C. B. Zeller

I'm not sure I agree, especially if the account consists solely of 401(k) contributions. The reg refers to other benefits conditioned directly or indirectly on the election to defer. For example, you couldn't offer an incentive where the employer will give a $1000 cash bonus to any employee whose 401(k) balance is greater than $50,000 at the end of the year. Even though the cash incentive is contingent upon the account balance, not the election to defer, the only way you can get an account balance is if you made an election to defer. Therefore the incentive is indirectly contingent upon the election to defer, and prohibited under the rule. Same thing, I think, in this case. You are eligible for the incentive if you elect a distribution during a particular time frame. The only way you could elect a distribution is if you have an account balance, and the only way you could have an account balance is if you previously made an election to defer.

PT is a potential issue, as mentioned. If this is the owner who is trying to do this, and there are other participants in the plan, it could be a non-discrimination issue if the investment is not available to non-HCEs. If the investment is going to generate UBTI, there are tax issues to consider. Bottom line: get an attorney.

If the participant was born on or before 12/31/1949, and they terminated employment in 2021, then 2021 is their first distribution calendar year and they must take an RMD before they can roll over their account balance in 2021. "Before" can really mean "simultaneously;" basically you just have to make sure that the RMD is distributed if you are paying out the entire account.

If you're referring to the 402(f) special tax notice, I would direct you to the model 402(f) notice contained in Notice 2020-62. Regarding loan offsets, it provides the following: You might also be interested in sections II.B and III of Notice 2018-74, which discusses the changes that were made to the model notice with respect to QPLOs.

It could certainly be done by having two separate plans - a 401(k), that provides the TH minimum and has a vesting schedule, and a separate PS plan that has 2-year eligibility and 100% immediate vesting. Whether it could be done in one plan depends on what the document says. For example, the FT William doc that we use says that the top heavy vesting schedule will only apply to the extent it is more favorable than the plan's regular vesting schedule. That language would seem to preclude doing this in a single plan.

Mike is correct, see 1.410(b)-7(d)(5). However, you still need to determine how many participants in plan A are are non-excludable under plan B and vice-versa, since they will be included in the denominators of your coverage tests. If both plans cover any key employees, be careful with your top heavy determination dates.

If she stopped loan payments, then the loan is in default and a deemed distribution has already occurred, or will as soon as the cure period expires. Technically, even after default, the loan obligation still exists. Repayments would create after-tax basis in the plan. Terminating the plan creates a distributable event and then a loan offset occurs, which is a real (as opposed to a deemed) distribution.

If the account balances are made up, either partly or entirely, of 401(k) deferrals, is offering additional cash a violation of the contingent benefit rule? 1.401(k)-1(e)(6)

DC plans can use 6-year graded or 3-year cliff (or anything more generous). Traditional DB plans can use 7-year graded or 5-year cliff (or anything more generous). If the plan is top heavy it would have to use 6-year graded or 3-year cliff. Cash balance plans must use 3-year cliff (or more generous).

12/31/2021. See Notice 2020-51 Q&A-5

Yes. Depends how you write the amendment. At this point you could still do a 3% SHNEC for 2021.

There are two ways a plan can allow in-plan Roth conversions: 1. Allow conversions only of amounts that are otherwise distributable to the employee. Once converted, the Roth conversion source may be distributed at any time, if allowed by the plan. 2. Allow conversions of vested amounts at any time, but retain the distribution restrictions associated with that money after the conversion. In this method, the plan would usually have to separately recordkeep each different Roth conversion source. For example, a plan that has deferrals, safe harbor match, and profit sharing, would also have to recordkeep deferral conversion, safe harbor match conversion, and profit sharing conversion sources. The option to allow Roth conversions to be distributed at any time is only applicable when the plan uses the first method for Roth conversions. Edit: Lou beat me to it by a minute. As he points out, some plans may use different terminology for the two methods, so read your document carefully. I do not think the methods have different names in the code or regs.

If the amount of the deferral was less than 3% of the key employee's compensation, then the top heavy minimum would be less than 3%. If the only contribution were a catch-up contribution (because it was reclassified due to a plan-imposed limit, or a failure of the ADP test, for example), that would not trigger the top heavy minimum. If any key employee received a contribution of at least 3% of compensation, including elective deferrals, then all non-key employees who are actively employed on the last day of the plan year must receive a top-heavy minimum contribution of 3% of compensation. This ignores the case of a safe harbor plan, for example a plan with a safe harbor match that excludes HCEs from the match. If no non-HCEs deferred and the only contributions to the plan for the year were deferrals made by a key employee (who is also HCE), then in that case there would be no employer contributions and also no top heavy minimum would apply.

I agree with Lou that it is a controlled group if the same individual owns 100% of all three businesses. The question about using each others' services is only relevant when you are considering whether an affiliated service group exists. In order to have an affiliated service group, at least one of the businesses has to be a service organization, which means either it is in one of certain specified fields (law, health, etc.) or capital is not a material income-producing factor. None of those businesses are likely to be service orgs, since none of them are in any of the specified fields, and it appears that capital would be a material income-producing factor for each of them.

A large plan will usually have to report it on Schedule R.

If you are talking about using a different interest crediting rate for different groups of employees, first make sure that your plan document will allow it. I vaguely recall hearing about an issue with using a lower interest crediting rate for HCEs, that it was discriminatory because it was equivalent to a larger early retirement subsidy or something like that. I am probably messing up the details. I think it was in an ASPPA presentation. If I can find it, I'll let you know. I don't see any 411(b) issues with a 0% interest crediting rate. The accrual each year would just be equal to (pay credit) / (APR at NRA). In other words, a flat benefit formula.

There is no requirement in the code or regs that the participant obtain a loan (from the plan or otherwise) before receiving a hardship withdrawal. The plan may impose such a restriction, however. The safe harbor defined in the regs is that "Costs directly related to the purchase of a principal residence for the employee (excluding mortgage payments)" are deemed immediate and heavy. It is almost certainly a terrible financial decision, given the 10% early withdrawal penalty, and the current interest rate environment, however if it is permitted by the plan I do not think you can stop the participant if that is what they really want to do.

Depends where in NJ. Only certain counties are covered by the relief. If they are in the covered area, and they had a valid extension to October 15 (or any time on or after September 1) then the deadline is extended to January 3. https://www.irs.gov/newsroom/irs-announces-tax-relief-for-new-jersey-victims-of-remnants-of-hurricane-ida

The hypothetical interest credits in a cash balance plan are just that - hypothetical. They are a fiction designed to account for the difference between the accrued benefit payable at retirement, and the present value of that accrued benefit (aka, the hypothetical account balance). There is no difference between a plan that says "I'm giving you $100,000 now, with 4% hypothetical interest per year, and you have 10 years until your normal retirement date" versus a plan that just says "I'm giving you a benefit such that the lump sum payable at your normal retirement date is $148,024." As long as they don't have a problem with promising to pay somebody some amount of money at some point in the future - since that's essentially what a DB plan is - a cash balance formula versus any other type of formula shouldn't matter. Of course, I'm no theological scholar. There is no reason you couldn't do a cash balance plan with an interest crediting rate of 0%, if that would help them feel better about it.

The 415 limit is cumulative for all plans sponsored by the same employer (or controlled group). If you terminate and distribute, that distribution will permanently reduce the 415 limit in the new plan.

If you're only talking about whole years, then yes. However consider that retirement benefits are often paid in the form of a monthly annuity. In that case you might have benefits that are payable in more than 4 but less than 5 years. Those benefits would be discounted using the 1st segment rate. Given that this is a cash balance plan, you might be using an assumption of 100% lump sum benefits paid at normal retirement age. As always, check with your actuary to see what assumptions are reasonable.

1st segment rate is used for benefits payable in less than 5 years from the valuation date. 2nd segment rate is used for benefits payable in 5 years and less than 20 years from the valuation date. 3rd segment rate is used for benefits payable in 20 years or more from the valuation date. A benefit expected to be paid exactly 5 years from the valuation date would be discounted using the 2nd segment rate.

An earlier discussion on this topic, that does address the fee disclosure question:

There are lots of testing options. If you have a test that's passing, there's probably a different way you could run the test to make it fail, if you feel it's important to show a failing test result before proceeding with an -11(g) amendment. To put it another way, there's nothing that says you have to test under every possible combination of cross-testing, average comp, accrued-to-date, permitted disparity, standard interest rate and mortality tables, restructuring, permissive aggregation, disaggregation of otherwise excludable employees, and probably a handful of other testing options I'm not thinking of, and then only if every single one of those tests fails, are you allowed to proceed with the amendment.

Line 4?