ERISAAPPLE

To Luke's point, and only if you really need an amendment, if the resolution is signed after the end of the plan year, that would be a late discretionary amendment.

Is any contribution mandatory, or are contributions discretionary? If mandatory, does the plan say who decides whether the "match" will be a percentage of deferrals or a flat amount? My guess is the contribution is discretionary and the employer gets to decide. If the employer decides a percentage, then the contribution is a match, it appears, under both the Internal Revenue Code and under the plan. If the employer decides a flat amount, that is not a match under the Internal Revenue Code. That is a profit sharing contribution (or company contribution or employer contribution, whatever you want to call it, but it is not a match under 401(m)). It looks like your question is a matter of plan interpretation. The appropriate person with discretion (if any) may be able to interpret the plan to mean that the use of forfeitures to pay for a match includes using the forfeiture to fund a contribution that is a match under the plan, even if the contribution is not a match under the Internal Revenue Code. If the allocation is a per capita amount regardless of deferrals, it gets tested under the general 401(a)(4) rules, not under the ACP rules. I recommend they get a better plan document that is drafted more clearly.

The easy answer is probably yes if excluding bonuses and commission pass 414(s) testing, no participant is allowed to defer bonuses or commissions, and every participant has an effective opportunity to defer the max (e.g., enough base salary to defer the max).

When did the participant overpay? I am guessing in 2017. If the overpayment was in 2017 and the refund was in 2017, can you show it as other income and then an expense? I don't think it would be a benefit payment. As always in matters of accounting, don't rely on me. I am just a simple caveman lawyer.

Talk to a lawyer who understands unions. There is some rule that limits the extent to which owners can be union members. I'm not sure of all the twists and turns of that rule though, and I see a lot of owners who claim to be a union member.

It sounds like the plan at issue is individually designed. If so, and if you already have your first letter, and the plan is not terminating, then unless things have changed since I last looked (and I don't think they have), you can't get a letter. The requirement to restate was a condition of applying for a letter. There is no requirement in the tax code or ERISA to restate. Since you can't get a letter, there can be no requirement to restate as a condition for a letter.

I wouldn't touch 409A with a 10-foot pole. The potential penalties and malpractice damages are simply too high, and it is extremely complicated. Many malpractice insurers won't cover the damages. Tell your client to talk to a lawyer who knows this area.

Client has combo DB/DC plan. For entire plan year, the DB plan is frozen. For the same plan year, employer makes no PS or match to DC plan and no key employees make 401(k) contributions. Only contributions for that plan year to the DC plan are non-key employee 401(k)'s. Both plans are top heavy. Is any top heavy minimum due for the plan year?

Define fund.

I guess I will tell the client the regs require the notice to be sent prior to the beginning of the plan year, and recommend they send a reminder notice 30-90 days before the escalation becomes effective.

If I recall the proposal, the DOL was going to require all retirement plans, both small and large, to get an audit. I would have to go back and read the proposed regs.

Won't happen absent a statutory change. Plus it would have to be the DOL, not the IRS.

Plan year is calendar year. Quarterly entry dates. Auto Escalation occurs on anniversary of entry dates. Is the notice still required within 30-90 days before plan year? Example: Jane enters the plan on October 1, 2018, makes no election, and employer automatically withholds 3%. On October 1, 2019, provided Jane makes no election, employer will automatically withhold 4%. Result: Jane must receive the notice for the 2019 plan year between October 1, 2018 and December 1, 2018. The Adoption Agreement allows the employer to elect escalation on anniversary of entry dates. The basic plan document says the notice is provided 30-90 days prior to plan year. This is an EACA, not a QACA. This doesn't seem right.

I'm not sure I am following this. I am not steeped in the lore of 415 DB calculations. But when I read Larry's more difficult question, I wasn't sure what the benefit was at age 62 in the plan that has an NRA of age 65. I believe he said a participant in a plan with an age 62 NRA has a benefit of $3 million, but the 415 limit is $2.8 million. His question also seems to assume that in the plan year the participant turned age 62, even if the plan has an 65 NRA, the benefit would be $3 million. Dan.jock, it sounds like you are saying it doesn't matter though because the 415 limit at age 62 is the same as it is at age 65, whether the plan's NRA is age 62 or 65. Am I understanding you correctly?

I have no idea. ?

Larry. As the question is posed, that is an easy one. The answer is yes, you can draft a cash balance plan with NRA as age 65 and allow participants to take their age 65 account balance at age 62. You can draft a traditional DB plan with an NRA at 65 that allows participants to take their age 65 vested accrued benefit at age 62. Clearly you can. In n a DB plan, however, that clearly creates an early retirement subsidy. The question is whether the right to receive an age 65 hypothetical account balance at age 62 is an early retirement subsidy. If you include interest credits to age 65 in the age 62, I think that has to create an early retirement subsidy (but I agree with you to leave that conclusion to the actuaries). The question I have is whether the right to the age 62 hypothetical account is an early retirement subsidy. I believe (but I am not sure, which is why I am asking the question) if there is no whip saw there is no subsidy. In other words, I believe that absent a whipsaw the hypothetical account at age 62 is the actuarial equivalent of of the age 65 benefit. Again, I am not sure and so I am asking the question.

Thank you CuseFan. I am thinking if there is no whipsaw there would be no early retirement subsidy. But I am not an actuary and therefore I am not sure.

If a plan with an NRA of age 65 is amended to allow a fully vested participant to take at 62 in-service withdrawals of the participant's "full accrued benefit," according to informal guidance from the IRS, that could create an early retirement subsidy. The reason is the participant would receive, at least under the terms of the plan, the same pension without reduction for early commencement that the participant would receive at age 65. Does this same analysis apply for the modern CB plans? I know the prior guidance used to say that the interest credits up to the NRA were part of the participant's "accrued benefit" (or interest credits up to distribution, if taken out earlier) Some say that at any given time the "accrued benefit" of a CB plan is the hypothetical account balance at that time. I'm not sure how all this works together in a CB plan post-PPA. My question is whether a plan amendment that allows participants at age 62 to take their vested hypothetical account balance in-service would create an early retirement subsidy.

Can you deduct the deferral at the time the advance is made? Is that feasible with the software? Example (shown on the ATM or whatever device the trucker uses to withdraw the advance) "You have elected today to receive an advance of $200. You previously elected to contribute 10% to your 401(k). The amount you are receiving today is $180. The remaining $20 will be contributed to your account in the 401(k) plan in accordance with your prior election. Press yes to confirm or no to change your advance request. Press 401(k) to modify your 401(k) election. Press hardship to take a hardship withdrawal from your 401(k). Press loan to take a 401(k) loan. Press help if you don't understand any of this." Yes this would be confusing. Yes it could result in lower 401(k) elections, yada, yada, yada. I am just throwing out an idea. Another option is to disallow advances that would lower the net check below the deferral amount for that pay period. Again, this might cause IT heartburn. P.S. Just joking about "press 401(k)" etc.

Card, those were my thoughts too. Why should a beneficiary be given better tax treatment than the participant would receive had he lived? The best move for a nonspouse beneficiary is either (1) make sure he is using the life expectancy rule or (2) if he is going to use the 5-year rule get the money into the inherited Roth IRA in the year of death, which gives him the chance to meet the Roth 5-year holding rule before the 5-year RMD period ends (the RMD 5-year rule is actually 5 years after the year of death, and the 5-year Roth holding rule would begin January 1 in the year of death assuming the inherited Roth IRA is opened that same year). The nonspouse beneficiary could always take out the investment in the contract tax-free, and the 72(t) 10% penalty will not apply.

The way I read the regs and all the guidance, including the IRS publications, and even Natalie Choate's book (which is wonderful, but I could not find where it addresses these questions), if a beneficiary rolls over the Roth 401(k) of a deceased participant to an inherited Roth IRA, and at death the participant did not meet the five-year rule, the following are the tax results. 1. The rollover is not taxable. 2. A new five-year holding period starts for the beneficiary's inherited IRA. 3. We don't worry about 59 1/2 because the distribution was on account of death. 4. The only way the beneficiary can avoid taxation on the earnings is to meet the 5-year holding rule. If the 5-year RMD rule applies to the inherited Roth IRA, then all earnings will be taxed, including pre-rollover and post-rollover. I read a website that suggested a non-spouse beneficiary cannot roll over a 401(k) Roth that is not a qualified distribution, but I don't think that is correct. Finally, if the beneficiary rolls over a Roth 401(k) that is qualified (because the participant had the Roth 401(k) for five years), the post-rollover earnings are still subject to a new 5-year holding period. This is all very confusing and the guidance is not clear. Does anyone have thoughts on this?

Thanks Luke. I found the same answer in an Employee Plan Newsletter. https://www.irs.gov/pub/irs-tege/se_021307.pdf I guess I wasn't the only one who was confused by this.

I guess the question I have is whether the beneficiary can take advantage of special rule in Q&A-17(c) after the rollover in Q&A-19. It looks like Tripodi believes it does. I can get there because Q&A-19 says you apply the RMD that would apply under the plan, and under the plan the beneficiary is allowed to use Q&A-17.

I thought the whole idea of inherited IRAs for non-spousal beneficiaries was the participant's beneficiary could roll the money over, e.g., from a 401(k) plan, to an inherited IRA. Then, instead of being forced to receive the distribution from the plan under the plan's terms, the beneficiary could stretch out the payments under the Inherited IRA under the more friendly provisions allowed under the RMD rules, as opposed to the plan's rules. For example, if the plan requires an immediate lump sum distribution on the participant's death, the non-spousal beneficiary could roll the money to an inherited IRA and take the money over the life expectancy of the beneficiary. Now that I re-read Notice 2007-7, Q&A-19, it seems the inherited IRA is required to follow the RMD rules that were in the plan from which the distribution was made. Is that correct? Thus, for example, if the plan requires the distribution to be made under the five-year rule, and doesn't allow for payments over the beneficiary's life expectancy, the inherited IRA must follow the 5-year rule. Is that correct? I am dealing with a Roth 401(k), but I don't think there is a difference between a pre-tax 401(k) or ROTH for this purpose. The Roth 401(k) is subject to the RMDs and a Roth IRA is subject to RMDs at the participant's death.

When do you close?