C. B. Zeller

Depending on the timing, you might be able to do a 60-day rollover by paying the amount to the IRA.

Then you can't do it. Notice 2016-16 covers permissible mid-year changes to safe harbor plans, and prohibits a mid-year change to reduce or narrow the group of employees eligible to receive safe harbor contributions.

The major thing you need to be aware of with using different eligibility for deferrals and safe harbor match, is that you no longer get your free pass for top heavy. If the plan ever becomes top heavy, you will be subject to the top heavy minimum, even if the only other employer contribution for the year is the safe harbor match. Other than that, there is no problem with having different eligibility requirements for deferral and match. For the ADP test, the employees who have not completed 1 year of service are disaggregated as otherwise excludable, and as long as they are all NHCE that group does not need to be tested. For the other group they satisfy the ADP/ACP test by way of the safe harbor match.

Is it 1 plan covering both entities, or 2 plans tested together?

No.

Generally deferrals have to be withheld from amounts paid during the year. Was the pay and the deferral included in their 2019 W-2?

Compensation for the ACP test must be 414(s) compensation. If you are using anything other than a safe harbor definition of compensation, such definition has to be reasonable, and it has to satisfy the compensation ratio test. I have no idea whether a definition that excludes all pay after a given date would be considered "reasonable."

I don't know that there has been any official word on the use of code 2 for coronavirus-related distributions, but it seems like a reasonable approach. The loan offset is a qualified loan offset (code M) since it is due to termination of employment. It probably benefits the participant the most if you do $80,000 from the account as code 2, $20,000 from the loan as code 2M, and $20,000 from the loan as code 1M. Then they have the opportunity to repay $20,000 of the loan offset to an IRA by their tax filing deadline for 2020 in order to avoid being taxed on it and avoid the penalty under 72(t).

Read the plan document carefully. Chances are that it states that additional profit sharing contributions will be provided as necessary to satisfy the minimum gateway. If this language is there, then you have an operational failure due to failure to follow the plan document, which can be corrected under SCP. If the plan document does not contain the gateway language, then you have a demographic failure, which can not be self corrected and must go VCP as Mike stated.

Then, same thing, except replace 7% with 4% from my previous reply.

Whatever aggregation/disaggregation is done for coverage, must also be done for nondiscrimination. You have to aggregate the SHNEC and the discretionary PS for coverage; you have to do the same for 401(a)(4). It sounds like some employees are getting a 3% allocation rate and others are getting 7%. If 100% of the HCEs and at least 70% of the NHCEs are getting the 7%, then the general test is satisfied on an allocation rate basis and you are done. If not, then you can try other testing methods, such as cross-testing. If the highest HCE allocation rate is 7% then 3% is plenty for the gateway. If you are unable to pass testing, then an -11(g) corrective amendment would be needed to increase contributions for enough NHCEs to pass testing. I am not sure why top heavy would be an issue if every employee is getting at least 3% by way of the SHNEC.

This article by Robert Richter compares a few different interpretations of CARES 2202(b)(2): https://www.asppa.org/news/browse-topics/covid-19-loan-repayments—how-many-licks-does-it-take-get-center-tootsie-roll-pop

Here is the language from 404a-5(c)(3)(i)(B): If there is a change to the information described in paragraph (c)(3)(i)(A) of this section [individual expenses charged to the participant's account], each participant and beneficiary must be furnished a description of such change at least 30 days, but not more than 90 days, in advance of the effective date of such change, unless the inability to provide such advance notice is due to events that were unforeseeable or circumstances beyond the control of the plan administrator, in which case notice of such change must be furnished as soon as reasonably practicable. I think passage of the CARES Act meets the standard of being unforeseeable/beyond the control of the plan administrator. Adding the loan provision might not be, but under the circumstances I agree it would do more harm than good to make participants wait the 30 days before making loans available.

When theorizing about loans, sure. Loans use end-period amortization, just like a mortgage, so it makes sense to think about it that way. It also helps to pretend that a month is exactly one-twelfth of a year. In the real world, we write loans with due dates that coincide with payroll dates.

Since the earlier post, the NJ bill has now been signed into law. https://www.archerlaw.com/covid-19-legal-digest-covid-19-and-notarizing-documents-covid-19-and-hippa/

No need, CARES sec. 3608(b) allows the plan to use its certified AFTAP for the plan year ending 6/30/19 as its AFTAP for the 7/1/19-6/30/20 and 7/1/20-6/30/21 plan years.

According to this ASPPA article, yes. https://www.asppa-net.org/news/browse-topics/irs-5500-extension-comes-short

It's not "subsequent" if it's due before the delayed payment. Going back to my earlier example, and using monthly payments. Payment #10 was originally due April 2020. It is delayed by 1 year under CARES. It is now due April 2021. According to the amortization schedule, payment #n+1 is due 1 month after payment #n. Therefore, after adjusting as required under CARES 2202(b)(2)(B), payment #11 is due May 2021, #12 is due June 2021, etc. Payment #19, which was originally due January 2021, is now due January 2022. Under your interpretation, if I'm understanding correctly, you would say that Payment #19 remains due January 2021. That would be before the due date of payment #10, which is the payment that was originally delayed. This is a logical contradiction, you can't have payment #19 due before payment #10. That would make #19 your actual 10th payment, meaning that the participant did not receive the full 1 year delay afforded under CARES.

The act specifically says any subsequent repayments shall be adjusted to reflect the delay in the due date. It does not say only subsequent repayments with due dates occurring in 2020.

CARES 2202(b)(2)(B): any subsequent repayments with respect to any such loan shall be appropriately adjusted to reflect the delay in the due date under subparagraph (A) and any interest accruing during such delay. I take this to mean that all of the payments subsequent to the first delayed payment are adjusted under this subparagraph. From a practical standpoint you essentially just insert a year into the amortization schedule with no payments. Payments stop between April 1, 2020 and March 31, 2021, then resume on the normal schedule, increased for interest and for the extended term of the loan, on April 1, 2021.

I agree with both 1 and 2. Harder is a matter of perspective, I suppose.

Right now, chances are your plan document says that once a participant reaches age 70-1/2 and is either a 5% owner or retired, they must receive a distribution by April 1 of the next year, and also by December 31 of that year and each year following. A plan must always be operated in accordance with its written document, so you have to either a) make those distributions, or b) amend the plan document. If you amend the plan document, then those distributions would not be made. Your amendment might include a provision allowing those distributions to be made if the participant so elects. If you do not amend the plan document, then the distributions must still be made - not because of any requirement in the Code, but because the document says so. That distribution would be eligible for rollover because it is not an RMD.

A qualified individual includes an individual "who experiences adverse financial consequences as a result of ... closing or reducing hours of a business owned or operated by the individual due to such virus or disease." If the owner can't drum up the work, then it seems to me that the business would be experiencing reduced hours, thereby making the owner a qualified individual.

Website 1 is referring to the normal suspension of loan payments during an unpaid leave of absence of up to 1 year. This existed prior to the CARES Act. Website 2 is referring to the provisions of CARES Act sec. 2202(b) which allow a Qualifying Individual (as defined in the CARES Act) to suspend loan payments with a due date occurring in 2020 for 1 year. This can be used to extend the overall length of the loan beyond the 5 year max thanks to a specific provision in the CARES Act.

It sure is. 3405(e)(10) applies. You can use Form W-4P or a substitute.