duckthing

MassMutual put one out a few years ago. I don't know if there's one that has been updated recently, though!

I don't know the exact context but I suspect his statement was more along the lines of "check the document carefully, because your document may say that if you fail the ratio test at 70%, you have to use the failsafe provisions to bring people in" -- that is, you have to follow the document, and if the document says to bring people in even if you could potentially have passed the ABT with the original population, that's what you have to do.

The plan document's definitions section should have an entry for "Key Employee" which should give the answer precisely. Our says it's based on ownership at any point during the year, so hopefully yours is similarly decisive!

This is just off the top of my head, but I think the answer to both of those is "yes". The plan's decision to call something an RMD doesn't make it an RMD if it's not actually required under 401(a)(9).

The answer I'll give here is what I think is the safe one: you can do so if the plan document or the plan's written QDRO or other administrative procedures say that's what will be done if you receive that sort of notification. I would not advise a fiduciary to delay or deny a lawful claim under a DRO that they've already qualified just based on "being told" something might be coming that changes it.

Just a few quick thoughts. Here's the first red flag for me! Did they have a TPA at any point prior to her involvement? Were any corrections ever made, to the defects she identified or to others? The fact that they froze the plan and then evidently did nothing else worries me. I don't know how the plan administrator or another fiduciary would explain the decision to freeze the plan (which is not a correction) to buy time to correct defects, then not take steps toward any substantive corrective action for several more years. Of course there may be more going on behind the scenes, but that's my initial reaction. I think your response to her is a good one. Find out what they want to do, then worry about how much of it is reasonable or even possible. In any case, neither "just leave it frozen" nor "terminate and hope nobody looks closely" are good options, as you know! My general sense is there is more going on with this plan than is visible to either of you at the moment. Digging in at the level required to prepare, say, a VCP filing is probably going to uncover more issues. The project could end up being considerably more involved if they'd like to keep the plan as a going concern; I think you'd need to make a strong case to the examiner that the significant operational defects have been addressed at the administrative/"process" level and that they won't be seeing a similar filing a few years from now for the same kinds of problems. Honestly, that issue is probably the least concerning part of the post to me! I'll give a "definite maybe" on this one. At a glance I think it could be fine depending on circumstances and documentation, assuming the loan satisfies the plan and IRS requirements aside from this question. There's some good, fairly recent discussion at: For what it's worth, I'd bet at least a dollar or two that this loan has other problems as well.

@stayingbusy, as you wait to hear back, it's worth checking out Notice 2023-43. There have been some changes to EPCRS since this thread was posted and the plan may have options today that weren't available when this thread was posted.

Their deferrals need to be funded as soon as it can reasonably be done once their self-employment income is determined. In other words, this is tied to their personal tax filing, not to the business's due date. Their personal tax filing deadline (including any possible extensions) is the latest possible date those deferrals can be deposited -- it is not quite as simple as "they have until that date". The usual rules on deposits being required as soon as they can reasonably be segregated from general employer assets still applies here.

That's my recollection as well. And yes, the DOL/VFCP calculator uses that rate. I know the usual caveat with that calculator is "only to be used if actually filing under VFCP" but I think this is the exception.

I'm not, and I doubt many TPAs are, for two reasons. First, the 5330 extension request is not automatically granted like the 5500/8955-SSA extensions are. Second, even if the filing extension is approved, that does not grant extra time to actually pay the excise tax. We file the 5330 as soon as possible. My understanding on this has always been that if the IRS wants to penalize you for late filing, they'll let you know. Issue 1 is real, but not material. I would never advise a client to ignore the issue (or to do or not do anything else, for that matter) based on perceived audit risk. Issues 3 and 4 are related in my mind. I would let the client know what the rules are and what corrective action should be taken (lost earnings, Form 5330 filing), and what our fees would be to do the work. If they want to be reimbursed for that expense by going after the recordkeeper whose delay caused the issue, that's between them and the recordkeeper in my mind. I don't think you get off the hook quite that easily here. I think in this situation it would be considered reasonable to use the Fed underpayment rate to determine lost earnings, but I don't have a citation or guidance off the top of my head

If you file the 5500 on an accrual basis, the 12/31/22 asset value would include the deferrals that were withheld but not yet deposited to the trust by EOY. This also avoids the problem of filing the "first year" 5500 for 2023 showing a 2022 plan effective date and having the IRS ask why no 2022 5500 was filed. Given the timeline you mentioned, I would recommend also confirming the timeliness of those deposits if you haven't done so already.

Agreed, and I would be very surprised if the plan document doesn't address this clearly. The document almost certainly does not say that participants can be paid out "after a distributable event" or something along those lines. It's much more likely it defines termination distributions, or distributions after severance of employment, and then stipulates that those are payable only to terminated participants who have had a severance that ends their employment with the sponsor/adopting employer. (A rehired employee would not be a terminated participant and would not fall in this category.) Our document specifically says "No distribution shall be made if the Participant is rehired by the Employer before payments commence" which is nice because it leaves no room for ambiguity!

EBP, I agree -- it's not spelled out. And unfortunately the Q&A is no more illuminating; there's nothing specific there that addressed whether or not ACP testing would be required under such an arrangement. I guess I figured the "and keep the ACP safe harbor" was implied by the question and answer, since it's not much of a question otherwise... but maybe it's not so simple!

My original thinking was that it would require ACP testing, lose the TH exemption, etc. but this is apparently not an issue. EOB says: So as long as the HCE match formula is strictly "worse" than the NCHE formula at every level of deferrals, it doesn't look like it poses any problems.

The language about prohibited mid-year changes applies to plans that are already safe harbor plans. It does not apply to a plan that does not have a safe harbor provision in place. The "(or add)" that you bolded is referring to modifying or adding a match formula to an existing safe harbor plan, not turning a non-safe harbor plan into a safe harbor match plan mid-year. On your second comment, a plan that suspends safe harbor contributions mid-year is not a safe harbor plan for that year. They cannot re-add a safe harbor match mid-year to become a safe harbor plan again for the year.