Tom Poje

I'm still baffled, I didn't know there were dividends and stuff attached to forfeitures the basic forfeiture data is on one the plan spec reports, but I'm unclear what more is desired. sorry.

just what are you trying to pull? I'm not quite sure what you are asking.

prior to 2006 you could have allocation conditions and satisfy safe harbor, but now you can't, so really the only thing special about the discretionary safe harbor match is it is subject to vesting. for ACP testing you either include all match or you could exclude 4% of the match. I think the reasoning being you used the Basic match to satisfy the ADP test, so it is optional to include or exclude from ACP testing. (Because if it was the only match you wouldn't run the ACP test anyway.

a typical discretionary match that would satisfy safe harbor (in addition to any other safe harbor match) would be either 100% up to 4% or 66.667% up to 6% deferred these satisfy the max deferral considered at the required cap of 6% and the max discretionary match at 4% of compensation. Again, that is added to any other safe harbor match. I've seen 3 tiered formulas - basic match required match and discretionary match I realize the goal is to get people to defer more, but if there is any match above 6% deferral then you have ACP testing, because the govt doesn't expect NHCEs on the whole to be able to defer more than 6%, and they don't want to give a free ride on the ACP test to the HCEs under those expectations

At the 1996 ASPPA annual fall conference (Q and A #84), the IRS representative indicated that in the case of an initial plan year in which the employer has also only been in existence for that time period there is still no short plan year—it is a 12 month period working backward from the end of the plan year—unless, of course, the document has defined it otherwise. 1997 Conference (Q and A #30) it was indicated the effective date could predate the existence of the company. (Of course comments made at Conferences might not reflect an actual Treasury position, but...) so, thinking out loud, since we haven't reached the end of the year, can you amend the effective date of the plan?????

my notes indicate there are a couple of issues Under a special de minimis rule, however, if the total amount of the excess deferral is less than $100 (excluding income), the distribution is taxed in the year it was distributed. Only one 1099-R is issued for the year of distribution. The taxpayer is responsible for reporting the excess deferral in the year it occurred (Though for the life of me I can't find where I have that note from - though they might be bad notes and should only apply to ADP/ACP failures, though it does seem consistent with late corrections under EPCRS) If the excess deferral is after 4/15 I have the following notes from some old Relius notes: Example. A participant deferred $16,575 in her 401(k) account in 2011. The 402(g) limit was $16,500 for 2011. The statutory correction method is to distribute the $75 before April 15 of the calendar year following the year the excess arose. The plan would issue a 2012 Form 1099-R. If the corrective distribution does not occur by that deadline, the plan is subject to disqualification and the participant is subject to double taxation. Assume the plan fails to correct the excess deferral by April 15, 2012, and therefore seeks to correct this failure under the self-correction program in EPCRS. Since the excess amount is $100 or less, no distribution of the $75 excess amount is required. The employer must send the participant notice that the $75 is not eligible for tax-favored treatment, including that it is not eligible for rollover. Additionally, the plan must track earnings on the $75 until the participant takes a distribution of the excess amounts. The participant decides to leave his money in the plan for 30 years. Finally, when the participant withdraws his full account balance, the plan administrator must issue two Forms 1099-R, one reflects the rollover amount and the other reflects the $75 plus earnings over 30 years. The corrective distribution may not be rolled over. Note: Tracking the excess amount would not be practical so the better correction would be a corrective distribution when the employer discovers the error. http://www.relius.net/News/TechnicalUpdateDetails.aspx?T=P&1=1&ID=941 publication 525 has the following: Report a loss on a corrective distribution of an excess deferral in the year the excess amount (reduced by the loss) is distributed to you. Include the loss as a negative amount on Form 1040, line 21 and identify it as “Loss on Excess Deferral Distribution.” ..................... I tried a search and back in 2010 I posted the following: if I understand the rules correctly, if there was a loss then the world stops, hell freezes over, planets collide and all other sorts of strange things happen. you end up reporting the loss as 'other income on your tax form. no 1099R for the loss and everyone gets confused as to what happens. you send the person a note signed by mom saying you can report the loss. or something like that. I looked it up once and tried to erase it from my memory but it is still partially buried there. 　 　

choose from random dice roll, good faith effort or any other means at your disposal The ERSIA Outline Book has the following (emphasis mine): Chapter 1, Definition – Highly Compensated Employees Part G ERISA Outline Book 4.Acquisition or disposition of the ownership of an entity that changes the membership of the related group. The IRS has not provided guidance on how the HCE determination should be made when a new related group member is added during a year, or one is disposed of during the year. 5.Adding new related group member. When a related group member is added during the plan year, a reasonable approach should be to treat all related group members, including the new member, as a single employer in applying the HCE tests. It should be reasonable to take this approach, regardless of whether the new related group member was added as of the first day of the plan year or sometime during the plan year, although some plan administrators might modify their approach depending on how late in the plan year the new related group member was added, and whether looking at the data on a combined basis is practical. 5.a.Five-percent owner test. Applying this approach to the five-percent owner test, any employee who owns more than 5% of any member of the related group, including the new member, would be treated as an HCE with respect to all the members of the related group for that plan year. Ownership in both the lookback year and the determination year would be taken into account, even though the employers were not related in the lookback year. Remember, ownership is not aggregated to determine whether the percentage exceeds 5%. However, by treating the employers as a single employer, more than 5% ownership with any of the related group members makes an employee an HCE with respect to all of the related group members. 5.b.Compensation test. Applying this approach to the compensation test, any employee in the determination year whose compensation for the lookback year exceeded the applicable dollar amount with any of the related group members, would be treated as an HCE with respect to all the members of the related group. This should be reasonable, even though the employers were not part of a related group in the lookback year.

the ERISA Outline Book has Chapter 6 Section VII Part A 3.a.Different rule for participants who die before RBD. If a participant dies before the RBD, the first distribution calendar year is generally the calendar year that immediately follows the year of the participant's death, unless a five-year rule is used to satisfy the minimum distribution obligation. For more details on death before the RBD, see Part F of this section. you could look at 1.401(a)(9)-3 Which has the title Death before required beginning date

by the way, as part of the Family Savings Act there is the following, so if they ever get things finalized for us.... SEC. 109. Exemption from required minimum distribution rules for individuals with certain account balances. (a) In general.—Section 401(a)(9) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph: “(H) EXCEPTION FROM REQUIRED MINIMUM DISTRIBUTIONS DURING LIFE OF EMPLOYEE WHERE ASSETS DO NOT EXCEED $50,000.— “(i) IN GENERAL.—If on the last day of any calendar year the aggregate value of an employee’s entire interest under all applicable eligible retirement plans does not exceed $50,000, then the requirements of subparagraph (A) with respect to any distribution relating to such year shall not apply with respect to such employee. “(ii) APPLICABLE ELIGIBLE RETIREMENT PLAN.—For purposes of this subparagraph, the term ‘applicable eligible retirement plan’ means an eligible retirement plan (as defined in section 402(c)(8)(B)) other than a defined benefit plan. “(iii) LIMIT ON REQUIRED MINIMUM DISTRIBUTION.—The required minimum distribution determined under subparagraph (A) for an employee under all applicable eligible retirement plans shall not exceed an amount equal to the excess of— “(I) the aggregate value of an employee’s entire interest under such plans on the last day of the calendar year to which such distribution relates, over “(II) the dollar amount in effect under clause (i) for such calendar year. The Secretary in regulations or other guidance may provide how such amount shall be distributed in the case of an individual with more than one applicable eligible retirement plan. “(iv) INFLATION ADJUSTMENT.—In the case of any calendar year beginning after 2019, the $50,000 amount in clause (i) shall be increased by an amount equal to— “(I) such dollar amount, multiplied by “(II) the cost of living adjustment determined under section 1(f)(3) for the calendar year, determined by substituting ‘calendar year 2018’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof. Any increase determined under this clause shall be rounded to the next lowest multiple of $5,000.

ftwilliam sent a similar comment in the form of a Q and A for example Q: When is an amendment required to the plan documents? A: The Proposed Regs state, “…if these regulations are finalized as they have been proposed, plan sponsors will need to amend their plans’ hardship distribution provisions.” The Proposed Regs also state that all provisions of the final regulations will have the same amendment deadline. It appears plan sponsors may rely on the Proposed Regs in operation prior to the plan being amended. Although the Proposed Regs discuss timing of the amendments for individually designed plans, they are silent regarding amendments for pre-approved plans. As such, it is unclear on the deadline for amending ftwilliam.com plan documents. If or when the IRS provides additional information on amendments, we will send you an additional correspondence. ................................................. I suspect if current plan allows hardships from all sources, then in operation you would now include the ability to take hardships from safe harbor sources in the future as well. if document indicated hardship from deferrals only then I would suspect you wouldn't want to include safe harbor in the future as well. whether you continue 6 month suspension for 2019 is your choice. in other words your 'checklist' of how you are operating until amending the plan would simply come from the possible changes and a simply yes or no how you are operating in practice. SEC. 41113. Modification of rules governing hardship distributions. 6 months suspension of deferrals after taking a hardship is eliminated (the revised regulations under this section shall apply to plan years beginning after December 31, 2018). YES or NO for 2019 SEC. 41114. Modification of rules relating to hardship withdrawals from cash or deferred arrangements. Section 401(k) is amended by adding a new section 14 (14) SPECIAL RULES RELATING TO HARDSHIP WITHDRAWALS.—For purposes of paragraph (2)(B)(i)(IV)— (A) AMOUNTS WHICH MAY BE WITHDRAWN.—The following amounts may be distributed upon hardship of the employee: (i) Contributions to a profit-sharing or stock bonus plan to which section 402(e)(3) applies (that is, a 401k plan). (ii) Qualified nonelective contributions (as defined in subsection (m)(4)(C)). QNECs can be taken YES or NO - tis includes SHNECs (iii) Qualified matching contributions described in paragraph (3)(D)(ii)(I). QMACs can be taken YES or NO this includes SHMACs (iv) Earnings on any contributions described in clause (i), (ii), or (iii). Earnings are now includable (B) NO REQUIREMENT TO TAKE AVAILABLE LOAN –(no longer required a participant must take a loan first before a hardship) YES or NO

since all are eligible for the first match I wouldn't think coverage is an issue. lets suppose everyone receive 100% up to 4%, and then all those active received an additional 100% up to 4% .I think (in addition to the ACP test) it might be a BRF issue - you would for all practicality, have 2 tiers one group at 100% up to 4% and another ay 200% up to 4%. but then, I am a Grinch, so maybe it is just me.... I'm not sure you could even have such a formula in a prototype

here is one comment from an ASPPA conference (which of course might or might not be valid) dang it, it is notes from my research from a talk I gave in 2012 so maybe even less reliable! but it was from a Q and A the year before. Margaret became a participant in a 401(k) plan in the 2010 plan year, which ends December 31, 2010. For 2010, Margaret did not satisfy any of the key employee tests. The plan is top heavy for 2011 because the top heavy ratio exceeds 60%. The top heavy ratio is computed as of 12/31/2010, which is the determination date for the 2011 plan year. For that calculation, Margaret's account balance as of 12/31/2010 is treated as a non-key employee account balance. During the 2011 plan year, Margaret marries the majority owner of the company. This makes her a more-than-5% owner of the company by attribution. Does Margaret receive a top heavy minimum contribution for the 2011 plan year? Should she have received a top heavy contribution for the 2010 plan year even though the employer didn't fund the contribution until 2011 after Margaret already had married the owner? IRS response. There is no guidance directly on point, but the most reasonable interpretation is that Margaret receives a top-heavy minimum contribution for 2011. For top-heavy purposes, a single determination date is prescribed by IRC § 416(g)(4) for determining both whether the plan is top-heavy and whether an employee is a key or non-key employee. While it would be intuitive to adjust this determination based on events occurring within the year after the determination date, this interpolates a condition that is not in the statute. Note that the House Report (H.R. Rep. No. 107-51) and Conference Committee Report (H.R. Conf. Rep. No. 107-84) accompanying EGTRRA § 613 both provide that the determination date is used for identifying who is a key employee in the following year. 2011 ASPPA Conference #47

I originally hail from Michigan. The city Hell is only 59 miles from Detroit, so the situation is even funnier, or at least appropriate.

the following showed up under the category Predictions by 2030 The problem is there are 2 parts to this one. the second part went 'unanswered'. The first part is easy, Who are the Detroit Lions? Seems to me a correct response to the second part would be "No. Never ever. Even if hell freezes over. Even if they gave the Lions a 30 point lead to start the game. Even if the refs were bribed (more so than usual)"

so Congress passed a Bill, and of course misc things get tacked on, including the new hardship rules. even without the proposed regs or final regs it was indicated you could take hardships from all sources. do you expect them to come back in the final regs and say 'we change our minds you can't take hardships from all sources?" or, do you expect your document provider to issue an interim amendment "yes you can do this but only amounts deposited after 1/1/2019" or " you can take a hardship from all sources if you stand on your head and sacrifice a goat on Tuesday".... I could see the unanswered questions like "How do you handle someone who took a hardship in Nov. Does the 6 month suspension for deferrals still apply" need to be finalized - and even that disappears by July of 2019.

you could test on an allocation basis, and impute disparity and you would pass testing as all should have the same e-bar (assuming you don't have 30% NHCE that receive nothing because last day rule or something like that.) plus, no gateway since tested on allocation basis

The IRS FIRE site will be down for scheduled maintenance starting December 5, 2018 at 6 PM Eastern Standard Time through January 7, 2019, but won’t be available until January 10, 2019. so I guess if you have an 8955-SSA due by 12/31 you need to check special exemption and say "because you shut the website down!"??? (their annual shutdown)

instead, let's say you have a discretionary profit sharing. would you say you could give 4% to owner and staff and 0% to non owner HCE or would you say you have to have it clearly defined in the doc that they are in groups?

I think union plans can have 100% after 5 years, and we had one that had a cliff schedule 100% after 3 years on new $, but 100% after 5 years no matter what.

this is the area (415 issues) the IRS agents (at least at one ASPPA Conference) concluded made no sense. supposedly you would count the 2017 contribution toward the 2018 415 limit because it was made after 10/15. But if you wait until 2019 to make the contribution (corrective contribution for 2017 under EPCRS) then it counts toward the 2017 415 limit. And of course, if someone quit in 2017, they are due the safe harbor, but would have no comp in 2018, so no 415 limit, which means no contribution! so the 'rules' for 415 limit make no sense in regards to this area.

I suspect it will be like other 'proposed' amendment changes. you can operate in 'good faith' until the actual amendment is available. you can't use them until 1/1 anyway which is a month and a half away. I'm sure there will be more info available until then. the proposed regs are effective for plan years beginning after 12/31/2018, they weren't published until November, and they take comments for 60 days which would be into the new year. so why give an effective date but take comments after that date? (v) Effective/applicability date—(A) General rule. This paragraph (d)(3) applies to distributions made in plan years beginning after December 31, 2018. Except as otherwise provided in this paragraph (d)(3)(v), the rules in 26 CFR 1.401(k)-1(d)(3) (revised as of April 1, 2018) apply to distributions made in plan years beginning before January 1, 2019. they also have language for no more suspension of deferrals.. In light of the timing of the publication of these proposed regulations, the requirement to obtain this representation would only apply for a distribution that is made on or after January 1, 2020. which to me says "we know we call these proposed, but basically they are good to go, but some don't have to be implemented until 2020"

I suppose it depends on what one feels what is the intent of the regulations. 1.401(a)(4)-11(g)(4) says corrective amendment must have substance...can't be taken into account to the extent it applies to nonvested employees who terminated on or before close of the preceding year, and who therefore would receive no economic benefit so, it is a QNEC so that technically doesn't apply if you take a strict reading of this reg. (?) but what is the intent of the reg? we know ahead of time when the QNEC is made there are distribution fees, and so ultimately such people would receive no economic benefit. that doesn't seem to be the intent of the reg you can use someone to help pass the test and then the person gets nothing (granted one has no control over distribution fee, and for all practical purposes the company has thus 'made' a contribution to the investment house rather than the participant) but that is the end result. if the regs were written to cover every possibility that may arise they would go on and on...oh wait, they already do. at least to me it would seem more logical if it were possible the company paid the distribution fees in such situations, but I don't think there are any guidelines when stuff like this happens.

next some of you folks will insist on changing the term to 'catsup' limit instead of 'ketchup' limit. .............. I did at least correct the calculation in my spreadsheet for SIMPLE plans, which since I have never worked on such a plan I never cared about. oh well.

my apologies if I took all the fun and suspense out of waiting for the numbers. next time I will have to post as "Warning: Spoiler Alert"

I guess it also eliminates the "Maybe we will be safe harbor"