TheoDawg

For bankrupt employers, HATFA §2003(c) generally revised IRC §436(d)(2) to provide that the AFTAP is determined without regard to the adjustment of the segment rates under IRC §430(h)(2)(C)(iv) to determine benefit restriction under §436(d)(2) . For non-collectively bargained plans, the statutory amendment deadline was the last day of the 2016 plan year with the IRS having authority to extend this deadline. Question: Has this deadline been extended by the IRS, if so, to when? Also, what is the remedial amendment period that applies here if the deadline was missed. For example, even though non-collectively bargained, would this plan be eligible for the extended remedial amendment period under Notice 2016-80, i.e., 12/31/2018.

This question relates to the recharacterization of Pre-Tax Deferrals to After-Tax Contributions to correct an ADP test violation. Treas. Reg. Section 1.401(k)-2(b)(3)(ii) states that recharacterized excess contributions will be includible in the HCE's taxable income "as if such amounts were distributed" under the regulations applicable to distributions of excess ADP amounts. Does this require that recharacterized excess contribution must be adjusted for allocable earnings like in an actual corrective distribution would be, i.e., recharacterized contributions along with earnings reported on 1099-R, etc.? My understanding is that when recharacterizing correction option used, allocable earnings are not taken into account, i.e., recharacterized amount (and thus taxable amount reported on 1099-R, etc.) equals just the actual excess contribution without earnings. Any insight would be appreciated.