C. B. Zeller

I agree that it could be done, but I would recommend against it. A better approach is to exclude all HCEs from the safe harbor, and rely on the plan's individual-groups allocation formula for nonelective employer contributions to make an allocation to some or all HCEs, if desired. This is a little bit more complicated (but only a little bit) and it gives the employer much greater flexibility.

If the document says that HCEs get the safe harbor then HCEs have to get the safe harbor. If they want to change that, it will need a plan amendment. Whether you can do that mid-year for the current year or whether it will have to wait to take effect until the next plan year is circumstance-specific. Did the safe harbor notice say that the employer may reduce or eliminate the contribution mid-year? Is the employer operating at an economic loss? Regardless, you can't eliminate benefits that have already been accrued. The anti-cutback rules protect both HCEs and non-HCEs alike.

What you are talking about is called a Qualified Charitable Distribution (QCD). The IRS has a webpage about QCDs (https://www.irs.gov/newsroom/qualified-charitable-distributions-allow-eligible-ira-owners-up-to-100000-in-tax-free-gifts-to-charity) and you'll be able to find more information by googling that term. Both IRAs and qualified plans are subject to the RMD rules. All IRAs owned by the same individual are lumped together for purposes of RMDs, however qualified plans must each separately satisfy the RMD rules. In other words, if you have 2 IRAs and 2 qualified plans, you can take one distribution from either IRA to satisfy the RMD for both IRAs, but you must take a separate distribution from each qualified plan. Only a distribution from an IRA can be a QCD. Maybe. Clearly your client is over age 73 if they are looking at their RMDs. Are they retired from the employer who sponsors the qualified plan? Or are they a 5% owner of the employer? If either of those are yes, then they are required to take an RMD from the qualified plan this year, and that would have to be taken before they could roll over any additional amount to the IRA. You would also need to check that particular plan's rules to see if the distribution would be allowed; there could be restrictions on what they can do if they are still working or if they want to take less than the entire account. The QCD can be any amount up to $100,000 per year. Correct.

I think manually checking the box on the hand-signed copy of the form that gets attached to the e-filing is fine. What I think is a problem is you modifying a document after it has been signed by the plan administrator. Either have the plan administrator check it themselves before they sign it, or send them a new copy with the box already checked. No problem. I probably wouldn't but ultimately I don't think it will make a difference.

A hardship is not an eligible rollover distribution, so there is no mandatory withholding. There is 10% automatic withholding but that can be waived. I don't see a problem here.

If I'm understanding the original question correctly, I believe CDA TPA intends to file a 5558 and mark the 5558 box in the software, but the client has already been provided with a copy of the 5500-SF for manual signature without that box checked. CDA TPA is asking if they can check the 5558 box on the paper copy of the 5500-SF after they receive it back, signed by the plan administrator, before scanning it and attaching the scanned copy to the electronic filing. I would not advise you to modify a document after it has been signed by the plan administrator in any way. However I would have no problem if the plan administrator manually checked the 5558 box before signing the 5500-SF. As long as all of the data elements on the manually-signed 5500-SF match the electronically-filed 5500-SF then, in my opinion, it is a valid and complete filing. I don't see how it matters whether the "X" in the box on the paper copy was placed there by your 5500 software, or a PDF editor, or a pen in the plan administrator's hand. It might be easier to send them an updated copy with the box checked, and say "If you don't get form back to us by X date, we will put you on extension and you must sign this attached form instead of the earlier one."

IRC 402(e)(1)(A)

I agree, no controlled group. No attribution because neither the parent nor the child owns more than 50%. IRC 1563(e)(6)(B) Jak, the issue you're thinking of has to do with controlled groups that are formed between spouses (or unmarried parents, for that matter) who are both owners of their own businesses when they have a young child together. The 1563(e) rules automatically attribute ownership from a parent to a minor child, so a controlled group would always exist because the child would be attributed all of the parents' ownership and therefore the child would be deemed to own 100% of both companies. SECURE 2 didn't change 1563, but it changed 414(b), (c), and (m) to say that a controlled group or affiliated service group will not be considered to exist merely because of the existence of a minor child, or because the spouses live in a community property state.

EACAs have a required notice and QACAs have a required notice but I don't believe there is a required participant notice for ACAs which are neither EACA nor QACA.

If a federal district court rendered such a decision, would that be binding precedent that other plan administrators could reply upon? Would it be applicable nationwide, or only within the same federal circuit? Could we end up with different precedents, and therefore different standards for the same issues, in different parts of the country?

Verily, and with great haste, thou shalt consulteth thy plan's governing documents and discover therein the answers thou seekest. Should fortune smile upon thee, thou may findest that thy plan be graced with a determination letter, be it sealed by the hand of the wise ones who dwell within the halls of the Internal Revenue Service, granting reliance upon the terms found therein. In that happy moment, thou shalt knowest that thy plan's allowances of in-service distribution of rollover accounts shall never be said to fail to satisfy the requirements of section 401.

Assuming no credit balances and no annuities purchased for NHCEs, the AFTAP with a BOY valuation date is (assets) / (funding target). For a EOY valuation, the AFTAP is based on the prior year's funding values, and the formula is (assets + contributions adjusted to valuation date) / (funding target + target normal cost). In both places, "assets" means plan assets as used for sec. 430 (minimum funding) purposes. For a plan with an EOY valuation date, the 430 assets do not include any contributions made for the current year prior to the valuation date. You increase those contributions at the effective interest rate to the valuation date, and subtract them from the value of the trust to get the value of assets. This rule is found in 1.430(g)-1(d)(2) So the numerator for an AFTAP measured at EOY is (assets + adjusted contributions) = ((trust account value - adjusted contributions) + adjusted contributions) = (trust account value) Which means it ends up being the same thing, but not maybe not for the reason you were thinking. I would recommend discussing this with the actuary who will be signing the AFTAP.

Assuming that the plan year is the calendar year, then I agree.

For distributions, the stability period can be the plan year, calendar year, plan quarter, calendar quarter, or calendar month containing the distribution date. The applicable interest rate can be determined as of the 1st, 2nd, 3rd, 4th or 5th month preceding the stability period, or may be an average of interest rates during those months. See 1.417(e)-1(d)(4). For funding, the segment rates are the ones published for the applicable month, which is the month containing the valuation date. However the plan sponsor may elect an alternative applicable month of one of the 4 months preceding the month containing the valuation date. The plan sponsor may also elect to use the corporate bond yield curve instead of the segment rates. Once an election is made, it may only be changed or revoked with IRS approval. See 1.430(h)(2)-1(e).

WDIK has the correct code cite. In addition, the instructions to Form W-4R state (emphasis added): Of course, this assumes that the distribution in question is an eligible rollover distribution. Is it? If this is a 401(k) hardship distribution, for example, that would not be an eligible rollover distribution and the 10% (not 20%) automatic withholding could be waived.

The outcome of a VCP submission can sometimes depend on what evidence the employer can provide that they intended to do the right thing. Cuse's observation about 204(h) notices is a great example. You could request an anonymous pre-submission conference to get an idea of how open they would be to this correction. My guess is that they would be ok with it, since it is in the participant's favor and there is some evidence to back up the employer's position.

Both IRC 412(d)(2) and temp reg 11.412(c)-7 refer to an amendment which is adopted no later than 2-1/2 months after the close of the plan year. To me, that means adopted, not resolved to be adopted. That said, what is an amendment really? In our world of administrators and actuaries we tend to think of the amendment as being something very formal that is spit out of our document system when we click the amendment button and that says "Amendment" in bold letters at the top. However I have been told by more than one lawyer that there may be other things that could be considered to be an amendment. A board resolution that clearly specified the changes to be made might be enough.

This seems like a procedural question. The employer should come up with something reasonable, document it, and apply it consistently.

It will depend on whether or not LawLLP is a predecessor employer with respect to Joe's PLLC, within the meaning of 1.415(f)-1(c). This is a facts-and-circumstances determination, so BG's recommendation may be apt if there is any ambiguity.

No, LTPTEs do not need to get SH match. However the plan document needs to say that they won't get it. (proposed) 1.401(k)-5(e)(2)(i) The plan also does not lose its deemed top heavy exemption merely because it excludes LTPTEs from the safe harbor contribution. 416(g)(4)(H)

Tom, the issue is not the 415 limits but the combined deduction limit under IRC 404(a)(7). A substantial-owner DB plan would be exempt from PBGC coverage so the maximum deductible contribution between the two plans is limited to 31% of compensation, unless the deductible contribution on the DC plan does not exceed 6% of compensation. I am not sure how you could "re-classify" contributions as employee after-tax contribution after they were made, since those types of contributions must be designated as such at the time they are contributed to the plan. But if you can figure out how to make that work then you could stay at the 415 limit in the DC plan since those contributions do not count towards 404, while keeping your deductible contributions to no more than 6% so you can make a large deductible contribution to the DB plan. Another option would be to design a DB plan with a small contribution for the first year, such that the combined contributions between the two plans do not exceed 31% of compensation, and then increase the contributions next year. If you are close to retirement (within the next 10 years) and want to accrue the largest possible amount, this could be advantageous as it gives you another year of accrual towards your eventual 415 maximum.

RTFD

Yes, I guess I was thinking about a 2023 plan year based on a 0% ADP for 2022. But a 3% SHNEC could be adopted for 2024 before 12/1/2024.

Agree that HCEs over age 50 could make catch-up contributions during the current year. If they are key employees and the plan is top heavy, this would also allow them to make contributions without triggering the top heavy minimum for the non-keys, since catch-up contributions in the current year are disregarded for top heavy. Assuming that the plan did not switch to prior year testing during the last 5 years, then it could switch to current year testing. However if none of the NHCEs defer in the current year then you are back in the same situation. Another option would be to do a 4% safe harbor non-elective contribution for the NHCEs.

I'd also be concerned that the change to the method used to calculate the safe harbor match would have to be disclosed in an updated safe harbor notice. Which obviously you can't do after the end of the year, so it would be impossible to make this change and retain the safe harbor. The result being that you lose the safe harbor and have to be ADP/ACP tested if you fail the 414(s) test.