C. B. Zeller

The way I'm reading this is that repaid amount is treated as a rollover contribution, and would therefore not be included in the top heavy ratio. If the coronavirus-related distribution were an in-service distribution, that amount would of course be included in the top heavy ratio for 5 years.

Here is a recent article published by ASPPA discussing what types of plan contributions might be payable with PPP loans: https://www.asppa.org/news/retirement-contributions-and-paycheck-protection-program

I have a loan that originated on July 1, 2019. The loan ends on June 30, 2024. I am a qualified individual, and starting on April 1, 2020 I take advantage of the 1-year delay. My next payment is due April 1, 2021. As of April 1, 2020, before applying the provisions of CARES, I had a maximum term of 4 years, 3 months left to finish paying off my loan. Under CARES, the period of time between April 1, 2019 and March 31, 2019 is disregarded with respect to the 5-year limit of 72(p)(2)(B). Therefore, As of April 1, 2021, I still have 4 years, 3 months left to finish paying my loan. Therefore my final due date is now June 30, 2025.

No

I think this should be acceptable. One thing to consider is that you can not use the ACP safe harbor with a SECURE Act retroactive safe harbor. So if the plan was SH match before suspending, and then later becomes SH nonelective, the matching contributions will still have to be ACP tested. One argument against allowing it would be that notice 2016-16 prohibits a mid-year amendment to change the type of safe harbor (e.g. from match to nonelective). Obviously this predates SECURE, but I don't think it applies in any case, since we are not amending the safe harbor - we are terminating the existing safe harbor, and then at some later date, adopting an entirely new safe harbor regime. A better approach in this case might be to adopt the SECURE safe harbor after the end of the year, thereby making it not a "mid-year" amendment to which 2016-16 would apply.

You can't use component testing for the gateway, sadly. If you're cross testing any component then the whole plan has to pass the gateway. There are two alternatives to the gateway. You don't have to satisfy the gateway if either 1. the plan has broadly available allocation rates, or 2. the plan has age-based allocation rates that are based on either a gradual age or service schedule, or a uniform target benefit allocation. It is unlikely that you will satisfy either #1 or #2 - this is why most plans just do the gateway. The only other way out would be if you could test the plan on allocation rates (with or without permitted disparity). Or, I suppose, if it turned out that the employment agreement you mentioned, which promises 3% of pay, was actually a collective bargaining agreement and retirement benefits were the subject of good faith negotiation.

I agree that they can be prospectively eliminated if they have not yet entered the plan, I'm not sure if that's what EOB is referring to there. My copy of the EOB is in dead tree form and sitting in an office which I don't expect to return to any time soon, so I can't reference it, but I am not aware of any superseding guidance. The plain language of 2016-16 pretty clearly prohibits any "mid-year change to reduce the number or otherwise narrow the group of employees eligible to receive safe harbor contributions." I can see an argument in favor of allowing it though. Since a SH plan is not required to provide the SH to HCEs, you could structure a plan to provide that the SH is given to NHCEs and a separate, 100% vested match with the same formula is given to the HCEs. There would be no functional difference between this and a safe harbor plan that covered all employees, except that the match for the HCEs could be eliminated mid year. If you can do that, why shouldn't the option be available to all SH plans without the extra complexity?

True, I suppose I should have added "...unless you want to show an unpaid minimum contribution" to the end of my comment. We might be getting some mileage out of the new PBGC reporting questions on the 5500-SF this year, if that's the case.

If we're only looking at the deferral and match portions of the plan for purposes of coverage, you can use the early participation rule to disaggregate only the otherwise excludable NHCEs.

Plans are not required to offer loans in the first place, CARES doesn't change that. It increases the maximum amount of a loan that can satisfy 72(p) but plans which offer loans are currently free to use lower limits than those stated in 72(p) so I don't believe you would be required to increase to the new maximums.

If they're not eligible yet, then you can prospectively eliminate their eligibility. However 2016-16 prohibits a mid-year amendment which narrows the group of employees eligible for the SH, HCEs or not.

It seems that it's going to be necessary. CARES extended the minimum funding deadline for DB plans to 1/1/2021 and the Schedule SB can't be completed until after the funding contribution has been made.

The language that XTitan posted is from a bill that has not been signed into law yet, so still subject to change. Don't rely on it. That said, the bill as it stands now only contains an RMD waiver for DC plans and IRAs.

One more thought on this, if you're talking about EPCRS then you're talking about qualification failures. You can't adopt an amendment that will intentionally cause a failure and then expect to be able to rely on SCP to fix it.

Federal law doesnt "allow" the wife to be the beneficiary, it requires her to be the sole beneficiary if the plan is going to be exempt from the QJSA requirements. If the participant was married for less than 1 year before his death, the plan is not required to recognize the marriage. What is Fidelity's role in this that they made the decision about who to pay out? Are they the Plan Administrator? The SPD will contain information about how to submit an appeal for a claim of benefits. If the widow believes she is entitled to benefits, she should start there.

Bird, I think the bolded section applies when the employer is increasing the match formula, for example changing from a basic SH match to an enhanced match. What Purplemandinga is talking about is making additional employees eligible retroactively. I am curious what the employer is trying to achieve with this. Why not just make the participants eligible on the effective date instead of messing around with retroactive entry?

A participant is still required to obtain all other currently available distributions from the plan and any other plans maintained by the employer before they can take a hardship distribution. I agree he has to take the $10k from the rollover source (subject to mandatory withholding) before the hardship can be taken from the deferral source.

What was the due date before the recent IRS extension? If it was April 15, then it has been extended to July 15. If the PLLC is taxed as a sole proprietorship then this is probably the case. If it was anything other than April 15, it is unchanged. If the PLLC is taxed as an S corp or as a partnership then its return and contribution were probably due as of March 15, unless an extension was filed timely.

This was in today's BL newsletter: https://www2.ascensus.com/news/industry-regulatory-news/2020/03/19/legislation-to-be-introduced-to-suspend-rmds-for-2020-exempt-social-security-income-from-taxation/

Prior discussion on the topic:

Employee entered the plan and was eligible to defer beginning on their date of re-hire, 8/1/2019.

No. See #3 under "Examples of impermissible mid-year changes" here: https://www.irs.gov/retirement-plans/mid-year-changes-to-safe-harbor-401k-plans-and-notices

I agree with CuseFan, if the CEO being paid on a 1099 then he is by definition not an employee. Even if he should be classified as an employee, the plan probably has the Microsoft language which says it excludes employees treated as independent contractors. You might have a leased employee situation though, or even a management service group.

No, I don't think so. But you should be able to spin off their portion of the 401(k) and then terminate that new plan. I do not know if the successor plan rule would prevent you from immediately adopting a new 403(b) after terminating a 401(k).

The change made by the new hardship regs was that the safe harbor reason for casualty loss now reads "Expenses for the repair of damage to the employee's principal residence that would qualify for the casualty deduction under section 165 (determined without regard to section 165(h)(5) and whether the loss exceeds 10% of adjusted gross income)." 165(h)(5) is the part that limits the deduction to declared disasters. It still has to be a casualty loss, e.g. a flood, fire, etc.