experts panel at the 2019 Los Angeles Advanced Actuarial conference. I initially answered that the deadline was well after the plan year end. But I was getting that tingly sensation when you know there is a better answer. A few minutes before the end of the session, as Kevin Donovan was approaching the microphone to provide the exact answer, I beat him to the punch by citing the correct deadline for the writing in question. Since he was already at the microphone he stuck around long enough to say "agreed" if I recall correctly the sequence of events. So, to those who know him, my citation is "Kevin Donovan".

Why wouldn't they be able to?