C. B. Zeller

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?

Opinions are split on whether the division needs to have any legitimate business purpose. In the most recent issue of the Journal of Pension Benefits, Larry Starr suggested splitting up the employee population by last name to avoid an audit.

You can exclude HCEs from deferring prospectively, but not retroactively. 411(d)(6) prevents cutbacks of benefits already accrued, even for HCEs.

The exact text of IRC 401(b)(2), as added by the SECURE Act, is If you have a calendar tax year, and a 10/15 tax filing deadline, then you have up until 10/15/2021 to adopt any plan that you could have adopted on 12/31/2020, this rule aside. Could you have adopted a 2/1/2020-1/31/2021 plan year on 12/31/2020? Sure. Is it a good idea? No comment. Jakyasar, have you asked your actuary about this? What do they think? I know there are some actuaries out there who read the changes made by PPA to have the effect of making the rule under 1.404(a)-14(c) obsolete. Under that reading, the deduction limit is determined for the tax year which contains the end of the plan year only. See 404(o)(1)(A).

This isn't something you can choose when you do testing. The plan document contains the definition of HCE with respect to whether the top paid group election is made or not. You have to use the definition in the plan document.

Determining if a DRO is qualified is one of the duties of the plan administrator. If the DRO does not contain enough information to divide the participant's benefit, then it might not be qualified.

This may be an inadequately drafted DRO if it does not address the division of the after-tax basis in the participant's account. Has it already been accepted as a QDRO by the plan administrator?

A plan can switch from using the counting-hours method to the elapsed time method for vesting service. However it cannot reduce any participant's vested percentage. If the OP had already worked enough hours to earn a year of vesting service under the old schedule, the change could not then make him wait until his anniversary date to keep that vesting. We don't know exactly when the switch happened, or how many hours were required under the old schedule, so this may or may not be a concern. However, the company's HR department represented to the OP that he was 100% vested, and he relied upon that representation. If the plan was properly amended and OP was not actually 100% vested, then that representation would not create an obligation for the plan to make him vested, however it could create a liability for the company who gave him incorrect information. That could explain why they are trying to settle with him outside the plan.

The plan does not lose the top heavy exemption unless any contributions other than deferrals or safe harbor contributions are actually made for the plan year. For example, a plan can permit profit sharing contributions, but if none are actually made, it can still use the top heavy exemption. In your case, if no after-tax contributions are made for a given year, then the top heavy minimum would not apply.

If an employee moves from an eligible classification to an ineligible classification, for example from division A to division B, they may be excluded prospectively. Check the plan document, as it should explain what happens when an employee moves from eligible to ineligible classification. For service-based participation conditions, the maximum permissible condition is described in IRC 410(a) - 1 year (1000 hours) of service. If an employee has completed 1000 hours of service then they may not be excluded on the basis of service. They may not be excluded merely because their hours drop below 1000 in a later year.

I've worked with Fidelity, they absolutely can do this. They might not make it easy, but it's possible. Your employer (or their third party administrator) might have to open a service request with Fidelity. If they won't do it, look at your SPD for claim procedures. You have a right to bring a claim for benefits under sec. 502 of ERISA. Hopefully just asking for this info will get your employer in line, as you mentioned no one wants to have to bring it to the courts. If they just cut you a check for $7,000, here are some of the consequences of that: It is not a plan distribution, so it can not be rolled over. If you are eligible, you could use it to make an IRA contribution (not a rollover), up to the annual limit ($6,000 plus $1,000 catch-up if you are over 50 for 2021). It is not a plan distribution, so there is no 10% early withdrawal penalty. If it is treated as wages (reported on W-2), it will be included in your income for federal and state income tax, FICA tax, etc. If it is treated as non-employee or independent contractor compensation, you could also owe self-employment taxes on it, plus you may have to file a schedule C to report the self-employment income on your 1040. Even if your employer has you sign something that you agree not to come after them for the $7,000 from the plan later on, that would be unenforceable. Both ERISA and the Internal Revenue Code have anti-alienation and anti-assignment clauses, meaning that it is impossible for you to lose your rights to money that is owed to you under the plan, even voluntarily. So you could theoretically come back for it years from now, and they could still be liable.

What your former employer should do, is restore your forfeiture and pay you from the plan. That $7,000 that was forfeited went into a "forfeiture account" in the plan, and since this was all pretty recent, chances are it's still there. If it's no longer in the forfeiture account for whatever reason, then the employer would have to write a check to Fidelity - not to you personally - for the amount that needs to be restored to your account. Either way, once the money is back with Fidelity, the employer should instruct Fidelity to restore it to your account, then they should initiate a new distribution from the plan to the same IRA custodian. This is, technically, a case of non-compliance. The good news is that the IRS provides easy-to-follow rules to fix plans when they have compliance issues, and as long as your employer does things the right way, they will not have any problems. If they try to pay you back outside of the plan it will cause bigger problems for both of you later on.

The top-25 rule does not depend on the plan's AFTAP per se. There is an AFTAP-based lump sum restriction, but it is different. The top-25 HCE rule is found in 1.401(a)(4)-5(b)(3). For this purpose, the restricted employees are the top 25 current or former most-highly paid HCEs. The rule is found in the 401(a)(4) regs and the definition of HCE is the usual definition for 401(a)(4) purposes. However, this entire paragraph in the regulations is under the heading "pre-termination restrictions." This rule is not usually meaningful upon plan termination, since you have to pay these people out regardless. If you are offering a window prior to plan termination, that might still fall under pre-termination, though.

These questions are coming back starting in 2022, if the proposal that was released a couple of days ago is finalized. It will be on the Schedule R, 5500-SF, and 5500-EZ.