C. B. Zeller

To be honest, I am not sure. I have never encountered this situation. However, the way I would approach it would be more like a change in vesting schedule. As long as nobody's vesting percentage is reduced by the change, then it should be fine. I would measure those vesting percentages both on the effective date and on the last day of the year. In other words, if somebody would have gained an additional year of vesting service during 2021, but wouldn't under the amendment, then I would make sure to grant them that additional year anyway.

You might be thinking of an S corp, where this rule is designed to prevent the shareholder from taking all of their compensation in dividends. Sole proprietors (and partners in partnerships) are not employees and should not receive a W-2 from their business. There might be some unusual cases where this would not be true but that is the general rule.

Not a QPLO. See Example 2 in 1.402(c)-3 which is almost the same situation.

A distribution will not help over-funding. What they need to do is stop contributing until the benefit accruals catch up with the plan assets. Is the participant already at their 415 limit? How old are they? If the plan is relatively new, and they still have several more years to retirement, the current over funding might not even be an issue. It's not an uncommon strategy to juice the contributions in the early years when you have more income, and let the benefit accruals catch up in the later years if income drops off. I have found that reminding sponsors (and advisors) that reversions of excess assets are subject to a 50% excise tax helps them take the issue of over-funding a little more seriously.

If participants are under 80 then the 80-120 rule doesn't apply.

The 80-120 rule is always optional. Once you are below 100 participants, you can file on SF even if you filed the full 5500 the previous year.

Compensation is in B2, deferral amount is in C2 Put the deferral rate in D2: =ROUND(C2/B2,4) The calculated match rate in E2: =IF(D2<.03,D2,IF(D2>.05,.04,.03+.5*(D2-.03))) The match in dollars in F2: =ROUND(B2*E2,2)

Have you asked your employer about the missing amounts? What was their reply?

Are they requesting a cash distribution or a rollover? If they are requesting cash, then it's fine. If they are requesting a rollover, then there is the possibility that they could fail to take their RMD if they terminate before 12/31/2021. In order to avoid that possibility, they should take at least the amount that their 2021 RMD would be, if 2021 were a distribution calendar year, based on their account balance at 12/31/2020 and their current age, as a cash distribution and roll the rest over. It might help to remind the participant that if they fail to take their RMD there is a substantial excise tax that they would be responsible for. If they ultimately refuse to take enough of their distribution in cash, and it later turns out that a 2021 RMD is required, then a corrected 1099-R should be issued showing the RMD amount as a taxable distribution and only the remainder as eligible for rollover. The participant would have to be notified that $X amount of their distribution was not eligible for rollover and should be removed from their IRA.

See section 6.07 of rev proc 2019-19

Assuming that the plan uses the maximum permissible cure period then I believe you are correct. Given the flexibility for self-correction of loans under the current version of EPCRS, they could probably restart payments and keep the loan going even if the cure period had expired.

1) Yes, but the entire suspense account has to be used up within 7 years if they want to avoid the excise tax on the reversion. The amounts allocated are still subject to the annual additions limit, so if it's just the two of them, and they are allocating (let's say) $35k each per year that ends up as only $490k allocated after 7 years. Make sure you will be able to fully allocate the amount before you transfer it. 2) No. Assuming that they take a distribution equal to the max lump sum, that is by definition the present value of their 415 limit. The 415 limit is a lifetime limit so any distribution they take now permanently reduces the future benefit they can receive from any DB plan sponsored by the same company (or controlled group etc). If they take the max lump sum there would be zero 415 limit left so no additional benefits could accrue under a new plan.

This is correct. You do not need to make any changes to the safe harbor. Just give a 3% PS contribution to the HCEs. Assuming, of course, that the plan's PS formula allows you to do so.

Balances from all employers are considered together when determining if a participant in a MEP can be forced out.

The plan can not require that your payment occur later that 60 days after the end of the year in which the latest of these happen: You attain age 65 (or normal retirement age under the plan, if earlier); The 10th anniversary of your becoming a participant in the plan; or You terminate employment with the plan sponsor. I agree with Mike that 999 days seems like a placeholder that should never have been included in the final documents. However if the plan's normal retirement age is 65, they could in theory hold on to your payment for a couple more years.

Yes, you can use the corrective amendment rules of 1.401(a)(4)-11(g) to correct a failed non-discrimination test. However please read your plan document carefully. Most plan documents I have seen provide for an automatic waiver of the last day and/or hours of service requirements as needed to pass the gateway test. This would usually apply only if the participant was otherwise eligible for a contribution that would require them to be included in the test, such as a top heavy minimum or a safe harbor non-elective contribution.

Here is the discussion that Lou S. mentioned: In that case, the conclusion was that they could not do it because of a controlled group issue, as the companies involved were owned by a husband and wife. In this case, as long as the brothers' companies are not part of a controlled group or affiliated service group with the company currently sponsoring the plan, then I don't see why they couldn't do it. That said, I agree with the other posters that they would be better off starting new plans anyway. If there is not a controlled group or affiliated service group, then by creating a MEP you would be subjecting them to a combined 415 limit that would not otherwise apply if they had separate plans. And if there is a controlled group or affiliated service group, then you can still add a new plan with additional benefits that you wouldn't be able to retroactively add to an existing plan.

The SPD is provided very infrequently in most cases, and as such may not be the best vehicle for constantly-changing information relating to cybersecurity. I think Belgarath has the right idea about providing the information outside the SPD. Surely they provide account statements and a SAR at least annually? The "cybersecurity notice" could be enclosed with those documents. A more frequent notice cadence would allow the plan sponsor to keep up with evolving best practices.

This type of plan design relies on the ability to disaggregate the portion of the plan that covers otherwise excludable employees. Under this design, you have two groups of employees and two disaggregated plans. The first plan covers the group of employees who have satisfied the minimum age and service conditions under 410(a). That plan satisfies the ADP test by way of the safe harbor contribution, which is provided to all NHCEs (and optionally HCEs) who are eligible to defer. The second plan covers those employees who have not yet satisfied the minimum age and service conditions under 410(a). This plan will typically not cover any HCEs, since an employee has to have prior year compensation above the applicable limit to be considered an HCE, and employees who do not have a year of service will typically not have prior year compensation that high (if they have any at all). This plan satisfies the ADP test automatically as long as it covers no HCEs. If you have any employee who will be an HCE before they meet the statutory eligibility requirements, you can have a problem with the otherwise excludable group. Usually this would happen if someone who is a 5% owner by attribution (such as the owner's spouse or child) becomes an employee. If that is a concern you may want to specify in the plan document that 5% owners have to complete a year of service before they become eligible to defer. As sb0828 mentioned, if the plan is top heavy, they lose the top heavy exemption with this plan design. If we are talking about a 3% safe harbor non-elective contribution, then the sponsor is going to end up making the 3% contribution for all employees, except those who terminated before meeting statutory eligibility. The contribution for the employees who have not met statutory eligibility can be subject to a vesting schedule, although if the employer was not intending on making other contributions which would be subject to a vesting schedule then this may be more administrative hassle than they were prepared to deal with.

1. Yes 2. There is no mandated method, any reasonable method should be fine. A reasonable method might be to allocate the contribution in proportion to the pay credits earned for the year.

If you are filing 5500-SF you do not need to attach Schedule D.

At least one formerly prolific contributor to these forums believes that the summary substantiation method should be avoided, although he did not go into much detail as to why. Under the new hardship regulations, a plan administrator is also required to obtain a participant's written certification that they do not have enough cash or liquid assets to satisfy the need. The plan administrator may rely on that certification unless they have actual knowledge to the contrary. A plan sponsor may limit hardship distributions to 2 per year.

They may or may not send more letters in the future. They may or may not also decide to audit the plan. I am not aware of anything that would allow a multiemployer plan to be exempt from the fiduciary rules that apply to plan assets, but multiemployer plans are outside my area of expertise.

Did they report late contributions on the 5500? These letters are usually sent in response to that. It's just the DOL saying, "Hey, we noticed you had some late contributions, you might want to correct the fiduciary failure under VFCP." You don't have to - the "V" stands for "voluntary," after all - but if the client wants to dot every i and cross every t they could. The fix under VFCP is basically to make up the lost earnings and pay the excise tax under IRC 4975. Hopefully the plan sponsor already did that. Then they would just need to file the VFCP form.

What specifically are you looking for in this rev proc? Because 2017-56 does address both a change in the valuation date to the first day of the plan year (at any time), and a change in the valuation date for a terminating plan from the last day of the year to the termination date. If you look at the end of 2017-56, it states that it modifies rev proc 2000-40 and announcements 2010-3 and 2015-3. Are any of those what you were looking for?