bmore1147

OK- appreciate the response, thanks for the insight

Luke- Thanks for the response- this was certainly my concern as the language under EACA appear to prevent mid-year amendments- I sincerely appreciate the response- We will most likely conduct the QDIA reset in august and default % reenrollment 1/1 - was hoping to complete this in one singular action, but it appears this isn't possible. Thanks for the response

client is looking to do a QDIA reset/ACA reenrollment mid year- the plan currently uses EACA and it can't be amended to the new reset deferral percentage mid year - anyone every opt out of EACA mid year? is it a problem to drop the EACA protections mid year and use a standard ACA/auto escalation for a mid year reenrollment. plan is not safe harbor. Any help would be appreciated.

for non safe harbor contributions, if the definition of comp doesn't pass 414s can you satisfy if you pass general test?

until the laws are changed to allow employers to write off or have some tax benefit for direct student loan payments for existing student loans, we will continue to see this solution gain traction- multiple firms, including Travelers company plan, have introduced a student loan contribution through the 401k plan - given the nuances and the testing requirements- especially since a NE contribution like this would probably be better suited for individual rate groups, TPA's are a far superior administrator for this solution than a bundled recordkeeper fumbling through this, as Empower most likely will given that even QNEC's need to pass coverage.

I read the PLR, but there was no mention of this contribution being a QNEC - specifically, from the PLR "The SLR nonelective contribution will be subject to all applicable plan qualification requirements including, but not limited to, eligibility, vesting, and distribution rules, contribution limits, and coverage and nondiscrimination testing" If this was a QNEC, it would be 100% immediate vesting - so I'm confused as to how this was explained in the PLR and how it appears to be executed. I'm trying to reconcile how QNEC, a separate money source, was derived from this PLR that made no mention of it and appears to place non-elective eligibility/vesting requirements on this contribution

Is anyone familiar with the Abbott PLR that was used to implement the student loan contribution arrangement? I read the PLR, and was under the impression that this was a Non-Elective contribution, subject to all the eligibility and vesting requirements of the NE contribution - However, Empower just launched a Student Loan program, and the employer contribution will be made as a QNEC - my questions 1- was the PLR based on a QNEC? That term and any reference to that term was not part of the PLR. 2. if you do proceed with a QNEC - can you place a last day/1000 hours requirement on the contribution? I assume you can't do anything about vesting https://www.groom.com/resources/irs-private-ruling-on-student-loan-benefit-under-401k-plan-likely-to-fuel-interest/

the plan must pass ACP if they are making voluntary after-tax contributions- having a Safe Harbor Match does not automatically satisfy the ACP if you are making After-Tax

congress introduced a few bipartisan bills that could have an impact on NDT- anyone had a look yet- specifically S3221 Retirement Felexibility act this one specifically is designed to incentivize the using ACA and auto escalation and provide some flexibility on SH contributions - anyone have thoughts on this? i was curious as to the flexibility of SH contributions to satisfy testing- it appears to look similar to QACA - see below EC. 2. ADDITIONAL NONDISCRIMINATION SAFE HARBOR FOR AUTOMATIC CONTRIBUTION ARRANGEMENTS. (a) In General.—Subsection (k) of section 401 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: “(14) SPECIAL NONELECTIVE AND MATCHING CONTRIBUTION RULES FOR SMALL EMPLOYERS.— “(A) IN GENERAL.—In the case of a cash or deferred arrangement maintained by an eligible employer (as defined in section 408(p)(2)(C)(i)), for purposes of paragraph (13), the arrangement shall be treated as meeting the requirements of subparagraph (D) thereof if under the arrangement, the total elective deferrals (as defined in section 402(g)(3)(A)) with respect to any employee do not exceed an amount equal to the applicable percentage of the limitation otherwise applicable under section 402(g). “(B) APPLICABLE PERCENTAGE.—For purposes of subparagraph (A), the applicable percentage with respect to an arrangement is— “(i) 40 percent in the case of an arrangement which does not meet the requirements of paragraph (13)(D) and is not described in clause (ii) or (iii), “(ii) 60 percent in the case of an arrangement which is not described in clause (iii) and which would meet the requirements of paragraph (13)(D) if— “(I) ‘equal to at least’ were substituted for ‘equal to’ in clause (i)(I) thereof, “(II) ‘2 percent of compensation, and such matching contributions meet the requirement of subsection (m)(11)(B)’ were substituted for ‘6 percent of compensation’ in clause (i)(I) thereof, and “(III) ‘1 percent’ were substituted for ‘3 percent’ in clause (i)(II) thereof, and “(iii) 80 percent in the case of an arrangement which would meet the requirements of paragraph (13)(D) if— “(I) ‘equal to at least’ were substituted for ‘equal to’ in clause (i)(I) thereof,

did this get posted in the wrong place? It doesn't seem like a complex issue, but i haven't seen many matching formulas structured to be between certain deferral percentages, so i thought i would see if ACP is the only concern. i don't see a problem with facts and circumstances/reasonability because it would actually prevent HCE's making over 205k from getting the full discretionary match since a 9% deferral on 206k is $18,540... but i will defer to more experienced pros on this forum

I'm working with a plan that is considering implementing a QACA SH match on 1/1/2019, but they would also like to match additional contributions over the QACA match. Specifically, they want to match 50% of contributions on deferrals between 7-10% - auto escalating up to 10% using the QACA AE provision. They want to try and get total employee contributions over 15%, but encourage it with the discretionary match over the QACA formula. is the discretionary match subject only to ACP? are there other considerations with offering this additional match above the SH match limit? any help would be appreciated.

Thanks Patricia- A couple of questions Company A and Company B are still unrelated separate entities - they are not part of a controlled group, they are not ASG's- the JOC that was created does not own either entity - to that extent - can these unrelated separate employers adopt a single plan? Wouldn't we need to do a MEP if they were to adopt a plan together? Happy to provide more information. thanks

context 2 separate entities created a 501(c)(3) Joint operating company (JOC)- essentially a virtual merger with no transfer of assets- there are no employees of the JOC - any expenses for the JOC are invoiced to the separate entities. The separate entities share no common ownership. the companies want to set up 1 plan and align their other benefit programs, create efficiencies in management, finance, etc. Company A - church 403b Company B church 401(k) My question is- Could the JOC sponsor a plan where the 2 separate entities are adopting employers? could the assets be merged into this plan? (i know the DoT hasn't ruled on the compliance requirements for church 401k/403b mergers resulting from PATH act, expected sometime this year) I think it is safer to keep both plans separate and align the plan design previsions across both plans. I would imagine that the JOC could be set up as a PEO and sponsor a plan but i think for simplicity keeping both plans separate is probably the most appropriate path - if anyone has any guidance on this issue or has worked with it in the past, that would be helpful - can provide more information as requested.

assuming you pass- do you use that for ACP- or is there flexibility

Sorry if this is a newb question, but any help would be appreciated- given the new overtime rules going into effect I am concerned about some clients increased responsibilities if they don't exclude overtime my question is - If you only exclude overtime for matching contributions, do you still run compensation test? If so- assuming you pass - do you use that for ACP? or is there flexibility? I really want to make sure of what happens if we are only making a compensation adjustment to matching contributions. Thanks

Agreed- QDIA mapping is always preferable, and I believe its not because of the relief of the QDIA vehicle, but that it creates an affirmative election for anyone not in the QDIA- especially considering a few of my clients who have had DOL audits have been asked to provide documentation around affirmative elections - So back to my original questions 1. if you map like-to-like - are the affirmative investment elections and the corresponding documentation from the seller plan still acceptable if the buyer plan is DOL audited post merger- does the buyer need new affirmative election forms when the plans are merged? 2. if the seller plan was 404© compliant (assuming buyer plan is also) are the assets still protected under 404c? what if you don't have affirmative election documentation from seller plan? - essentially- if you don't have the documentation- can you lose the protection for the assets that came over?

PPA extended relief of mapping participant assets assuming the following conditions are met- and provided relief so long as assets were mapped to funds of similar risk/return profiles.  The participant exercised control over their investments prior to the change (i.e. the participant and not the plan’s fiduciaries made the original investment allocation decision),   The change results in a reallocation of amounts invested in the discontinued option to a new or remaining investment option under the plan,   The remaining or new investment option is “reasonably similar” in terms of risk and return to the discontinued option,   Participants are notified of the change at least 30 but not more than 60 days prior to the effective date of the change. The notice must inform participants that the change will occur unless instructions are received to the contrary, and   The participant has not provided affirmative investment instructions to move to another investment option prior to the effective date of the change.

Can you clarify this comment? If a participant makes an active election from a broad range of investments (assuming the action and investments, along with any disclosures- satisfies 404©) and then at some point one of those investments is determined to no longer be prudent, and is removed by the plan sponsor (satisfying 404a1b and 408b-2c duty to monitor) then those assets are no longer protected under 404c because the participant did not make an active election? Even though that participant initially made an active election? Assume this all happens in the same plan, no M&A - If a participant was in the plan for 20-30 years, and the lineup turned over in that period- then if they were mapped like-like there would be no protection, even if they had made active elections initially? Can you cite?

Agreed- But if they had previously elected that investment choice in the seller plan, that active election cannot carry over in the merged plan? Similar to how it carries over when investments are removed/replaced in a plan - but given the potential blackout it may not apply.

In a stock sale Merger - I have a few questions about the mapping process for seller assets 1. if you map like-to-like - are the affirmative investment elections and the corresponding documentation from the seller plan still acceptable if the buyer plan is DOL audited post merger- does the buyer need new affirmative election forms when the plans are merged? 2. if the seller plan was 404© compliant (assuming buyer plan is also) are the assets still protected under 404c? what if you don't have affirmative election documentation from seller plan? - essentially- if you don't have the documentation- can you lose the protection for the assets that came over? Always advocate for QDIA mapping- because of the protection and it creates affirmative elections for anyone that opts out - but some push for like-like to minimize participant disruption. Thanks for any help. Happy Thanksgiving