RatherBeGolfing

If it was me, I would make it a three source split going forward: 1. Pre-2020 deferral and profit sharing 2. Deferral 3. Profit Sharing You can always explain why you can't track pre 2020 contribution, but you should track the contributions you can.

Agree with @Bird. Cash basis - No. Accrued - Yes. I dont think the IQPA will go along with not listing it as a receivable since it is the only way the numbers will balance. The explanation and reasoning for NOT listing it as a receivable on an accrual basis is likely more complicated and more work than fixing the 5500.

8/31/2026. Good catch. There is chronological issue with this argument. Per the CARES Act, in order for a payment to be delayed/suspended, it has to be due during the March 27, 2020 - December 31, 2020 period. Therefore, the argument that the loan is not entitled to add 1 year to the maximum loan term because payments were never due fails. The only way I see a loan miss out on the extra year is if the loan, by its original terms, does not have a loan payment due on or before December 31, 2020.

This was cleared up in Notice 2020-50. You get to extend the amortization period by a maximum of one year, regardless of how long payments are suspended. For OPs example, the latest extended due date is 8/30/2026 8/31/2026.

Still active as far as I know, at Faegre Drinker

No. The instructions state they should be reported until the year after, meaning they are not reported the year after. It is basically a different way of saying "reported for each subsequent year, including the year it is fully corrected. It eliminates the possible confusion of using the wording "until corrected", which could be interpreted to mean that you don't have to report it in the year of correction. I just had to explain to the IQPA that she was wrong in insisting that I remove the reported contributions in the year of correction... She is the worker bee doing the leg work, not the audit partner signing off on the financial statements, but still....

I'm a bit curious as to the actual language, be it loan policy or plan document, that "permits" continued loan payments after termination as long as they are initiated within 30 days of termination. Does participant have to make an election? Just a payment? Is it an automatic 30 days, or does the participant elect to continue loan payments and in that case the first payment has to be made within 30 days of termination? Does initiating a distribution trigger an offset in the absence of an election to continue loan payments after termination? Should it? Ideally, this should be part of the distribution form. I want a cash distribution, No I will not continue to make loan payments. In the end, this is further complicated by the CARES suspension of loan payments. Since participant elected a CRD of his account balance, I would give him the benefit of doubt and offset the loan

I just came back to say the same thing.

The date in the file name should not be necessary for chronological sorting, but there are other reasons why you might want to include a date in some of the file names. I wouldn't put a date in every file name though. A good naming convention should not make the file name so long and cluttered that it takes more time than a quick scan to pick your file out out of a folder.

If he has the cashflow or can come up with the funds to do it, couldn't he just make one loan payment now to pay the loan in full and then CRD the account balance? The requirement to make loan payments may be suspended, but nothing prohibits a participant from making loan payments voluntarily to avoid additional interest to accrue. It may be worth it for him to borrow funds now and repay the loan after the distribution, just to get the CRD tax treatment rather than having the loan become taxable in 2021.

I have had many auditors ask for, but I'm not sure if it has been every single one. Might depend on region as well, different training maybe? FWIW, I have had situations where a copy cannot be located, and as long as contributions have been made on time and in the correct amounts, they haven't made it into a major issue.

What Lou S said, but we also request a signed copy for our records. IRS will ask for it in an audit.

Agreed, but I also think the mandatory withholding on a termination distribution vs voluntary withholding on a CRD is relevant.

I would be 100% confident that there is plenty of fiduciary liability associated with offering just one fund and no investment choice in a defined contribution retirement plan.

Pretty sure PenChecks does one-offs at a set $ per search type of thing

How do you account for the distribution after it is rolled over? Ignore it because you already reported it once? Only report earnings on the "rollover"? report it again? Not trying to shoot you down, just trying to work out what the practical implications of the workaround would be, assuming you don't want amend any prior reporting (5500, 8955, 1099,945) From a reporting perspective, Im not sure you can apply constructive receipt to every situation, so you may need to amend 1099s at least.

Amend prior filing?

Wait, you think a pooled plan that is properly diversified would have problems in court because it is pooled?? Yep, participant direction takes away all the risk... Im just gonna leave this here...

How big of an issue is it?

It matters. But if they deferred the comp, you really don't have an option to not make the contribution. You need to correct now by making the deposit, calculating and contributing lost earnings, paying the associated excise taxes, filing VFCP, and possibly amending prior year Form 5500s. As Bill said above, it is really not different from an employee deferring from W-2 comp without the contribution being made to the plan.

Agreed

Im hopeful the participant count issue will be "fixed" prior to implementation. Since we are able to exclude them from testing and employer contributions, it would make sense to exclude for participant count OR only include LTPT participants with an account balance.

Two plans will almost certainly be cheaper. If the audit is the cheaper alternative, it is probably not worth whatever the price is.

This is what comment periods are for... Also, having to include them in the participant count for audit purposes is a bigger issue than vesting in my opinion.

Agreed. But you still think the recipient is the one who has to prove that there is a benefit even though the plan sponsor is required to keep those records?