CuseFan

Agreed - I've seen SH plans that exclude all HCEs from the SH and others that only exclude Key Employees from the SH, which makes sense if top-heavy as non-Key HCEs must get TH minimum.

That is a great point that is often overlooked - if a non-safe harbor "plan" (401(a), 401(k), 401(m), etc.) satisfies nondiscrimination (401(a)(4), ADP, ACP) using a definition of compensation that satisfies 414(s) (such as 415 comp) then the definition of plan compensation used to determine compensation and benefits need not be separately tested and pass such test. A lot of times it is easier to just skip to testing using a safe harbor gross compensation rather than do a compensation test first and hopefully pass so you can test nondiscrimination using plan compensation. You're likely better off on your results using the safe harbor compensation anyway.

So depositing money by year-end attributable to a drafted plan document received by year-end was the justification (disguise?) for backdating the adoption thereof, interesting.

No. It is equally applied to all. Any loan repayment schedule will have a bearing on income and one's ability to repay, so HCEs are going to be better positioned in that regard any way you look at it.

agreed - that is the correct application of the provision

That is, taxed as ordinary income at whatever incremental rate bracket applies to your situation. I assume FICA and Medicare taxes were applied during the accumulation of your account, otherwise those taxes would be due as well.

and you obviously cannot apply to existing loans or any that have been applied for prior to any such amendment being executed.

Why not? Isn't 72(p) the maximum allowable parameters? Why couldn't a plan, either via it's document or the loan program, enact more restrictive requirements? 72(p) requires loans amortized at least quarterly, but most plans amortize per pay period. Plans are not required to collect loan repayments via payroll withholding but nearly all of them do. 72(p) allows longer than 5 years for mortgages but some plans still limit to 5 year terms. Etc. Etc.

of course assuming the 2021 extended tax return due date has not passed and all can get fixed by 9/15, if that's your deadline.

Agree with Bri, no plan document = no qualified trust = still corporate asset. How/why a trustee/custodian would open a plan account without a copy of a signed document baffles me. Establish the trust account now, and either transfer the previously deposited funds or withdraw from the "corporate" account and deposit into the trust, then close that prior account. You can roll dice that IRS never sees this or even makes a case if it does, but why take that chance when there is an easy fix?

Others may disagree, and this is likely gray enough to get ERISA counsel involved, especially if the employer and affected populations are relatively large, but I think that employees who are "on call" and/or "per diem" may be different than your standard part-timer and not an hours-based exclusion. I have had clients categorically exclude such, and without regard to actual hours worked, so per diem employees who happened to work more than 1000 hours in a year were still not benefit eligible. However, if the employer's industry is such that employees frequently shift into or out of on call or per diem status, monitoring eligibility compliance is a pain to say the least. I actually had a client reverse that exclusion because administration was not worth the trouble relative to the cost savings. It was a situation that required balance between corporate finance (cost), HR philosophy, administrative burdens and risk management (compliance). Another note regarding on call status - if employees are paid (albeit at a reduced rate) to be on call during specific times, then those hours must be credited. For example, say a nurse is paid $10/hour to be on call 24 hours over a weekend, (s)he gets credited for 24 hours whether called in to work 0, 4, 8, 12 or whatever hours - of course you don't double count with hours actually worked. This obviously doesn't apply if these people are excluded. Good luck, this is not a trivial cut and dried issue and unless it would yield substantial savings is probably not worth the time and effort chasing down that rabbit hole, in my opinion.

If this was a totally discretionary profit sharing contribution then it would be permissible if made by the employer, so as the Bird tweeted, transferring from a personal account is a deal breaker.

Although most people's usual convention, there is no requirement to order plan numbers sequentially according to their effective date or the date actually adopted.

Agree with you both. No 2022 RMD under any scenario. Keep in plan, subject to plan provisions but very likely no RMD until participant's RBD. R/O to inherited IRA, no RMD until participant's RBD. R/O to own IRA, RMDs begin 2023 based on spouse age. And if the company/product wanting my R/O was insisting on the plan paying an RMD first, I would find someone more knowledgeable of the rules to take my money thank you very much.

100% agree - if exclusion was a reasonable job classification then permissible provided such resulting "plan" satisfies coverage. However, any hours-based classification, specific or "veiled", is not considered reasonable per IRS.

Agree w/Peter and think on DB you must pay the "benefit waiving" owner last as it must be after all other participant liabilities have been satisfied, and also agree with the wisdom on the pooled account issue, I think there has to be a liquidation date at which all accounts are valued and then distributed.

I would say it depends on the reason for the RK conversion. Was is necessary because (1) the RK dropped the client, (2) because the employer did a fiduciary due diligence RFP which resulted in a decision to change RK, or (3) some discretionary decision which may have originated for some reason? I think (1) definitely and (2) likely could be situations where these conversion fees could be paid from the plan. If (3), I think not. If the fees are substantial, then getting legal counsel to opine might be warranted. If the fees are not substantial then I say play it safe and do not pay from plan unless clearly supportable (1).

Doesn't specifically help here but the current legislation being considered will give plan sponsors leeway to not recoup overpayments. Congressional sentiment seems to be that participants should have to cough up corrections to plan sponsor's (or their providers') mistakes, although the context of that is more in the repayment of years of excess pension payments rather than a $30 lump sum excess. Personal opinion - $30 is immaterial to plan, neither the plan itself nor any participant was harmed as the excess $30 should never have been in there to begin with, so just move on. They could ask for it back, make the plan whole by depositing the $30 from the former participant or the employer, forfeit the incorrect/errant contribution and maybe return to employer (mistake of fact mentioned above) or reduce a future contribution - that's a big circle of professional time costing way more than $30 to get everyone where they already are (except maybe the payee has $30 less). Sometimes practicality and (im)materiality needs to win out over strict legality.

Yes, I think we've run into that as well. I did a quick google and found this Q&A from Guardian. Some other sites had similar type of info. Apparently, the insurer can provide the W2 (if negotiated/policy provides) or otherwise must provide the necessary info to the employer for proper payroll reporting and issuing W2s. https://guardianlife.custhelp.com/app/answers/answer_view/a_id/69/~/do-i-receive-a-w-2-form-for-disability-claim-payments%3F

That is the $64,000 question. I have not seen this, but others may have a different experience. If the physician works exclusively through one hospital then those waters get very muddy, but if (s)he sets own schedule and sees patients outside of hospital then being IC more supportable. This may be the more important question for qualified legal counsel rather than affiliated service group.

Agree that having knowledgeable attorney opine is optimal choice but without overlapping ownership - doctors don't own any portion of hospital and hospital doesn't own any portion of doctors' practices - then I don't think you have an issue. I don't think the hospital could be a management company because the "back office" management services it provides to the doctors would be a sliver of its revenue. It is fairly common to see independent contractor doctors providing services to/through hospitals and many of these doctors have solo plans. But certainly it is worth consulting qualified legal counsel so everyone can sleep at night.

That was my thought - how was it reported to IRS and correcting it there. Will also require employee to file amended tax return, so employer should do the right thing and cover any associated costs including interest and penalties on additional taxes owed. Seems like it's OK at the plan level.

I agree with Luke and I think your summary document may not be correct. Say your original election was later of age 62 or separation. If you left at age 64, payments would begin at age 64, correct? But, a year before your turn 62, you elect to change the age to 67. You separate at 64. If payments begin at 67 they have only been deferred 3 years from the time they would have otherwise been payable (later of age 62 or separation, 64 in this example), not the required 5, and that would be a 409A violation. You should also note that 409A penalties (excise taxes, in addition to income taxes) are assessed to the employee, not the employer, so it is in your best interest that this is administered properly. It could be that the major firm taking over admin of your plan noticed this as a compliance mistake/issue and fixed it.

As I understand it, IRC Section 409A requires that any change to the time and form of distribution must defer the commencement of payment(s) at least five years beyond when it would otherwise be required to commence. If your payments were originally required to commence at the earlier (or later) of age X or separation then 5 years must be added to such timing. Adding 5 years to only the age component does not satisfy that requirement.

Correct, that is the usual application but it could also apply if a change in plan year created a short plan year