JustnERPA

That was my thought too. But the non-key HCEs are excluded from the safe harbor, so the 4% is a much cheaper deal in this case, I presume.

Suppose plan A merges into plan Z. Plan A files a Final 5500 and shows the transfer amounts to plan Z. Also suppose Plan A uses a pre-approved document. Can Plan A file a Form 5310 to get a determination for its final year?

See 1.401(m)-2(a)(5)(iv). You may test only match exceeding 4% of pay (3.5% if QACA): (iv) Matching contributions taken into account under safe harbor provisions. A plan that satisfies the ACP safe harbor requirements of section 401(m)(11) or 401(m)(12) for a plan year but nonetheless must satisfy the requirements of this section because it provides for employee contributions for such plan year is permitted to apply this section disregarding all matching contributions with respect to all eligible employees. In addition, a plan that satisfies the ADP safe harbor requirements of § 1.401(k)-3 for a plan year using qualified matching contributions but does not satisfy the ACP safe harbor requirements of section 401(m)(11) or 401(m)(12) for such plan year is permitted to apply this section by excluding matching contributions with respect to all eligible employees that do not exceed 4 percent (3 1/2 percent in the case of a plan that satisfies the ADP safe harbor under section 401(k)(13)) of each employee's compensation. If a plan disregards matching contributions pursuant to this paragraph (a)(5)(iv), the disregard must apply with respect to all eligible employees.

Perhaps you describe the two options, SCP and VCP, to the employer. Include the pro and cons of each: costs and certainty, add your caveats, and have the employer choose.

The language you seek should be under the first paragraph of the safe harbor contribution section of the notice. It should say something like this: "The Plan may be amended during the plan year to reduce or suspend the safe harbor contributions. The reduction or suspension will not apply until at least 30 days after you are provided notice of the reduction or suspension." My understanding is that this means any amendment that reduces the safe harbor amount, including a change in the definition of compensation, must follow the safe harbor exiting rules under the regulations. That includes the 30-day notice and funding to the end of the 30-days, and changes the plan from safe harbor to not safe harbor (current year testing).

The IRS intentionally put in special treatment for corrections made for plans with automatic enrollment. The IRS was told automatic enrollment was good for getting more employees to save for retirement and that they should support that. At the same time, the industry was telling them that the 50% QNEC for a missed deferral was a significant deterrent to adopt automatic enrollment provisions. If you look further at Revenue Procedure 2019-19, you will see a sunset clause that these reduced correction costs for automatic enrollment plans will end for failures that occur after December 31, 2020. The IRS is saying that if these more lenient corrective provisions result in more employers adopting automatic enrollment, then the IRS will likely extend these provisions beyond December 31, 2020.

Never have

If the owner is the only employee over age 21 and with a Year of Service, then that would be the case. Of course, if any other employee was over age 21 and completed a year of service for eligibility then they are also grouped with the owner. But yes, we do this if testing fails and if doing improves the results.

If you are submitting under VCP, ask for the moon and negotiate as needed with the IRS agent to find something that the employer can afford and that the IRS can agree with, something reasonable.

But not as much as when you have tweetle beetles in a puddle paddle battle with their paddles in a bottle, which is a tweetle beetle bottle puddle paddle battle muddle.

The bargaining was to drop the match for the union and replace it with a nonelective so the union employees would not be required to defer. So the match was bargained for, and it was not wanted by the union. In the document we have, when the "union" exclusion is applied, the exclusion only allows union employees to be excluded if they bargained in good faith regarding retirement benefits AND that such bargaining does not require coverage under the plan. So even if that was marked, in this case, they would not be excluded from the plan overall, but if that provision is used, then perhaps they become excluded from the safe harbor match when this contract begins?

Actually there is a solution: just have her contact her representatives and senators and tell them to make Congress change the law! I'm sure they will listen intently.

An employer has a group of employees that are will become union members, the collective bargaining agreement begins mid-year. The calendar year 401(k) plan provides a safe harbor match. The union has negotiated to be eligible for deferrals in the plan and for some nonelective contributions, but no match. Can the plan be amended mid-year to exit safe harbor just for the union employee group only, to reflect the bargaining that occurred, but still keep safe harbor status for 2019 for the rest of the plan, the non-union portion?

Tried. The plan sponsor does not want to do that. The main question is whether or not the distribution was truly rollover eligible or not - how should the 1099-R have been prepared?

A fully vested NHCE participant, age 59.5, requested an in-service distribution last year of their entire account from a 401(k) plan, to do a direct rollover to an IRA. The plan sponsor approved. However, the plan does not have an in-service option at age 59.5, it has age 60 for some reason. They did not reach age 60 until this year. They currently do not intend to pay it back to the plan. EPCRS, Rev. Proc. 2019-19, 6.06(4): Make-whole contribution. To the extent the amount of an Overpayment adjusted for Earnings at the plan’s earnings rate is not repaid to the plan, the employer or another person must contribute the difference to the plan. The preceding sentence does not apply when the failure arose solely because a payment was made from the plan to a participant or beneficiary in the absence of a distributable event (but was otherwise determined in accordance with the terms of the plan (for example, an impermissible in-service distribution)). To me, the above (bolded) means the employer does not need to repay the amount to the plan. Let me know if you disagree. The question I have is the tax reporting of the distribution. Was it actually rollover eligible? Or because it violated the plan's in-service provision, is it to be reported as taxable? Would the answer change is this was distributed in error before age 59.5 and the payout included deferral accounts?