C. B. Zeller

Good point, I wasn't thinking about participants who might not have a smartphone. They could bookmark the page on their phone or save a copy of the disclosure after opening it.

What's the reasoning here? In this situation I think hard copy is worse because it results in more effort on the part of the participant to be able to access the disclosures.

Except that you can't click on a piece of paper. My impression is that the DOL wants the disclosures to be as easy to access as possible. Requiring a participant to read a URL off a piece of paper and type it in to their browser, especially if it is a long URL, is not easy and few are likely to actually do it. I could see a QR code being ok on a printed notice though.

It is a safe harbor definition to exclude deferrals. Deferrals includes sec. 125 deferrals (which includes pre-tax HSA contributions) and also 401(k)-type deferrals. If you excluded just sec. 125 deferrals but not 401(k) deferrals it would not be a safe harbor definition.

Extended to July 31 https://www.irs.gov/retirement-plans/deadlines-extended-for-403b-plans-and-pre-approved-defined-benefit-plans

Thanks for reading carefully Mike. Otherwise excludables would not have to receive the gateway, assuming that there are no otherwise excludable HCEs. They do have to get the TH minimum, although if they are not eligible for the DB plan then they would only have to get the DC TH minimum.

If there was actually a termination of employment, probably nothing - but who knows if there are other facts we are missing. Maybe the participant took an in-service withdrawal prior to termination? Figured it couldn't hurt to throw it out there.

The 1099-R itself will have the answer. If the code is 1M or 7M then it is a "qualified plan loan offset" and it can be rolled over by paying the amount of the offset to an IRA before the individual's tax filing deadline (presumably 7/15). Generally this is what occurs when defaulting on a loan in conjunction with a termination of employment. If the code is 1L then it is a deemed distribution which is not eligible for rollover. If it is code 1 or 7 then it is a loan offset which can be rolled over subject to the usual 60-day deadline. In other words it's too late now.

1.416-1 Q&A M-12 provides the TH alternatives for an employer who maintains both a DB and a DC plan. 1.401(a)(4)-9(b)(2)(v) contains the combo gateway rules.

Agreed, my use of the term "waived" was sloppy language. I apologize. As of yet there is no guidance specifying a method for making the election, nor a deadline to do so. Presumably the sponsor could make the election even after the 1st day of the 10th month of the plan year and still have it apply.

I am having trouble parsing your question, but the simple version is this: if your plan has different eligibility requirements for deferrals and safe harbor, then it is subject to the TH minimum.

The only authority would be to request a coverage determination from the PBGC - which is a fairly painless process, actually. It can also happen when you have the benefit for a group defined as 0, or if you have employees who met the plan's entry requirements, but never satisfied the hour requirement to accrue a benefit in any year. In both of those cases I think you still have to count them as active.

A plan is exempt from the top heavy minimum if it "consists solely of" deferrals and match which satisfy the ADP/ACP safe harbor. IRC 416(g)(4)(H) If you have participants who are eligible for deferrals but not for safe harbor, then that portion of the plan is not satisfying the ADP safe harbor (the portion of the plan covering otherwise excludable employees is subject to the ADP test, but generally passes automatically as long as there are no HCEs). Therefore the plan as a whole no longer qualifies for the TH exemption.

I think all plan participants (and beneficiaries) have to fall into one of 3 categories: active participants, retired receiving benefits, and terminated but entitled to future benefits. Any participant who is neither retired and receiving benefits, nor terminated and entitled to future vested benefits, would have to be an active participant. If there is any doubt, request a coverage determination from the PBGC.

It added a new safe harbor, while leaving the old one in place. I think that's what most of us would prefer - since many sponsors are probably comfortable with their current understanding of their obligations and happy to continue doing it that way.

CARES Act waived the requirement to certify an AFTAP for any plan years beginning or ending in 2020. However, if you wanted to certify one anyway, because maybe your 2020 AFTAP would be materially higher than your 2019 AFTAP, then I do not believe the due date would be extended.

There was a law a while back that explicitly permits in-plan Roth conversions of amounts which would otherwise not be distributable. The converted account remains subject to whatever withdrawal restrictions applied before the conversion. See Notice 2013-74. This is optional of course; plans are free to restrict in-plan Roth conversions to amounts that would be otherwise eligible for a distribution.

I recommend you read the instructions on the site. The definitions are under the "Glossary" section. Recovery Date - The date that the Principal Amount is restored to the plan. Final Payment Date - The date on which Lost Earnings is paid to the Plan, if later than the Recovery Date.

Doc - you are correct about CARES 3608(b). However the act says that the plan "may elect" to treat the 2019 AFTAP as the 2020 AFTAP - it is not required. What David is saying, and please correct me if I am misinterpreting, is could/should a plan sponsor instruct the actuary not to certify the AFTAP for 2020, and also not elect to apply CARES 3608(b), thereby causing the plan to have a presumed AFTAP <60% as of October 1, 2020 (assuming calendar year). One effect of having an AFTAP less than 60% is that the plan is not permitted to pay lump sum benefits. Not having to pay lump sums may be advantageous to the plan's financial health after a large drop in the value of plan assets. I feel like this could be construed as administrator discretion in the availability of a form of benefit. If one of my clients asked me if they could do this, I would advise against it.

In addition to the TGPC, ASPPA has a CPC module about nonqualified plans. It's not specific to 457(f) plans but they are on the syllabus. Derrin Watson has a 457 book available on erisapedia.com; it is, like everything the man writes, excellent. But it is more of a reference manual than a training resource.

They have until the deadline of their 2019 tax return to make deductible contributions for 2019. Even if they already filed, they can make a contribution now as long as the deadline to file hasn't passed. Of course, if they filed based on a different contribution amount they will have to amend their return.

I think what AdKu is trying to ask is, is an allocation from the suspense account in a QRP considered an annual addition? The answer is yes. If the sole proprietor's net earned income for the year is 0, then their annual additions limit is 0, and they may not receive an allocation from the suspense account.

SCP is available to correct operational failures and certain plan document failures. An operational failure is a failure that arises when the plan does not follow the terms of its plan document. If the plan is making hardship distributions available in accordance with its document, then there is not an operational failure to self-correct. Violation of the nondiscrimination rules of 401(a)(4) results in a demographic failure, which can not be corrected by SCP. That is as far as I am willing to go with any degree of certainty. Wild speculation follows.... Considering that VCP is a voluntary submission, and the plan sponsor's submission to the IRS must include a proposed method of correction, I think the question is less "What would the IRS ask for" in terms of a correction, but more "What proposal might the IRS find acceptable?" If there were any demonstrable harm resulting from the failure, that would be a good starting point. For example, if an NHCE terminated employment in a prior year in order to gain access to their retirement funds, but might have remained employed if a hardship withdrawal option had been available to them at the time, then maybe the plan could propose making additional contributions to this employee to make up for the plan years that the employee missed out on. It's harder if there are no specific events to look to. The plan sponsor might say that there were no requests for distributions, therefore it is reasonable to conclude that no one would have taken one even if they had been available, therefore there was no actual harm done by the non-availability of hardship distributions, therefore no correction is needed. However this discounts the possibility that the NHCEs might have made 401(k) contributions at a greater rate if they knew they would have access to their contributions in the event of a pre-retirement financial hardship. Therefore the sponsor might be justified in proposing to make additional contributions to each NHCE's account for the period which the failure occurred, to make up for the lost deferral incentive (a term I just made up). Maybe, and this is a real stretch, the plan would consider "invalidating" the hardship withdrawal provision for any years that 401(a)(4) was not satisfied. This might involve requiring any HCEs who received hardship withdrawals during that time to repay those withdrawals to the plan, with earnings. I think this is unlikely to be acceptable since plan correction principles are generally not in favor of cutting back participants' rights under the plan, even HCEs' rights. This an interesting question. Thanks for asking!

Here is the text of CARES 3608(a): It says the amount is increased for interest from the original due date using the effective interest rate for the plan year containing the payment date. I understand this to mean: (1) X = MRC calculated as of the val date 1/1/2019 (2) Y = minimum due as of normal minimum funding deadline of 9/15/2020 = X * (1 + 2019 EIR) ^ (20.5/12) (3) Z = minimum due as of 12/31/2020 using CARES extension = Y * (1 + 2020 EIR) ^ (3.5/12) or, alternatively (4) Z = minimum due as of 1/1/2021 using CARES extension = Y * (1 + 2021 EIR) ^ (3.5/12) 4 seems highly impractical for a calendar year plan, as it would require you to have calculated the 2021 EIR by the first day of the plan year! Theoretically possible though, if your 2020 accruals are flat dollar amounts since the segment rates for 2021 will be published in September 2020.

CARES Act sec. 3608(a) extended the due date for any contribution due during 2020 to 1/1/2021. It has to be adjusted for interest to the date actually contributed, using the effective interest rate for the year in which the actual deposit occurs, not the 2019 effective interest rate.