Notice 2020-52

We know this applies to SHNE for HCEs, I do not see any mention of suspension for NHCEs, such that ADP/ACP need be met the customary way and HCEs need go through the reductions anyway, through levelling, returning , etc and the 3% top heavy need be for the full plan year.

This may seem a dumb question, but how does this help the sponsor that can't afford the SHNE for NHCEs?

Especially for 2019- many sponsors wait until end of year or accrue the contribution.

It's no help for 2019.

For 2020, it lets the sponsor suspend the SHNEC without the 30 day advance notice.

It also lets the sponsor suspend the SH even if they did not provide the "maybe not" cause in their notice, and without regard to whether they are operating at an economic loss.

9 hours ago, thepensionmaven said:

This may seem a dumb question, but how does this help the sponsor that can't afford the SHNE for NHCEs?

thepensionmaven, as C.B. Zeller explains clearly, it lets you stop making SH for rest of year, with 30-day delay of were doing safe harbor match, no delay if SHN. This gives all the relief possible with respect to employer's cash flow. Your implied complaint seems to be that ADP and ACP might not be passed for 2020, but that is not a cash outflow for the employer, so the relief is real. Also, IRS cannot rewrite the Code, only interpret it, so that was all the relief possible.

A couple of months ago several BenefitsLink participants were posting about whether you could stop SH match or nonelective just for HCEs, and lamenting that it did not make sense that you couldn't, but that appeared to be the rule. Others thought you could, now the IRS has said that it's interpretation of the law is that you always could amend to stop SH just for HCEs. It's good.

2 hours ago, Luke Bailey said:

Also, IRS cannot rewrite the Code, only interpret it, so that was all the relief possible.

This is very important point.  There are limits on what the regulatory agencies can do, even if the do seem to color outside the lines sometimes.  Industry groups have been pushing for more legislative relief, so it may be included in the next Covid bill (assuming they get their #$%^ together and reach a compromise).

This was my way of thinking, as well.  As you know, clients have and will continue to complain if not already that they still need contribute SHNE for NHCEs.  

Thanks all, I thought zi may have missed something here.

I've been not so patiently waiting for this news!  But what about Top Heavy?  Are they still on the hook for a Top Heavy minimum?   If so, that would provide relief to a very small percentage...those who have a safe harbor plan, but are not Top Heavy...?

If none of the key employees defer or receive any other contributions, then there is no TH minimum.

As Luke reminds us, the IRS can not rewrite the law. TH relief would have to come from Congress.

Thanks C.B.  Yeah, I know that if the Key EE's don't contribute or receive any contribution, then the Top-Heavy minimum is zero, but unfortunately, that would be a very very small percentage of clients.  (I have only a couple of plans where the Key EE's don't contribute.)

If your Keys are over age 50, one thing that can help is to put a dollar limit on deferrals of $0 for key employees only. Then they can defer up to the catch-up limit and their deferrals will be reclassified due to exceeding a plan-imposed limit. Catch-up contributions are not counted for top heavy purposes so no TH minimum. $6,500 is a lot less than $26,000, but if they absolutely can not afford the TH minimum then this is better than nothing.

Thanks C.B.  Yes, good point and I agree 100%.  Unfortunately most have already exceeded that.  But even if it is 1% or 2% of their compensation, it's still less than 3%, right?