C. B. Zeller

The default form of benefit in a DB plan is always QJSA. According to 1.417(e)-1(b)(1), a benefit can be distributed in the form of a QJSA once the participant reaches the later of age 62 or NRA without the consent of the participant or the spouse. Any other form of distribution, such as a lump sum, would require consent.

Assuming the plan was properly amended to provide that QNECs are non-forfeitable at the time they are allocated, then I do not see a problem with this.

Karoline - What you might be thinking of is for a shareholder-employee in an S-corporation, they receive income both from their services as an employee (W-2) and from their investment as a shareholder (K-1). For that scenario you would only use their W-2 compensation. For partnerships, including LLPs, compensation is defined as net earned income, which is calculated in the usual way: K-1 earnings less one half of self-employment taxes, yadda yadda. Be certain to account for the portion of FICA taxes that were paid on their W-2 in order to accurately calculate the self employment taxes.

There were some changes to the hardship provisions in both the House and Senate versions but the final version of the bill made no change to the current law. There is a good comparison chart here: https://www.groom.com/wp-content/uploads/2017/12/Final_Comparison_Chart.pdf

On the K-1, underneath where it says "Schedule K-1" does it say Form 1065 or Form 1120S? 1065 is for partnerships, including LLCs, and 1120S is for an S-corp.

The plan is deemed not top heavy only if the safe harbor matching contribution is the only employer contribution. The minute you add in a dollar of discretionary profit sharing, the top heavy minimum is required. As Tom said, the safe harbor match does count towards the 3% top heavy minimum.

Re-reading the reg I agree that the 30 day period is required regardless of whether the employer is experiencing an economic loss. 1.401(k)-3(g)(1)(i)(A) states: which would seem to imply that the 30 day wait is only required if the reduction or suspension is happening in accordance with a provision in the annual notice. However 1.401(k)-3(g)(1)(i)(C) goes on to say: It seems a little odd that the regulation would specify 30 days in (A)(2) but not (A)(1) even though it applies to both. But such is life.

See reg. 1.401(k)-3(g)(1) An employer may suspend or reduce safe harbor contributions mid-year if the plan is amended during the plan year, and provided they meet certain other conditions. Obviously it is too late to amend for 2016 so the employer will have to make the contributions. EDIT: Next paragraph is incorrect. Disregard. For 2017, if the employer is operating at an economic loss as defined in section 412(c)(2)(A) then they may suspend the safe harbor contribution for the remainder of the year, provided they amend the plan on a timely basis.