FORMER ESQ.

Assume we want to aggregate two SH 401(k) plans. Both of them provide a matching formula. Plan A's match formula is 100% of first 3% deferred and 50% of the next 2% deferred. Plan B's match formula is 100% of first 3% deferred and 60% of the next 2% deferred. SH matching contributions are made to NHCE only. Could these plans be aggregated for 410(b) testing? I read the Regs as saying yes, because there are no HCE that are getting a SH match. What bothers me is that some NHCE are getting a better match than other NHCE. What is the issue here?

Which is why I asked. If the answer is yes, then no reason why this cannot be 404(c) compliant.

Depends on the plan document language. I normally see plan language that says that if an allocation/contribution to a participant's account would otherwise causes it to exceed the participant's 415 limit, the allocation/contribution is reduced to not exceed the limit. With language like this, you don't need to make the matching contribution if you know the 415 limit will be exceeded. Bottom line is to look at plan document language.

Can they change their investments in the money market funds at least once per quarter?

Represented a plan/plan sponsor with somewhat similar facts in Federal District Court in Northern California. Guess how the court ruled on the fiduciary liability issue?

These employees that are not otherwise excludable will be treated as not benefiting for 401(k)/(m) testing. So, the answer in all likelihood is you will not pass coverage. Out of curiosity, what exactly is the religious belief that prevents them from deferring?

You have bad facts here. When the participant signs his own name for the spouse, I can see a court accepting a breach of ERISA fiduciary duty argument under the exclusive purpose or prudence rule: A prudent fiduciary in the same situation as this plan administrator would have investigated (or rejected outright) a beneficiary designation when a participant signs for the spouse and there is no POA on file. Also, as a matter of equity, a court could easily shift the legal risk to the plan administrator (they were the ones in the best position to prevent this harm) and should be held accountable.

Does the plan document indicate what happens if the participant's heirs are not located? Does the plan say you can escheat?

None of parents' stockholding in company A is attributed to adult son. None of the adult son's stockholding in company B is attributed to the parents.

I second Mojo's answer. From a legal point of view, we look to the effective date of the merger agreement, not the actual transfer date of assets. But, I can see how this really complicates administration.

But they were not allowed to defer until 02/01/2020, correct? They can generally do this, unless the timing of the amendment is discriminatory under 1.401(a)(4)-5. For example, lots of NHCEs vs HCEs terminated employment in 2020 and now they want to add a PS with last day of the year requirement for a PS allocation, retroactive to 01/01/2020

Actually, when I re-read the Regulation, the only way this makes sense is if the QNEC is not used to meet the gateway test. This is the only way I see this making sense.

You can use the QNEC to pass the gateway. Once you pass the gateway and now want to cross-test, you have to pass (a)(4) with and without the QNEC. If you can pass (a)(4) without the QNEC, then that's great. It really just depends on the data.

No, if you look at §§1.401(k)-2(a)(6)(ii) and 1.401(m)-2(a)(6)(iii), making the QNEC expands the group of employees that are deemed to be benefiting under the plan for 401(a)(4) and triggers the gateway contribution.

Your fact pattern is just too close to Example 1 in the 1.401(a)(4)-5 Treasury Regulations. Of course, the determination is made based on all the facts and circumstances.

Okay, so allow me to answer in the following way: 414(s) compensation includes the four safe harbor 415(c) definitions of compensation, the three or four alternative safe harbor definitions under 414(s) and "any reasonable definition of compensation." There is a test under 414(s) for determining whether a compensation definition is reasonable. As I recall, one prong of that test includes what is called the "compensation test," which has to be calculated. I hope this clarifies.

If your compensation definition for allocation purposes is not a safe-harbor definition, you have to show that the definition itself is non-discriminatory under 414(s). That is separate from the ADP test, which is the exclusive test to show non-discrimination in amount of benefits in 401(k) arrangement.

The problem is that the plan to plan transfer in your context is not a distribution event from the Plan. So whatever you do with their account balances, they will have certain BRF attached to them (vesting, sharing in earnings, etc...) under 401(a)(4). You can set up a "mirror plan" just for your union employees, do a plan to plan transfer, and have a different vendor administer it.

Great! That is all we need is a new EPCRS. They could easily handle the extension in one page Rev. Proc.

No. There is an exception to that rule in certain circumstances, and I believe that yours may qualify. I don't have the DOL Regs in front of me, but I believe it provides for "reasonable" timing of notice in situations where the 30-90 days is not practical.

The IRS routinely takes a number of positions. The impermissible CODA position described above seems like a stretch. Show me the "cash" or other item of value that is being given up by the participant as an explicit exchange for a CB credit?

Did the record keeper indicate why they allocated the forfeitures despite acknowledging their mistake? If the plan document gives the plan administrator the discretion to use the forfeiture account to pay for plan expenses, the plan administrator choses to do so, and that decision is (timely and properly?) communicated to the recordkeeper, then the proper course of action is to return the money from participant accounts. The plan sponsor should not have to sign a hold harmless letter for a mistake made by the recordkeeper. In fact, unless there is something in the record-keeping agreement that requires the recordkeeper to allocate the forfeitures, I would write a letter back to them and say because you used your discretion to override the plan administrator's explicit direction, you are now acting as an ERISA fiduciary. They hate the "f" word. We will not sign a letter for your mistake. In fact, we will change our communication to participants and include your name as an ERISA fiduciary with respect to certain plan functions.

EBECatty makes the key point. If seller wanted to terminate the plan to allow distributions to seller employees on account of plan termination, the plan should have been terminated immediately prior to the effective date of the transaction. Because the seller plan was not terminated, the only real choice to "get rid" of buyer's plan is a merger.

So long as the "substitution" of the options/bonuses is not for amounts already accrued under the SERP, I do not see a 409A problem.

I was hoping the IRS would extend, but have not seen anything yet.