The section 72(p) regulations don't say what happens if the cure period ends after the 5 year period. Assume the participant takes out a loan on June 12, 2012. The Payoff Date is 7/10/2017. The end of the grace period is would seem to be 12/31/2017, with a deemed distribution date of 1/1/2018. Is that allowed? (Can the grace period extend beyond the 5 year max period?)

Regulation 1.72(p)-1 Q&A 10 (no reference to the 5 year period):

Q-10: If a participant fails to make the installment payments required under the terms of a loan that satisfied the requirements of Q&A-3 of this section when made, when does a deemed distribution occur and what is the amount of the deemed distribution?

A-10: (a) Timing of deemed distribution. Failure to make any installment payment when due in accordance with the terms of the loan violates section 72(p)(2)(C) and, accordingly, results in a deemed distribution at the time of such failure. However, the plan administrator may allow a cure period and section 72(p)(2)(C) will not be considered to have been violated if the installment payment is made not later than the end of the cure period, which period cannot continue beyond the last day of the calendar quarter following the calendar quarter in which the required installment payment was due.

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Employee A is a participant in a hospital's 403b plan and contributes $24,500. Employee A also is an employee of a foundation that sponsors its own 403b plan, to which Employee A makes no contributions (because he already maxed out under the hospital's plan). The foundation ALSO maintains a tax-qualified profit sharing lan (under Code section 401(a) and contributes $54,000 on behalf of Employee A. There's no overlap between the Boards, so no controlled group. I know that any additions to the 403(b) plans would be considered subject to one 415 limit because the employee is deemed to sponsor his or her own 403b arrangement. But what about the profit sharing plan? Section 415 tends to pull in "all plans of the employer." Does the fact that the foundation sponsors a 403(b) plan mean Employee A must aggregate all of his contributions under all plans sponsored by the same employer (i.e., the two 403(b)s plus the 401(a))?

Rev. Proc. 2007-71 provided model plan language that may be used by public schools to satisfy the final 403(b) regulations plan document requirement. The student exclusion used in the Rev. Proc. was a "student-teacher" definition (see below in bold) and did not point to IRC 3121(b)(10). There is no mention of student-teacher in the applicable IRC or Treasury reg. sections.

The pre-approved 403(b) document LRMs has the following exclusion: "Employees who are students performing services described in section 3121(b)(10) of the Internal Revenue Code." (This language is being used by several 403(b) pre-approved document providers.) There is no mention of student-teachers.

For those plans that used the IRS 2007 Model document language, would you use the pre-approved LRM student 3121(b)(10) exclusion or write in the student-teacher definition from Rev. Proc. 2007-71?

Section 2 Participation and Contributions

2.1 Eligibility. Each Employee shall be eligible to participate in the Plan and elect to have Elective Deferrals made on his or her behalf hereunder immediately upon becoming employed by the Employer. However, an Employee who is a student-teacher (i.e., a person providing service as a teacher's aid on a temporary basis while attending a school, college or university) or who normally works fewer than 20 hours per week is not eligible to participate in the Plan. An Employee normally works fewer than 20 hours per week if, for the 12-month period beginning on the date the employee's employment commenced, the Employer reasonably expects the Employee to work fewer than 1,000 hours of service (as defined under section 410(a)(3)(C) of the Code) and, for each plan year ending after the close of that 12-month period, the Employee has worked fewer than 1,000 hours of service. Note: This model language assumes that the plan has immediate eligibility, that the plan is limited to pre-tax elective deferrals, and that the plan has no matching or other employer non-elective contributions.

The model language in Section 2.1 also assumes that employees who normally work fewer than 20 hours per week or who are student-teachers are not eligible. Either of these exclusions may be deleted on a uniform basis for all employees. If this model language is used by a Section 501(c)(3) employer that is not a public school and the plan is subject to ERISA, the plan should delete the exclusion for employees who normally work fewer than 20 hours per week.

I am attempting to figure out how to vacate a federal QDRO. My client and his ex-wife are both in agreement to vacate the QDRO. She's willing to walk away from it.

Census reports zero hours for the owner of a company but maximum limit of pay. Would he be counted in the ADP test as a zero? Is this W-2 pay?

Employee went on line at investment company and made a positive election to have a pre-tax deduction of $100 per pay period, starting 10/1/2016. Somehow this never got into our payroll system. We found about it last week and have started deducting (2/23/2018). I think the QNEC correction would go like this: 50 percent or $50 per pay from 10/1/2016 to 12/31/2016. 25 percent of $25 per pay from 1/1/2017 to 11/30/2017. Zero for the last 3 months, 12/1/2017 to 2/23/2018. Correct?

A consultant referred a plan to me. He said they have a safe harbor plan with the 3% QNEC. They realized this year that the plan's safe harbor QNEC failed the 410(b) test last year. All they have are the 3% QNEC and 401(k) deferrals. They want to correct using a corrective amendment under 1.401(a)(4)-11(g). The problem, the consultant says, is some of the employees whom they'll add didn't receive the safe harbor notice. He wants to know if they can adopt an 11(g) amendment and separately correct the failure to provide the safe harbor notice under EPCRS. I am struggling, however, with the idea that they somehow failed 410(b) "after the fact" with a safe harbor contribution. It's not as if they have a last-day-of-the-year requirement with terminated employees, which can cause an "after-the-fact" 410(b) failure. Is it possible for a safe harbor plan to fail 410(b) due to demographic changes that occurred during the year? Could this be a result of the method they use to test 410(b)? Have you ever seen a safe harbor contribution that failed 410(b) due to mid-year employee changes, and, if so, how did you correct the failure to give notice? What if the safe harbor had been a match instead of the 3% QNEC? Something is making think it's not possible for a safe harbor that meets 410(b) at the beginning of the year to fail it later during the year due to employee changes.

The only employees of a plan sponsor who are covered by a union are the company's owners (albeit a very small percent). The owners make hundreds of thousands of dollars each. They're covered by some union multi-employer plan, getting benefits. Has anyone seen this before? I see nothing that suggests that I am prohibited from maxing them out in their company's qualified plan. I assume the 415 limits take into account both the company's plan and any DC plan maintained by the union. But let's say the union plan is a defined benefit plan. I can give them all the 415 max in this plan and give nothing to the employees. If it's true, then yay! (for my clients). But this seems too good to be true, and yet I've gone through the regs and I find nothing in the definition of collectively bargained employees that is problematic. Under 1.410(b)-6(d)(2), disaggregation appears to be mandatory.