C. B. Zeller

I've used Google Docs for collaborative editing before, and it's quite good at it, but it does need to be set up correctly to get the most benefit out of it. My number 1 recommendation when using Google Docs is to assign only a small number of people to the "Editor" role - just 1 or 2. Most people should be "Commenter." Changes made by Commenters do not directly modify the original document, but show up in a different color. The Editor(s) can then approve or reject the suggestions. Suggestions made by Commenters also show up on the side, and you can have a discussion thread attached to each one. There is also a chat box assigned to the document as a whole, for things that do not fit into a comment discussion thread.

They're available now. https://www.law.cornell.edu/cfr/text/26/1.401(a)(9)-9

In the case where actual returns are less than the returns calculated by the VFCP calculator (or negative), I usually use the greater of the two. (Is the plan trustee-directed or participant-directed? If trustee-directed, do they have an IPS? Does the IPS say they will invest 100% in money markets? That doesn't pass the sniff test for prudence, or diversification, in my opinion.)

But they invested their contributions in a vehicle of some sort, right? If they had made the deposit timely, what would the earnings have been?

The plan must permit a reversion according to its terms. No money has to actually go back to the sponsor though. While you could read IRC 4980 to mean that exactly 25% of the excess (and no more) can be transferred to the QRP, every actuary I know understands it to mean at least 25% of the excess, up to and including 100%.

What would the actual return have been if the contribution had been deposited timely? You might need to check historic unit values for the investment election(s) to make that determination.

In terms of things I could ask a client and expect them to reasonably give me an answer on their own: What type of entity is the company? What is the principal business of the company? Do any of the owners of the company (or their spouses, children, parents or grandparents) have any ownership interest in any other organizations? Do any of those other companies have employees? Does this company provide services to any of those other companies or vice-versa? Are any of the companies regularly associated in providing services to the public? If the answers to those questions indicate that we need to consider whether an ASG exists, then I would start digging in further.

Keep in mind that RMDs due 4/1/2022 (for someone who was 72 and terminated in 2021) are still technically 2021 RMDs and will use the 2021 table.

Please flag PeterN, Suzanne85, and Aaron_Co as spammers.

This was not the question you asked, but it bears pointing out that the earnings calculated by the VFCP calculator are only acceptable if you actually correct the prohibited transaction under VFCP. If you are merely self-correcting then you must calculate earnings as provided under EPCRS, which usually means the actual rate of return.

Three or four brand-new users are currently replying to old, in some cases years-old, threads adding just "Thanks" or other useless replies. My front page currently has dozens of these. What is going on? Is this some sort of automated spam attack (what would be the point)? Or are these legitimate new users? It seems suspicious that they all joined roughly Saturday at 2 pm. Edit: So now it looks like they each made 12 posts and then stopped. I guess the board software has some rate limiting built in, which is great. Let's see if they manage to create any more new users and continue the attack.

I agree with shERPA, but they might be able to achieve the same, or mostly the same, result if they do it right. You said these people are on payroll during their probationary period, presumably that means they are employees during that period. If that is the case then you absolutely cannot disregard their service during the probationary period when determining eligibility. What you can do, if they are willing to open up to more than semi-annual entry dates, is rely on the actual maximum entry conditions under 410(a), which says that you have to become a participant no later than the earlier of the 1st day of the plan year or 6 months following the date that you meet 1 year of service and age 21. For example, they could write their plan document to say that you enter the plan on the first day of the month coincident with or next following the 1 year anniversary of the end of your probation period, or the beginning of the next plan year, if sooner. An employee hired in June 2020 would complete their probationary period in September 2020 and enter the plan October 1, 2021. That is fine, because it is less than 6 months from the day they actually completed 1 year of service, which was June 2021. However if you have someone who is hired late in the year it doesn't work right. Say you have an employee hired in November 2020, they complete their probationary period in February 2021, so you would want them to enter March 1, 2022, but they have to enter on January 1, 2022 instead, because it's the first day of the plan year.

The plan document should specify what happens when a contribution cannot be allocated due to 415 limits. It will probably say that the remaining contribution is allocated to other eligible participants.

404(a)(6) absolutely applies to DB plans.

Here are the slides from a presentation at an ASPPA conference a few years ago. It was about DB plans but I don't see any reason why the deduction timing question would be any different for a DC plan. https://www.asppa.org/sites/asppa.org/files/PDFs/2016AnnualHandouts/WS18 - Deduction Limits for DB Plans and Combined Plans.pdf (deduction timing starts on page 24) On page 27 they cite a PLR where the IRS allowed a plan sponsor to take a deduction in 1989 for a contribution made in 1989 that was used to satisfy minimum funding for the 1988 plan year. I know that a PLR can't be relied upon as precedent but it does show that the issue is not as clear-cut as this individual may feel. Of course, if they weren't thrilled about relying on a 20-year-old document, they would probably be even less excited about a 30-year-old ruling that does not even provide reliance.

I once heard it put this way once and it has stuck with me: IRC 401(a)(4) says a plan may not discriminate in favor of highly compensated employees. It says nothing about discriminating in favor of non-highly compensated employees. You can discriminate in favor of non-highly compensated employees all you like. If the plan is using a Cycle 3 pre-approved document, they will have to provide a notice describing their discretionary match formulas and what formulas apply to which groups of employees. As Mike said, they should make sure that they are not including a disguised age or service condition that would disqualify the plan.

The 10-year rule was added by the SECURE Act. If the plan currently applies the 5-year rule, it will need to adopt an amendment permitting an eligible designated beneficiary to use the 10-year rule instead. Your plan document provider may already have this amendment available. A plan is not required to permit the beneficiary to wait the full 5 years before forcing them to take a distribution, so it would follow that use of the 10-year rule would likewise be optional.

The max lump sum is considered to be the present value of the 415 limit, so I think you can apply the 415 aggregation rules that exist in the plans, i.e. apply the limit to plan A first.

In order to transfer to a QRP the plan must provide that excess assets will be reverted to the employer upon termination. The employer can then transfer 25% or more of the amount that would have been reverted to a QRP in order to reduce the excise tax to 20%. If the plan says that excess assets will be reallocated, then the participants in the plan are considered to have an accrued right to the benefit increases that would result from the reallocation. Transferring any excess out of the plan would deprive them of those benefit increases, so you can't do it (5-year amendment rule notwithstanding). If the plan says reallocate, and you increase all participants to their 415 limits, but there are still excess assets left over, then you revert the excess. I suppose you could do a transfer to a QRP in that case to reduce the excise tax. I am not 100% sure on this scenario so I would be happy to hear from anyone that has direct experience with it.

An organization engaged in the field of health is automatically a service organization for the ASG rules, regardless of whether capital is a material income-producing factor. The best way to find if an ASG exists is to hire an ERISA attorney to make that determination for you.

I agree that if you have a safe harbor non-elective plan then a last day condition is not helpful. Worse than useless really, since it can force you to do an -11(g) amendment in some cases which will possibly require that you grant additional vesting. My experience has been that while giving an allocation to a terminated employee might sometimes be helpful to pass testing, most employers would rather pay more to one of their current employees than give a contribution to somebody who left if they don't have to. That's not always the case, so always discuss it with the client before you decide on any plan provisions.

Is the participant actually requesting a distribution or is this just for valuation purposes? If this is just for your assumptions I think you can do anything reasonable. For example assume that A is distributed first and then limit the lump sum in B to the maximum lump sum minus the lump sum value of A.

I had a sort-of similar case a couple of years ago. We took over a 2-person plan (one doctor and one employee) and found that the statement for the employee's account was labeled as an IRA. The prior TPA said that it was really a plan account, but mislabeled. After several hours on the phone with the investment provider, we determined that it was not a trusteed account, and there would be nothing stopping the employee from taking the money out if she chose. We concluded that if there was no trustee then it could not be part of the plan trust. The good news is we got a VCP approved pretty quickly to move it out of the IRA and into an account titled under the name of the plan. I'm not sure if this helps; in your case it sounds like the trustee probably does have authority over all of the assets if they are in a single checking account, so it's possible it could meet the requirements of a trust. The sponsor probably breached their fiduciary duty of diversification if all the assets are held in a checking account, but that is a separate matter. I agree of course with the other posters who point out that IRA can by definition not contain assets for more than one person - the "I" stands for "individual" after all. Is it possible that the client is confused about the difference between an IRA and a plan? What type of plan did they have before?

If by "class-allocated" you mean that every participant is in their own group, then yes - as long as the document provides that contributions to each group are totally discretionary, the employer can elect to contribute $0 to any particular group. One good reason to keep a last day requirement, even with each participant in their own group, is that it allows you to exclude terminees with less that 500 hours of service from the coverage test. If you have low turnover, or a HCEs who do not receive an allocation, this may not be a concern.

I just tested it - if you change your email address for mailing purposes, it also changes it for login purposes. I was able to log in with the new email address that I supplied and was no longer able to log in with the original one.