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?

Adopt a resolution to rescind the previously adopted resolution to terminate the plan.

Restatements are not required. Taking an unnecessary risk is not prohibited. Here is my understanding: 1. If you want to maintain an ongoing pre-approved plan you must restate by the end of the IRS restatement window to maintain document compliance (e.g. 4/30/2020 for a pre-approved DB plan). 2. If your plan's official date of termination is on or before the end of the restatement window, you do not have to restate. Be sure to get everyone paid out within 12 months as the IRS may consider the plan to be ongoing otherwise, and you'd have missed a restatement deadline. Any amendments that were not covered by the plan's most recent Opinion/Advisory/Determination Letter are at risk - they have not been approved by the IRS. The plan sponsor should consider that risk and weigh the cost/benefit of restating. 3. If you have an individually designed plan and you are eligible to submit your plan to the IRS for a Form 5300 determination letter, not the initial one, but one of the "other business reasons" that the IRS has yet to define, then you likely need to restate. Lastly, if you are terminating the plan before the end of the restatement window and you intend to file a Form 5310, no restatement is required, but be sure to submit each amendment that was not covered by the plan's last Opinion/Advisory/Determination Letter (whichever applies). Edited to add: And yes, when a plan terminates, it's written terms must be up-to-date for any changes in laws/regs/etc. to be compliant. Also, if the plan is submitting Form 5310, the document does not have to be updated by its date of plan termination like other plans. Instead, the IRS agent reviewing the Form 5310 will explain what language is missing/incorrect, ask for that proposed language, and the plan sponsor can adopt it within 91 days after the date on the IRS Determination Letter (the 401(b) period).

None of the SEP contributions will count toward satisfying the nondiscrimination testing needs for the DB plan, so the DB plan will have to pass nondiscrimination stand-alone. Many times, that much much higher NHCE benefit cost within the DB plan justifies the adoption of a profit sharing plan in lieu of the SEP.

An Employer's profit sharing allocation was pro-rata and included a last day requirement. On the last day of the plan year, an amendment is executed to change the allocation formula from pro-rata to individual rate groups. Because the amendment was executed on the last day of the plan year, are they stuck with a pro-rata allocation for that plan year?

A catch-up eligible NHCE elected to defer the maximum in calendar year 2018. The calendar year plan allows catch-up deferrals. The employer stopped withholding once they reached $18,500. The employer started withholding deferrals again January 1, 2019. To fix a missed deferral using a 25% QNEC instead of a 50% QNEC, a notice must be provided no later than 45 days after the correct deferrals begin. The error only affected catch-up deferrals. The notice requirement states "Notice of the failure that satisfies the content requirements of section .05(9)(c) of this Appendix A is given to an affected participant not later than 45 days after the date on which correct deferrals begin;" Could the term "correct deferrals" mean the next time a catch-up deferral applies to the participant? That would be the date on which such “correct deferrals” begin? If so, that would allow a 25% QNEC to fix the error. Otherwise, the 45-day notice requirement can't be met and the 50% QNEC applies.

A couple of our plan sponsors received notices that their plan is one of the settlement class members covered by some class action against a bank. The period covers some foreign transaction fees from 1997 to January 2019. If they do nothing, it explains that a small percentage of the settlement may be sent to them, if the court approves. Does this mean that years from now, the plan fiduciaries will receive some small check to allocate to participants to offset expenses paid by the plan from 1997 to January 2019? Would it be better to just write back asking to be excluded from the settlement? Or would that be a fiduciary breach?

Partnership has a 401(k) plan with match, the match is funded per payroll, but the two partners do not have paychecks, they only have a few "draws" during the year, some have no draw. The document allows the plan administrator to decide whether or not to apply a true-up for the plan year. The partners' NESE will be determined at year-end and will include their full compensation for the year for determining the match. Does that then require the plan to provide a true-up for the W-2 employees? the plan document does not appear to require that.

A plan sponsor's DB plan has been hard frozen for a few years. It has no early retirement and no subsidized benefits. Last month they changed their 401(k) plan to only provide allocations of deferrals and safe harbor match for 2019. Is the 401(k) plan top-heavy exempt, or does the mere existence of the frozen DB plan eliminate the top-heavy exemption?

if they had a 401(k) plan in the MEP, by starting a "new plan" now, can they use the 3% deemed prior year ADP and ACP for the NHCEs if using prior year testing?

Okay, found this: The issue is when the plan document requires 'daily valuation'.If the loan policy has language that allows some reasonable procedure, would that allow the $5,000? It is not exactly addressed in IRS Notice 82-22. Opinions welcome.