JustMe

Thank you for these responses. That is correct. The plan has yet to distribute assets, but did not file for a D-letter. Not sure what the hold up was on the distribution of assets.

We have a defined benefit plan that terminated in 2018 and was underfunded at the time of termination. The plan sponsor wants to fund the shortfall now and then pay out the benefits. Is this permitted since the plan terminated or would the funding need to have occurred in 2018?

I would like some help determining when to use the separation from service rule/same desk rule and severance from employment rule. I feel that I am being told that the separation from service/same desk rule no longer apply, but the fact that the two rules continue to be discussed makes me feel that I am missing something. If I have a partnership that dissolves (and likewise, terminates its 401(k) plan) and a few partners from that partnership start a new business, hire basically the same staff, and start a new 401(k) plan, what rules apply? Is the new partnership a predecessor employer for terms of service crediting? Do the staff members that went from Old partnership to New partnership have a distributable event? Do the coverage transaction rules of 410(b) apply to the New partnership plan? Do I care about this if Old partnership plan terminated and New partnership started "anew" and both plans were safe harbor? Potential wrinkle - or, perhaps, opportunity for planning advice - What if New partnership simply spins out of Old partnership's plan and then Old partnership terminates the "remaining" plan? Any change in answers above? Clearly no distributable event issue since the assets would come to New partnership in the form of a trustee-to-trustee transfer; assuming service crediting would automatically apply; but what of coverage issues? Is there a reason why one would want to terminate the plan rather than the spin-off solution? Assuming the New partnership would "take on" any disqualification defects of the Old partnership plan in the spin-off, whereas those qualification defects would terminate with the Old partnership plan if it terminated. Any help to resolve this question I've been fighting for too long is greatly appreciated! Any issues I'm overlooking?

Thank you all for this information.

We recently discovered that our client/owner didn't have any eligible plan compensation but has funded the maximum 415 limit to both DB and DC plans for years. Thoughts on how to correct aside from basically removing all contributions and amending the company's tax returns?

Is anyone being asked if a plan can fund a contribution to their terminated participants now since there are so many people being terminated/severed, etc.? It may be a BRF issue that some are benefiting from receiving a contribution now, versus later, but if it impacts only NHCEs... Is it even a possibility to fund some but not all participants?

Thank you all for your comments.

Do any TPAs list themselves as Trustee in their client's plan document if they provide Administrative "trustee" services, such as benchmarking fees, confirming deposit of contributions in the plan, signing off on distributions, etc.? This is not 3(16) services. If there is a service agreement in place with such services indicated, what is the benefit of putting the information in the plan document?

Could an Qualified Individual take a CARES Act distribution from a governmental 457 plan and repay that distribution over the next 3 years to the same governmental entity's defined benefit plan rather than the 457 plan? I believe so based on the language below, but want to see if anyone has any different thoughts. (A) IN GENERAL.—Any individual who receives a coronavirus-related distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received, make 1 or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16), of the Internal Revenue Code of 1986, as the case may be.

Regarding the repayment 1-year later - is that still beginning 1/1/2021? Or 1-year from the date of the loan? I am having a very tough time with this 1-year delay but that payments still must begin no later than 1/1/2021. I feel that many plan sponsors and participants are being misled regarding the loan repayment suspension period!

I want to instruct participants to move money to cash if they are worried about distribution timing, but do not want to provide investment advice. But the market is fluctuating so significantly, it cannot be timed and participants are upset about their distribution amount.

Any other recordkeepers struggling to keep up with the demand of distributions during Coronavirus? Argument suggestions for participants unable to time the market? Suggestions for limiting liability?

Both the Adoption Agreement and the Base Plan Document state that if the ER maintains a DB plan in addition to the DC plan, the ER may elect to provide the THM allocation in the DC plan but increasing the minimum allocation from 3% to 5%....so I guess you've got me there. I was just wondering if, perhaps a frozen DB plan would reduce that amount. No? If no one has reached the 1,000 hour requirement and there is such a requirement in the plan, could the plan be amended to reduce the THM to 3%?

If a plan sponsor maintains both a cash balance plan and a defined contribution plan and the plans are top heavy, it is my understanding that the top heavy minimum must still be funded, regardless of the DB plan’s frozen status. But my question is, would that contribution amount be 3% or 5% and would the amount depend on the contributions funded by the Key employees?

Great, thank you!!!

Bri, thank you very much! Yes, looking to pass 410(b). So disaggregating them looks as follows: EEs who met 1 YOS requirement as of 1/1/2019: HCEs – 4 (all 4 benefitting) NHCEs – 18 (all 18 benefitting) (add 1 more here if considering who met 1 YOS as of 12/31/2019 - also benefitting) EEs who did not met the 1 YOS requirement as of 1/1/2019: HCEs – 1 (benefitting) NHCEs – 6 (1 benefitting – who was hired 3/12/18 so actually did complete 1 YOS by 12/31/2019) (the remainder were hired after 1/1/2019 and so not benefitting) Based on this information, is our coverage rate for the otherwise excludable group 1 of 6 or 17%? Or is it 0 of 5 or 0% since the 1 NHCE actually worked 1 YOS – negating the impact of the early participation requirement for him (not sure that is what I’m trying to say but just determining whether he should be differentiated since he HADN’T worked 1 YOS before he entered the plan)? Could we aggregate and have: 5 of 5 HCEs benefitting = 100% 19 of 24 NHCEs benefitting = 79% !?!?!?

My main question is what is the group for testing purposes when you have an early participation rule in the plan? Will the test result for the current plan year (2019), based on the early participation date as of the first day of the plan year (1/1/2019), be based on employees with a hire date on or after 1/1/2019: 1 of 1 or 100% HCEs benefiting 0 of 5 or 0% HNCEs benefiting = FAILS COVERAGE OR does the coverage group include those eligible for the plan due to being employed before 1/1/2019: 4 of 4 HCE benefiting 20 of 25 NHCEs or 80% benefiting = PASSES COVERAGE

You can only use the early participation rule to disaggregate only the otherwise excludable NHCEs for ADP/ACP purposes, not for coverage purposes. So I still have an issue.

Testing separately with those less than 1 YOS will result in 1 HCE and 5 NHCEs. Only the 1 HCE entered the plan since she was hired on the effective date of the plan and the NHCEs were hired after this date. The NHCEs are subject to the 1 YOS.

Am I thinking this clearly - Client waived eligibility requirements as of the effective date of a new plan and this brings in an HCE hired on the effective date. There are 5 other employees hired after the effective date (all NHCEs) who are subject to the plan's eligibility conditions of 1 YOS and semi-annual entry dates. For coverage purposes we do have 100% of HCEs benefiting and no HNCEs benefiting - coverage failure? Or do we consider the total population and consider 100% of HCEs (HCEs hired on or before effective date + HCEs hired after effective date (here no HCEs hired after effective date)) benefiting v. NHCEs benefiting which is calculated as follows: NHCEs hired on or before effective date / NHCEs hired on or before effective date + NHCEs hired after effective date = NHCE benefiting population ...and that % must be greater than 70% for this waived service condition to pass coverage? I am getting push back that you can have such dual eligibility conditions and there is no need to test for coverage.

I'm in the same boat with another client.... Do you need to provide all the restatements (GUST, EGTRRA, PPA, etc.) or just the original and the interim amendments between the original document and the newly restated document?

Great, thank you so much!

I know that there isn't much guidance, but some help from you all would be greatly appreciated. If an employer wants to implement a setup similar to Abbott Labs (2% loan repayment, 5% "match" to 401(k) plan) and the plan has individual rate groups for a profit sharing allocation, is there a need to amend the plan to allow for this setup? Or is the contract for the "match" for student loan repayments outside of the 401(k) plan and the "match" is really just a discretionary contribution to the PS plan by the employer?

Thank you for your responses. Just an FYI, I spoke with an IRS agent this morning and she said the IRS receives these requests all the time and that they approve them when an employer can show intent to open the plan with items such as corporate minutes, email discussions, deposit of funds to a plan trust, etc. I explained that it is an owner only plan and she said that didn't change her response. So, here's hoping!

Has anyone had any luck with an owner-only plan VCP submission to retroactively initially adopt a plan?