C. B. Zeller

See Table 1 here: https://www.irs.gov/retirement-plans/funding-yield-curve-segment-rates BBA 2015 extended the 90-110% corridor through 2020. I wouldn't be surprised to see it extended again before then. However the 25-year average now includes 10 years of very low interest rates, this combined with the fact that interest rates are now starting to rise again, means that the HATFA rates are not going to be very much higher than the unadjusted rates for long.

Once the IRS has assessed a penalty, it's too late to go back and use the delinquent filer relief program.

But is it "F. T. William" or "Fort William?" Asking the important questions here.

For what it's worth, Kevin Donovan and Kurt Piper quoted this same section of the gray book in their presentation at the 2016 ASPPA Annual, and argued that (b) is allowed as well. See the last slide here: https://www.asppa-net.org/Portals/2/PDFs/2016AnnualHandouts/WS18 - Deduction Limits for DB Plans and Combined Plans.pdf

The only reasonable way to deal with a single entry date in a 401(k) plan is to reduce the service requirement to 6 months and the age requirement to 20-1/2. Then they enter the plan on the first day of the plan year following. It's going to be up to the employer to decide whether the cost of allowing some additional employees into the plan outweighs the administrative burden of checking who is becoming eligible and handing out SPDs and enrollment kits one extra time per year. Edit: If this were a profit sharing plan, with 100% immediate vesting, he could use the 2-year eligibility rule to keep more people out. But of course that option is not available in a 401(k) plan.

This presentation has some good info: https://www.asppa-net.org/Portals/2/PDFs/2016AnnualHandouts/WS18 - Deduction Limits for DB Plans and Combined Plans.pdf Discussion of deduction year starts on page 24.

The 404 is limit is 25% of compensation paid during the tax year. So unless the sponsor also had a short tax year from 11/1 to 12/31 then there is no problem.

Assuming both of the 2 new owners are >5% owners, all 3 are HCE for 2018 and 2019.

Presumably the owner must be doing some non-union work; as the management, after all, he would be the other party in the collective bargaining agreement. In the next paragraph of the reg you quoted, 1.410(b)-6(d)(2)(i) it states "An employee who performs hours of service during the plan year as both a collectively bargained employee and a noncollectively bargained employee is treated as a collectively bargained employee with respect to the hours of service performed as a collectively bargained employee and a noncollectively bargained employee with respect to the hours of service performed as a noncollectively bargained employee." I think as long as you can account for the non-union hours, you can base a plan just on those hours (and presumably the comp paid just for those hours). However I can't disagree with ERISAAPPLE's suggestion to get advice from an attorney first.

There is a new code M for 2018 used to report loan offsets due to termination of employment. The withholding is 20% of (cash distribution + loan offset) and it is taken entirely from the cash distribution, since it can't be taken from the loan offset. There is no withholding on the amount rolled over.

Yes, unless your plan document says otherwise, you can use average annual compensation to test amounts that were allocated based on current compensation.

You can use any 414(s) definition of compensation for testing, it does not have to be the same definition used for allocations.

Larry, Not to doubt you, but can you provide a cite? Required beginning date is pretty clearly defined for a non-5% owner as April 1 of the calendar year following the year in which the participant turns 70-1/2, or retires. It doesn't make any reference to when pre-retirement in-service withdrawals begin. If the participant is not yet retired as of 12/31/2018, then her RBD would not be 4/1/2019, and therefore 2018 would not be a distribution calendar year, and therefore the distribution taken in 2018 would not have to comply with 401(a)(9).

Does testing on average compensation help? Does the document contain a fail-safe or any other language that would apply? If you have to fall back to the general test, you only need to satisfy the gateway if you cross-test. If you are able to pass by, for example, imputing permitted disparity on allocation rates, then the gateway is not needed.

SCP can be used to correct significant failures up to the end of the second plan year after the failure occurred. The deadline to make the 2015 SH contribution was 12/31/2016, so you would have until 12/31/2018 to self-correct that failure. Furthermore, insignificant failures can be corrected under SCP at any time. I can't determine for you whether or not the failure was insignificant, but based on the number of participants affected and the dollar amounts it may be.

I sincerely doubt there was a determination letter. We have as yet been unable to locate the original plan document though. Honestly there are quite a few document issues and we are planning to go to VCP after the 5500 issue is settled. The government might know the plan exists, because 1) they have been reporting profit sharing expense on their corporate returns for many years, and 2) we recently put in a new cash balance plan for this company with plan # 002 (and those 5500s have been filed timely).

The plan has never filed Form 5500 in the past. The plan started in 2005 and covered just the owner and his wife. The balance was over $250,000 due to a large rollover contribution in the first year. It continued to cover just the owner and his wife until 2012, when an employee became eligible. So we have late 5500-EZ filings for 2005 through 2011, correctable under Rev. Proc. 2015-32, and late 5500-SF filings for 2012 through today, correctable under DVFCP. However, we are still waiting for the client to find the end of year account balances for 2005 through 2007. Without that info we cannot prepare the EZs for those years. My question is, should we do the DFVCP filings now, in order to close the door on the DOL penalties, at the risk of potentially alerting the IRS to missing past EZs? Or should we wait until the client is able to find their old account statements, and do both submissions at the same time, hoping that neither the DOL nor the IRS come knocking at their door before then? Has anyone had a similar situation in the past? Am I just paranoid thinking that the IRS will see a "First return/report" with an opening balance greater than $250,000 and immediately come looking for the past EZs?

Correct, because the new law doesn't talk about rolling over a loan, it talks about rolling over a loan offset. The offset is the lump sum distribution of the outstanding balance of the loan. The participant can roll it over by paying the amount of the offset to the rollover account by the appropriate deadline.

No (maybe). In the DC plan, 1.416-1 M-7 does state that you cannot use the rule reducing the TH minimum to the maximum key contribution rate if the DC plan is being aggregated with a DB plan for coverage or nondiscrimination testing. However if your DB plan is frozen then (presumably) there were no accruals and so no testing would be required. So the plans are not being aggregated and you can reduce the DC TH minimum to 0. On the DB plan, if no key employee benefits during a given year, then the year is not counted in determining the employee's years of service for purposes of determining the TH minimum. So if their benefit satisfied the TH minimum in the previous year, then it should still satisfy it in the current year, provided that their high 5 year average comp hasn't increased. If the DB plan provides for TH minimum benefits under the DC plan, then I'm not sure. My feeling is that it's probably not required, since the purpose of allowing the DB TH minimum to be provided in the DC plan is to replace the minimum accrual, and if no accrual would be required for a given year then the corresponding contribution should not be required either.

It would depend on the document, but most that I've seen have language saying that a participant who terminates with 0 accrued benefit is deemed to have received a distribution of their benefit. In that case, I think you would be ok, since once they've been paid out you're done with them.

I think it would cause issues with 401(a)(26), specifically the prior benefit structure would not pass.

I agree with ETA. Here's a cite from 1.416-1 (emphasis added): T-4 Q. How is a terminated plan treated for purposes of the top-heavy rules? A. A terminated plan is treated like any other plan for purposes of the top-heavy rules. For purposes of section 416, a terminated plan is one that has been formally terminated, has ceased crediting service for benefit accruals and vesting, and has been or is distributing all plan assets to participants or their beneficiaries as soon as administratively feasible. Such a plan must be aggregated with other plans of the employer if it was maintained within the last five years ending on the determination date for the plan year in question and would, but for the fact that it terminated, be part of a required aggregation group for such plan year. Distributions which have taken place within the five years ending on the determination date must be accounted for in accordance with section 416(g)(3). No additional vesting, benefit accruals or contributions must be provided for participants in a terminated plan.

I recently wrapped up work on one of these plans that we took over towards the end of last year. Our software (ASC) doesn't support CB-FO plans so that was a challenge. There were other things that made this particular plan a challenge that I won't get into here. If you asked me would I take on this plan again, knowing what I know now, I would say yes, but only because it's a good client and I value the relationship with the advisor who brought us the plan. I wouldn't go seeking out this type of business in the future and I can't see myself recommending this plan design.

Contributions must be deposited by the entity's tax filing deadline in order to be deductible for that tax year. Minimum funding for a defined benefit plan (you didn't specify whether this is a DB or DC plan) must be made by September 15 for a calendar year plan, regardless of the type of entity.

The contribution becomes an asset of the plan on the date that it would have otherwise been payable to the employee in cash had they not made an election to defer. However the loss date as BG quoted is not defined as the date that it became a plan asset. It is defined as "the date on which each contribution reasonably could have been segregated from the employers general assets." I can certainly imagine a scenario where it's not reasonable for the employer to segregate the contributions immediately on the pay date; for example if the payroll processor sends them a report the next day after the paychecks are cut, then the contributions can't be reasonably deposited until after the employer receives the report.