C. B. Zeller

Then the maximum on the DB plan would be the greater of 6% of comp, or the amount necessary to satisfy minimum funding; assuming that amount does not exceed the maximum under 404(o). I'll admit I was not considering DC plans with large fixed contributions when I wrote that.

I'm not aware of any definitive guidance on the subject. However the buyer should be aware that failure to provide the 204(h) notice carries a substantial penalty. They may wish to consider the cost of the penalty at 30 days multiplied by the number of participants versus the minimum required contribution that would be owed if the plan were frozen 30 days later. The rest of this post is pure conjecture. I would advise you to disregard it entirely and seek ERISA counsel. If I were going to rely on the exception to the 45-day requirement, I would want it to be as clear as possible that the amendment is being made in connection with the acquisition of the plan sponsor, and not for any other reason. For example, I might do the following: In the 204(h) notice itself, state that "In connection with the acquisition of Sponsor Co by Bigname Inc., the Sponsor Co. Defined Benefit Plan is being amended..." Put similar language in the resolution adopting the amendment, e.g. "Whereas Bigname Inc has agreed to acquire Sponsor Co on the condition that the Sponsor Co. Defined Benefit Plan be terminated..." Commit in writing - either in the amendment itself or by a separate resolution - that if the acquisition falls through, or is not completed by X date, that the termination is rescinded and benefit accruals will be reinstated retroactive to the date of the freeze.

I think that as long as the amount added to the loan will be fully repaid within 60 months, it is ok. The amount outstanding from the original loan as of the refinance date could be repaid as late as 69 months from the refinance date.

In my experience, brokerage account statements are unlikely to include any of the disclosures required by ERISA. However you may want to ask the brokerage firm directly. Maybe they can provide you with a sample statement for your review. If no plan-related expenses are actually charged against the participants' accounts, then the expense-related disclosures of 404a-5 would not apply. The disclosures relating to direction of investments, plus the disclosures relating to diversification required under sec. 105(a) would still need to be provided somehow.

Just to be entirely clear, there is no 6% limit on the deductible contribution to the cash balance plan. When an employer sponsors overlapping DB and DC plans, and the contribution to the (non-PBGC) DB plan exceeds 25% of compensation, then the deduction on the DC plan is limited to 6% of compensation.

Depends how "unrelated" they are. Even if there is not enough common ownership to create a controlled group under 414(b)-(c), there might still be a controlled group under 415(h).

Friendly Benefitslink Inventors!

The plan is required to ask for the money back, but there is no mechanism allowing the plan to forcibly recoup it. However, the plan has a qualification issue created by allowing the participant to take an impermissible distribution. If I were the plan sponsor, I would be wanting the recordkeeper who allowed the distribution to pay for a VCP filing to correct the failure.

Assuming you did not make a calendar year lookback election, you will need to know 6/30 year-end comp and calendar year comp for all employees in both companies. For A's plan year beginning 7/1/2020, employees in both A and B who had comp greater than the limit for the period 7/1/2019-6/30/2020 will be HCEs when doing A's testing. For B's plan year beginning 1/1/2020, employees in both A and B who had comp greater than the limit for the period 1/1/2019-12/31/2020 will be HCEs when doing B's testing.

Don't forget the DOL can impose substantial penalties for a late filing in addition to the IRS. The DOL penalty is currently $2,233 a day. DFVCP by comparison is $10 a day with a cap of $750. I think the choice is clear. Also, don't file the 5500-SF saying that it was filed under 5588, if 5588 was not filed. Remember the plan administrator is signing under penalty of perjury. Check the box for DFVCP and pay the $10.

You can require 2 years of service if all contributions will be 100% vested. The 2 year of service rule is not available for 401(k) deferrals. You can still use semiannual entry dates with the 2 year of service rule. The way 410(a) is written, it says that if the plan provides 100% vesting then you can just replace "1 year of service" with "2 years of service" and nothing else changes. As long as the employee becomes a participant no later than the earlier of the first day of the next plan year or 6 months after completing 2 years of service, then they meet the requirements. Be careful with how you define your eligibility computation period when using this rule. The initial period always starts on the employee's date of hire, but the default in many plans is to have it switch to the plan year after the first period. If you do it that way the second period could begin while the first period is still ongoing. For example, if you have somebody whose date of hire is April 1, 2021, they would complete their first year of service on March 31, 2022. If the eligibility computation period switches to the plan year, then the second period begins on January 1, 2022 (assuming the plan year is the calendar year) and they would complete a second year of eligibility service on December 31, 022 and enter the plan on January 1, 2023. If the intention is for them to become eligible no earlier than their 2nd anniversary of hire, then you have to make sure that the eligibility computation period remains on the anniversary year and does not switch to the plan year.

If the goal is to promote networking among forum members, how about a stickied "Introductions" thread? It might repeat some of the same info found on people's profiles, but how many of us are browsing individual profiles? This way everyone's blurb would be in one place.

I agree with CuseFan and I'll add that your plan probably has a section describing what happens when an employee transfers from an ineligible classification to an eligible one. That section is more than likely going to say that they become a participant on the date that they transfer to an eligible classification, provided they have satisfied the age and service requirements with the employer as of that date.

If I'm reading Mike's mind correctly (and that's a big if), the concern is that, following the amendment, the accruals in the first plan year are zero, and then something larger than zero in all subsequent plan years. That would not satisfy any of the accrual rules under 411. If you did it in two amendments: 1) change the plan year and freeze accruals, and 2) reinstate accruals effective the first day of the next plan year, I think that would be ok, or at least better. There is always the question about definitely determinable benefits when freezing and unfreezing DB formulas though.

The final plan year ends on the date of the final distribution. That is the date you should use on the 5500. The 5500 is due on the last day of the month 7 months after the final distribution.

https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/dfvcp.pdf

Yes, as long as you are a qualified individual within the meaning of the CARES Act. Code 4 means you are the beneficiary of a death benefit. Notice 2020-50 section 1.C states that "any distribution received by a qualified individual as a beneficiary can be treated as a coronavirus-related distribution."

To address the original question of "How does the CARES Act RMD waiver affect a participant who would have been required to commence distributions by 4/1/2021," this is addressed in Notice 2020-51.

An individual born after June 30, 1949 and before January 1, 1950 would turn 70½ in 2020 and 72 in 2021. An individual born after December 31, 1949 and before July 1, 1950 would turn 70½ in 2020 and 72 in 2022.

If the employee turned 70.5 in 2020, then their RBD is 4/1 following the year they turn 72, under the SECURE Act.

Typically a 401(k) election that is expressed as a percentage will be applied to gross pay (before taxes, medical premiums, or other deductions or withholdings). That is a general trend, but not a rule, so you should confirm with your wife's employer. Most 401(k) plans will allow you to make an election as a dollar amount per pay period, instead of a percentage of pay. If your goal is to defer the annual maximum it might be more practical to do it that way, so you would not have to worry about periodic fluctuations in her pay. You will also need to ask them what they do if her gross pay is not enough to support her elected 401(k) amount after tax withholding, medical premiums, and any other deductions. They might do the maximum, they might do nothing, or they might have some other procedure. Again there is no universal rule on this, but they should have an established procedure in place.

If there are no accruals under the DB plan, then there should be no need to aggregate it with the DC plan for nondiscrimination testing.

Rev Proc 2019-19 6.02(4)(a) (emphasis added)

Sound to me like they have either a significant operational failure which is uncorrected for more than 2 years, or a demographic failure; either way, the correction is VCP. Earnings should be calculated at the plan's actual rate of return.

If an ASG exists, then both companies are treated as a single employer for most purposes. 1. No. He can't contribute to the SEP while part of an ASG (unless he wants to provide SEP contributions to all the employees of the ASG). In addition there is a single 415 limit which applies across all plans sponsored by all members of the ASG. 2. Yes. Since A's only comp is his W-2 comp from the S-corp, the S-corp needs to adopt the 401(k) plan in order for him to make 401(k) deferrals. 3. Yes.