CuseFan

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.

Agree that benefits should be calculated using correct data and in compliance with plan provisions. This is also a good time to suggest an "internal audit" of plan data to verify completeness and accuracy given the previously described situation and, as the successor actuary you may want to insist or "strongly recommend". If an error in one direction gets corrected (in the sponsor's/owner's favor) but another error in the other direction does not get corrected, you/they got lots of 'splaining to do Lucy.

I had never had a DCP spin-off (or merger) that didn't meet one of the exceptions that exempted the transaction from filing. Maybe IRS will inquire about balance differences/unallocated accounts as a follow up, if they follow up at all, that would be my guess.

Yes, the lovely nuances of international work!

agree 100% - but in order to allow this the plan must first have a Roth deferral provision.

Exactly - current tax year deduction subject current year limit.

yes.

Absent a QDRO, depending on plan terms it could be that the participant was required to commence a single life annuity rather than a J&S. If person was put into pay status automatically at RBD, then that may likely be the case. If they made a valid election of a J&S, and plan allows for non-spouse beneficiary, then that may be irrevocably set. It seems like you know the facts, apply the terms of the plan based on those facts, including any adjustments and corrections to what was initially done. If there is a subsequent, post commencement QDRO, then it could assign a portion of the retiree's life annuity but that would cease upon the retiree's death, you could not after the fact implement a forced J&S upon the plan.

I think the QRP rules are fairly specific and detailed, that any remaining excess not allocated after the earlier of the 7th year or termination of the QRP (due to 415 limits, otherwise you must allocate to remaining participants at such time) must be reverted and is subject to taxes. If a QRP to a QRP were allowed, an employer could simply run a string of QRPs that used excess assets indefinitely into the future. https://www.law.cornell.edu/definitions/uscode.php?width=840&height=800&iframe=true&def_id=26-USC-276939643-615333267&term_occur=999&term_src=title:26:subtitle:D:chapter:43:section:4980

I don't think so. Furthermore, I don't think that person is statutorily excludable from coverage and discrimination testing (assuming Martha is US citizen) as none of the listed exclusions apply. She simply goes from an eligible class of employee to non-eligible class of employee, and still earns vesting service for employment with XYZ UK.

Google is a wonderful thing - see forms IT-2104P, NYS-1 and NYS-45. Paychex not helpful? Shocker!

Agree with Calavera, and think that the RE company is not prof svcs and as participating ER there is no PBGC exemption.

probably not necessary unless some are over comp limit and others under. that way each is limited to same max % rather than same dollar amount. example above, but assume the $60k HCE was owner's son. if small plan, consider SH and avoid that worry altogether.

Yes, sorry, I was questioning myself after I sent - it was so long ago that I even forgot the (ir)relevant Code Section. At least I didn't go Corporal Klinger and say Section 8! (Yeah, I know, a lot of you youngsters are asking who's Corporal Klinger?) Answer for curious minds, and this is based on the memory of 60-year-old so cut me some slack, Section 89 was essentially the 401(a)(4) version of regulations for health and welfare plans, it came out well in advance of its effective date, and it had employers and practitioners spending boatloads of time preparing and determining how to test if plans were compliant or how they could make them compliant - but was ultimately repealed either just before or after it was to take effect, rewarding all the procrastinators who decided to be reactive rather than proactive. I was an underling at the time but will let you guess which side of the Section 89 fence we were on!

Alternatively, consider that the company C 401(k) plan fails coverage (not to mention nondiscrimination), is deemed not qualified and therefore contributions are returned as not deductible. Need to amend any W2 and tax return(s) based on the invalid deduction. So basically, similar result as presented by Peter but even if documents were signed. You'll need to confirm if document language supports.

Agreed