CuseFan

Personally, I would want the forfeited accounts restored from the master forfeiture account to the extent sufficient, any additional forfeited accounts made whole by the plan sponsor (if necessary), and the lost earnings directly restored to such accounts by the entity responsible for the error and correction - in this case the RK. But I don't see a huge advantage/disadvantage of one method versus the other, unless someone else (TPA) then has to allocate lost earnings from forfeiture account to move them into accounts.

https://www.asppa.org/news/look-new-long-term-part-time-employees-rules https://www.napa-net.org/secure-act-long-term-part-time-employees-qas Here are a couple of articles that appear to opine, especially the NAPA piece (see Q&A#3), that the 3 years of 500-999 hours is only a 401(k) deferral eligibility service provision and does not change any reasonable eligibility class exclusion that may be in the plan. So a truck driver exclusion could continue to apply to all truck drivers whether full-time or part-time. This is obviously the interpretation that makes sense versus an interpretation that would require including PT truck drivers who would be excluded if working FT. The equally obvious disclaimer - do not assume subsequent regulations and/or guidance will clarify with the most logical interpretation, stranger things have come out of the IRS. But I cannot see this going the other way.

yes, good point

If we were talking recent PYEs then I might be more concerned, but seven years down the road it's a safe bet (but won't say guaranteed) that this issue is dead and buried. Yes, it probably would have been safest to vest that person and pay them out, but to do that now might raise the dead, especially if the plan had been filing as an owner-only arrangement since then.

Even if owners accrue, as 50/50 partners I believe they can elect (with spousal consent if married) to forego the portions of their benefits necessary to fully pay all other participants upon plan termination.

That is how I read it. If I'm allowed to make up missed prior deferrals, what good does that do me if they are subject to current year limits together with my current year deferrals? But if that forces a plan sponsor to go back and amend prior returns, I think that would be very draconian/punitive and not make sense.

just a bit outside...

Great points by all. I have not seem documents with that sort of specificity, do your (BL groupies) preapproved plans have that sort of language? Although document preparers have wised up over the years, I still see adoption agreements out there that list salary deferrals allowable up to 100% of pay even though we all know that is an impossibility. Absent specific document language or an employer's (or payroll company's) governing procedures, how about incorporating the withholding hierarchy or stating where 401(k) sits on the hierarchy (subject to applicable law first and employer desires second) within the friendly confines of the salary reduction agreement?

Also, is it essentially the same entity but with a new name and EIN, hence "meet the new boss, same as the old boss"? That is, the person signing for the new boss is/was also authorized to sign for the old boss? If so, then there are probably no issues following Bird's flight, but if this is a change in ownership, officers, those authorized to sign for employer and plan administrator, etc. then there may not be a choice but to have the new boss sign because he is not the same as the old boss. We run into similar issues - acquire an entity and assume sponsorship of their plan after the PYE but prior to the filing due date. So as of 12/31/YY the plan sponsor is Their Bank but when the filing gets made 7/31/YY+1 or 10/15/YY+1, the sponsor is Our Bank, Their Bank no longer exists and the person who signed for Their Bank is no longer around, or at least no longer authorized in that capacity.

I think you would account for any such contributions in the current year (year made).

agree

https://www.thetaxadviser.com/issues/2021/jan/retirement-plans-comparison-401k-sec-403b.html I found the above article which talks about the different 403(b) plans, referring to non-ERISA plans as "unrestricted". The article includes the paragraph below that states ERISA spousal protections do not apply. I did not independently verify that statement, but it makes sense to me. Spousal annuity requirements A second requirement inapplicable to unrestricted 403(b) plans involves spousal annuities. Sec. 401(k) plans are generally required to pay a participant's retirement benefit in the form of annuities that are designed to protect spouses and surviving spouses.73 A plan subject to spousal annuity requirements must generally make provision for two different types of annuities: (1) a qualified joint and survivor annuity for the participant and his or her spouse, and (2) a qualified preretirement survivor annuity for the surviving spouse of a participant who dies before retirement.74 Unrestricted 403(b) plans, however, are not required to provide these annuities.

I'm not saying this as a fact, but bringing it up as a possibility to be explored. Was this PSP communicated to employees (via SPD and any other methods)? Other than a plan document, was there anything else to support that there was indeed a plan? Maybe via the facts and circumstances it could be construed that there never actually was a bona fide plan? What were the reasons for not making 2020 or 2021 contributions and is that now likely the case for 2022 as well? Say they NEVER make a contribution - was there a plan? I might even go so far as to say if the company deducted fees it paid to generate a plan document, such might not be a legitimate business expense because in practice there was no employee benefit plan established. Maybe this is just alternate universe upside down crazy talk, and I'm not saying I would hang my straightjacket on this, but just thinking outside the box (or asylum cell).

sorry, logo. somehow the last o got left off.

and Dave, sorry if this is a sore spot, but shouldn't you be updating your log?

No issues except if you have allocation conditions on the profit sharing but are allocating before such conditions are satisfied. But as a cross-tested PS on top of 3% SH, every NHCE will need to get the gateway, so there probably shouldn't be allocation conditions anyway.

Generally, was the workforce reduction the result of employer action - mass layoff, plant closure, sale of division, etc.? Usually any termination is deemed employer initiated, so employer should have clear detailed records in order to claim employee initiated voluntary terminations. If most or all of terminated participants were replaced by new employees, then maybe this is a situation of normal turnover for this employer (industry probably plays a role here as well). If similar turnover has occurred before there was plan, that is further evidence supporting position that this wasn't a partial termination. If 5500 filing shows a 20%+ reduction, employer should expect a letter of inquiry and have evidence to argue against partial termination.

Agree with all comments above, including the termination date and accelerated loan due date, if applicable. If person gets 6 months of severance after termination date, for example, and plan provisions make loan due upon termination of employment, you can't run the loan out 6 months paying from that severance. If plan allows terminated employees to keep repaying their loans, then no issue. Could this be allowed but solely through payroll withholding, i.e., only for employees getting severance? I'd be curious to hear what others think about that. Depending on the company, I could see discrimination in practice/operation if only/predominantly HCEs are ever entitled to severance, but companies with general/generous severance plans, why not?

Agree with Lou. If the SH 401k is a separate plan then that document should say how to handle. If the ESOP and SH create a 415 violation then you have some bigger coordination of multiple plans design issues to resolve.

You did not necessarily "forfeit" any payment amounts as the plan is required to pay you an actuarially equivalent benefit. If you commenced earlier you would have received smaller amounts as they are expected to be paid over a longer period of time.

Is this strictly 410(b) coverage testing, the percentage of benefiting NHCEs/HCEs? Individual allocation groups define how the allocations are made, not who is covered. If this is for coverage on rate groups, for general 401(a)(4) testing, reasonable classification does not apply.

This is very hard to estimate as noted because it is so variable. I have an ERPA designation but work with and support a number of actuaries who can also be named on a 2848 so my credential isn't critical. There is the very occasional VCP, but most of this type of time is once every six years submitting pre-approved document restatements that have modifications. So maybe 10% that year but 0-0.1% in intervening years. However, due to stock market run up prior to this year and an increase in interest rates, we're also seeing an increase in traditional DBP terminations which we also typically submit to IRS, so maybe 1%-5% in a given year depending on how many plan terminations we have.

Absolutely cannot add a last day requirement for 2022 as every person in the plan has already satisfied the requirement for a discretionary true-up match for 2022 if one gets made. The exception, you could amend to include a last day requirement for 2022 for anyone who enters the plan (plan entry date, not deferral start date) after the later of the amendment's effective date or adoption date. So if plan entry is monthly and the plan was amended this month, you could impose a last day requirement for people entering the plan on or after 8/1/2022. Of course, this assumes your plan is not a safe harbor. If plan entry is dual then you're stuck until 2023.

I think that cite is in the context of the prohibited transaction exemption for participant loans but I would be surprised if it can be also properly construed to mean the person is considered an ongoing employee for purposes of avoiding an accelerated loan payoff due date or, absent repayment, loan default. Probably not a can of worms they want to open, especially if making due and payable now, but I don't know if I'd sleep easy on this unless ERISA counsel had already opined, IMHO.