C. B. Zeller

The reference in question is 1.401(m)-2(a)(5)(iv) Since the reg says a plan is "permitted to" disregard the match (not required to) it follows that a plan is also permitted to include the match.

You can always exclude any portion of compensation for HCEs and still have a safe harbor definition of compensation. That said, this this phantom stock plan sounds like a nonqualified deferred compensation plan. Here is what 1.415(c)-2(c) says:

I will remind clients in this situation that we are not tax experts and we can't in good faith provide them with tax advice. Our valuation report has a line that says something along the lines of, "This is the maximum deductible contribution under IRC sec. 404, but we can not confirm that this amount is deductible for federal income tax purposes, check with your tax advisor or accountant." That said, I agree with Lou's understanding, I don't think there is a way to deduct an amount that would cause a loss. If they contribute the amount anyway, they have a non-deductible contribution which is subject to excise tax. There is an exemption to the excise tax for the amount necessary to satisfy minimum funding. To your second question, the deduction is not based on average comp. It is based on the sum of the funding target plus target normal cost plus cushion amount over the market value of assets. If the plan's benefit formula is based on average comp, then the funding target and target normal cost could be affected by a change in average comp, but given the very low 2018 comp for #1, I expect it's going to be hard to get an appreciable increase in the average for 2019, especially considering 401(a)(17) limits.

The top heavy rules are full of contradictions when compared to other sections of the code. Why can you disaggregate otherwise excludables for coverage but not for top heavy? Nondiscrimination can be tested using pay as a participant, but top heavy has to use full year compensation regardless of entry date? I could go on, but it's not going to help anything unless Congress decides to change it. If the objection is just to having to actually having to do the amendment, you might include a 410(b) fail-safe in your plan document which would automatically bring in enough NHCEs to satisfy coverage. Another advantage of this is it might bring in someone who is unvested, allowing you to forfeit their contribution. If you do an -11(g) for a terminated participant they have to be at least partially vested.

1.416-1 Q&A M-10

Yes, you have to do the -11(g) amendment, otherwise you have a qualification failure.

You never need to use it, it's only a safe harbor. Any differences between your notice and the model take yours out of the safe harbor, but don't necessarily make it invalid.

Yes Does coverage pass using the average benefits test? Does the plan document have a 410(b) fail-safe provision? If not, then you have to do an -11(g) amendment to add benefits for some NHCEs.

The examples in A-5 and A-6 adequately cover the adjustments required for 2020 quarterly installments due during 2020, however the notice included no mention of what to do with the 2019 4th quarter installment due on January 15, 2020. Here is my analysis, based on the guidance provided in the notice: The January 15, 2020 installment, or any portion of it that was unpaid as of January 15, 2020, is increased at the 2019 effective interest rate to the date of payment, not later than January 1, 2021. The 2019 funding contribution will not be made later than January 1, 2021, therefore the penalty discount rate (2019 EIR + 5%) will never apply to this installment. The contribution is discounted at the 2019 EIR from the date paid to the valuation date, the same as if the quarterly installment requirement did not apply. Therefore, this has the effect of eliminating the 4th quarter installment for 2019. Do you agree? Did I miss something in the notice?

No. But does the document permit discretionary profit sharing contributions? If so then rely on that to provide your 3% (or whatever amount) to all employees.

Does the plan currently allow for in-service withdrawals? You mentioned the husband's age, but the wife must also be at least age 59-1/2 for an in-service withdrawal, CRD or otherwise. Make sure the distribution is not restricted under either 1.401(a)(4)-5(b)(3) or 436(d).

They should be reported on lines 1b(1) and 2a(1)(A) of Schedule H. Unlike the Schedule SB, you can include contributions on the Schedule H even if they haven't been made at the time the 5500 is filed. Therefore, if you know in advance what the contribution is going to be, you can report it on the Schedule H when you file it on or before 10/15. However, since you will have to amend the filing anyway once the final contribution is made, I don't see the point. As far as the audit report, you will have to discuss that with the auditor.

I think you're looking for Sec. 6.02(5) which says: You can use a reasonable estimate of the investment results, including the results of the DOL calculator, only if "it is not feasible to make a reasonable estimate of what the actual investment results would have been." In my opinion if you have the data it is feasible to calculate, even if it might be time consuming to do so. Check Appendix B section 3.01(3)(b) and (c) for simplifying assumptions which might make your life a little easier. Of course, you can still rely on the DOL calculator if you correct under VFCP.

Have you asked your employer about it? If they realize they made a mistake they should be willing to correct it.

A CG or ASG exists (or doesn't) on every day of the year. Its existence (or non-existence) mostly affects coverage testing, so it matters which method you're using to satisfy coverage. Assuming you're using the annual method of 1.410(b)-8(a)(4) , you need to satisfy coverage on the last day of the year taking into account all employees who were eligible at any point during the year. If an employee was eligible for the portion of 2020 while the ASG existed, but ceased to be eligible once the ASG ceased to exist, they would still need to be included in coverage testing for 2020.

You can specify the individual(s) by name in the amendment.

Adopt an -11(g) amendment waiving the last day requirement for the 2019 employee, and a mid-year amendment waiving the last day requirement and granting additional vesting for the 2020 employee.

I don't think you're allowed to resell the PDF versions. The print versions would probably be ok if you can find them, but I suspect most test-takers probably get the PDF copy. Even after the exam is done, the study guide is still an excellent reference and source of research material. For that reason the PDF version is superior since you can ctrl-F to find the topic you're interested in. Have you looked at ASPPA's "New QKA" program? I don't have any personal experience with it, but it looks interesting.

Was the acquisition a stock sale or an asset sale?

Why are the plans merging? Was it due to a merger or acquisition involving the plan sponsors? If so rely on 410(b)(6)(C) and test the plans separately until the end of the transition period. Then merge them on the first day of the plan year beginning after the transition period.

The sponsoring employer needs to be able to adopt the plan document on or before 10/1. What needs to be in place before the new company is a considered an entity capable of taking an action like adopting a plan? I don't know; it will probably depend on the laws in your state. Presumably there are some lawyers involved with the spin-off - can you ask them? Alternatively, have the plan adopted by the presently-existing company, with an effective date of 10/1, covering only the the people who will be employees of the company being spun off. Then after the spin off occurs, have the new entity adopt the plan and the old company revoke its adoption, and name the new company as plan sponsor simultaneously.

Profit sharing can be used for in-service withdrawals, including hardships - but that was always the case. They are not required to allow hardships from profit sharing under the new regs. They could, of course, amend the plan to permit it if they so choose.

Well, the document was written by a lawyer at some point - however, point taken, we wouldn't want to imply that we have lawyers on staff. Maybe Document-Consulting-Administrative?

This message brought to you by the American Society for the Employment of Actuaries Though as someone who is currently waiting on results from EA-2L I can't disagree too much with this perspective. To the original question, when someone asks me what our company does (and they want the short version), the top 3 things I would mention would be plan document work (Legal), testing and calculations (Compliance/Consulting), and processing contributions and distributions (Administrative). So if you asked me for a better name than TPA I would suggest something like an LCA (Legal-Compliance-Administrative or Legal-Consulting-Administrative - take your pick) Firm.