C. B. Zeller

It's one possible method, although there are certainly others. As another example, in a cash balance plan, you might prorate the contribution in proportion to the hypothetical pay credits. I'm having some trouble understanding your claim that sec. 412 is not related to the individual benefit calculations. 412 says that for a single employer plan, the minimum funding standard is determined under sec. 430. 430 says that the minimum required contribution is equal to the target normal cost (plus a shortfall and/or waiver amortization charge, or minus the amount of excess funding). The target normal cost is equal to the present value of the increase in accrued benefits for the year, plan-related expenses and mandatory employee contributions notwithstanding.

What the referenced section says is that you can disregard the safe harbor matching contributions and perform the ACP test on only the discretionary match. If only NHCE received any discretionary match then the test will pass automatically.

Plan termination is not an exception to the 10% penalty on early withdrawals. If a participant takes a cash distribution upon plan termination and they do not meet any of the exceptions under 72(t) then the tax will apply. If they want to avoid the penalty then can roll over their distributions. For COVID distributions, whether or not the 10% penalty is waived is determined on an individual basis. When the individual files their 2020 tax return, they will determine whether or not they were a qualified individual, and if they were, they would be able to waive the 10% excise tax. This is true regardless of whether the plan is amended to provide COVID distributions. See Notice 2020-50.

Any reasonable method should be acceptable. One way you might do it, would be to prorate the total contribution in proportion to the actuarial present value of the increase in accrued benefit for the year. If this is in regard to a specific plan, you should ask your actuary.

I think you could get away with it, if you apply the fee first, before processing the distribution.

Does the plan provide for the calendar year data election?

No - because the amount payable to the participant is <$1000 after the fee. The fee is not considered part of the distribution. However, if the account is daily-valued, I wouldn't risk playing the market that close to the line. You process it as a cash payment today, but if it turns out after the market closes the investments went up 5%, and whoops, now it's over $1,000 even after the fee.

Do the owners have earned income (LLC/parternship) or are they W-2 employees (corporation)? If it is a corporation, find their pay stubs and confirm if the amounts were actually withheld from their pay. If they were withheld, deposit the amounts now, with lost earnings, and pay the excise tax. If they were not withheld, amend the returns. If it is a partnership/LLC, so there are no W-2s to refer to, then you have to look at the partners' elections (the partners do make a written deferral election before the end of the year, right?). Then, same logic as before. If they elected to defer the amount but it was never deposited, deposit it now; if they did not elect to defer that amount, then amend the returns.

Based on this I would agree with your interpretation. DFVCP is probably not required and an amended filing should suffice.

You can enter the amount on line 4g of the schedule I if it has not been appraised.

If the plan was not eligible to file SF for those years, because it contained non-eligible assets, then I think the DOL would not recognize those filings.

Why risk it? Just file the past years' 5500s now under DFVCP. Much cheaper than being assessed penalties by the DOL.

If the asset does not have a readily determinable market value, then it must be valued by an independent third party appraiser.

I agree with Bird. It sounds like the agent is on a fishing expedition. The sponsor is not required to retain proof that the notices were handed out. I would tell the agent that the notices were delivered by hand (or however they give them out) on approximately whatever date and leave it at that.

I do not know if there is a prescribed method, but I would think it should not be less than the amount that would be required for the plan to have passed the ADP test each year. Were you planning on self-correcting? Given that the failure spanned multiple years and involved 100% of the eligible NHCE population being excluded from the plan, I think this points to a significant failure which would have to be corrected under VCP.

Since you asked not to research it, I won't look it up, but if I recall correctly Notice 2016-16 prohibits a mid-year change to reduce the safe harbor formula. Since the change in the way the match is calculated could result in a smaller match for some people I think it would be prohibited. If the amendment requires the sponsor to true up the match at the end of the year, I think that would be ok. It would in essence just be changing the timing of the contribution, which I don't believe is protected.

This wasn't explicitly stated, but assuming OwnerCo is a corporation? Owner receives a W-2 and not self-employment income? You cannot "treat" deferrals as catch-up by election; you have to exceed a limit. $20,000 exceeds the 401(a)(30) limit by $500 so we have $19,500 deferrals plus $500 catch-up. $19,500 deferrals + $5,500 PS = $25,000 which exceeds the 415 limit (100% of compensation) by $3,000 so another $3,000 of deferrals can be reclassified as catch-up. Ultimately we end up with $16,500 deferrals + $3,500 catch up + $5,500 PS = $25,500.

To nitpick the terminology a little: plans are not part of a controlled group. Employers can be members of a controlled group. I assume what you meant to say is that employers A and B are in a controlled group together, they each sponsor their own plan, and neither plan covers employees of other members of the controlled group. Members of a controlled group are considered a single employer for most purposes. Therefore the employee who left company A and was hired at company B has not experienced a distributable event because they have not had a separation from employment. The fact that they are no longer eligible to participate in company A's plan does not make it a distributable event.

I'm not sure. The weird thing about this extension is that the amount due is increased using the effective interest rate not for the plan year to which the payment applies, but for the plan year which contains the payment date. If you make the contribution after the regular due date but before the end of 2020, then you will need to know the 2020 effective interest rate in order to apply it to 2019 minimum funding. However the 2020 EIR would not appear anywhere on the 2019 schedule SB. Not that you couldn't describe it in an attachment, but it just seems funny to me. For that reason I think it might be better shown on the 2020 schedule SB. For now I am thinking of this extension as more of a waiver of the sec. 4971 excise tax and PBGC reporting obligations, which helps me feel better about potentially showing a funding deficiency. I agree that we should wait for more guidance on this, to the extent possible. Presumably the filing deadlines have already passed for some plans which are taking advantage of this extension - how have they handled it?

Same here! But I would rather have been wrong and know it, than be maybe right but have no idea.

That is not a correction described in EPCRS. Mistake of fact is generally reserved for minor arithmetic or typographical errors. In this case the arithmetic was done correctly in calculating the match; the error was in applying the plan document's provisions.

I think the plan administrator is right - the benefit was paid in 2019. Whether or not the participant cashed the check is irrelevant. Was a 1099-R issued?

The popular consensus seemed to be that it would not be permissible. However I don't think there has been anything official one way or the other.

It applies to all types of plans. However it only applies to tax years beginning after 12/31/2019.

No. SECURE removed the notice requirement for the ADP safe harbor of 401(k)(12) and 401(k)(13) but did not remove it for the ACP safe harbor of 401(m)(11) and 401(m)(12).