"A client wants to stop allowing loans as of 10/01/2022. Loans already taken can continue to be paid off. Is that a prohibited cutback of a 'benefit, right or feature'?"

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"Interested to hear whether others have encountered this question and how they resolved it.

Under Section 401(c)(2)(iv), for 401(k) earned income purposes, net earnings from self-employment is calculated 'without regard to items which are not included in gross income for purposes of this chapter, and the deductions properly allocable to or chargeable against such items.'

The plan sponsor, which is a partnership, had a PPP loan that was used for deductible payroll expenses. The loan was fully forgiven. The forgiven PPP loan amount was (properly) excluded from gross income. The 'deductions properly allocable to' the non-taxable PPP loan forgiveness amount arguably would be the payroll expenses covered by the PPP loan proceeds during the loan period.

The CARES Act and later COVID tax-relief laws clarified that no deduction would be denied (i.e., the original payroll expenses could still be deducted on the partnership's tax return) solely by reason of a non-taxable PPP loan forgiveness, but I'm not sure that alone would override the relevant portion of 401(c) that says the deductions associated with a tax-exempt item of income should be disregarded for purposes of calculating 401(k) earned income.

Disregarding the deductions would increase 401(k) earned income by the amount of deductible payroll expenses paid with the non-taxable PPP loan proceeds (and increase each partner's earned income on which contributions are allocated).

Would appreciate everyone's thoughts."

"I'm working on a small 401(k) plan. This plan has a 3% SHNEC. The PS allocation is integrated. In reviewing the contributions, I see that 3% SHNEC was made for everyone but I'm also seeing a non-elective contribution made only to the HCE Owner. I am not sure why she would get a non-elective and no one else. What am I missing or not seeing?"

"I am not involved in nonprofit/governmental plan admin work, but I have a question regarding references I see to '401(a) plans.'

I have always viewed IRC 401(a) as a rather lengthy section containing a host of rules that apply to many types of private industry plans, and not necessarily isolated to governmental/nonprofit plans (e.g. retirement distribution rules under 401(a)(9) which apply to private plans).

Is the term '401(a) Plan' just a way those involved in administering/working in this area distinguish certain governmental/nonprofit plans (mandatory contributions, etc) from other governmental plans, like 457(b) plans, or from 401(k) plans sponsored by private employers?

I am trying to find a good way to summarize the main purposes/provisions of IRC 401(a) but just about every article I find keeps referring to governmental, educational, non-profit 401(a) 'plans'."

"I may have made a grievous financial error.

Under the terms of my 2013 QDRO, I'm entitled to 100% of the marital share of my ex's pension. His plan's administrator in 2013 told me I'd start getting the pension when my ex retired. (That's my recollection. I'm hoping to find this exchange in writing.)

My ex is now age 62. He became eligible to retire at age 60, with 20 years of continuous service.

I recently asked him about his intended retirement date. He referred me to his retirement plan administrator, who told me I was eligible to start my benefit 'at any time.'

Have I forfeited either 2 or 9 years of pension payments? Is there any possible way for me to get back payment?

My QDRO is below, and the retirement plan is attached. Thanks for helping me think this through!

QDRO EXCERPT

[8] The parties and the Court intend this Order to constitute a 'Qualified Domestic Relations Order' as defined in Section 414(p)(l) of the Internal Revenue Code of 1986, as amended (the 'Code'), and Section 206(d)(3)(B) of the Employee Retirement Income Security Act of 1974, as amended ('ERISA').

[9] This Order is issued pursuant to Section 20-107.3 of the 1950 Code of Virginia, as amended, which relates to the division of marital property rights between spouses and former spouses in actions for divorce.

[10] The Alternate Payee is hereby assigned One Hundred Percent (100%) of the Participant's total vested account balance under the Plan as of June 1, 2012, plus or minus any earnings and investment gains or losses thereon from June 1, 2012, to the date the Alternate Payee's share is segregated into a separate account in the Alternate Payee's name under the Plan. Such 'total vested account balance' shall include all amounts which have accumulated under all of the various accounts and/or subaccounts established and maintained under the Plan on the Participant's behalf. There were no loans against the account as of June 1, 2012. The Alternate Payee's share of the benefits as set forth above shall be allocated on a pro rata basis among all of the accounts and/or investment funds maintained on behalf of the Participant under the Plan. If applicable, the Alternate Payee's share shall be paid from the non-loan assets in the Participant's account(s) on the date that the award is distributed from the Participant's account.

[11] As soon as administratively feasible following the determination that this Order as a Qualified Domestic Relations Order, the Alternate Payee's share as awarded hereunder shall be segregated and separately maintained in an account established on the Alternate Payee's Behalf and shall additionally be credited with any investment earnings or losses attributable thereon from the segregation date to the date of total distribution to the Alternate Payee. Notwithstanding the foregoing, the Alternate Payee may elect to receive her benefits in any form or permissible option under the Plan, including, but not limited to, an immediate lump sum cash payment and/or a direct rollover into an IRA or other qualified retirement account in the Alternate Payee's name.

[12] The Alternate Payee shall be eligible to receive payment as soon as administratively feasible following determination that this Order is a Qualified Domestic Relations Order.

[13] If the Participant predeceases the Alternate Payee prior to payment of the Alternate Payee's assigned benefits under the Plan, payment to the Alternate Payee shall nonetheless be made under the terms of this Order. If the Alternate Payee dies before full payment to Alternate Payee has been made, the amount unpaid shall be made to the beneficiary designated by the Alternate Payee, or if no beneficiary has been so designated, in accordance

[14] No benefits have been previously assigned from the Participant's interest to another alternate payee under another order which has been determined to be a QDRO.

[15] This transfer is intended to be a trustee-to-trustee transfer and a non-taxable went to either party; however, if the Alternate Payee elects to receive a direct distribution from the Plan, the Alternate Payee shall be treated as the distributee under 26 U.S.C. Sections 72 and 102 of the Internal Revenue Code on Federal, State and local income tax returns for all retirement benefits and distributions that the Alternate Payee receives due to the benefits assigned herein, and, as such, will be required to pay the appropriate Federal, State, and local income taxes on such distributions.

[16] The Alternate Payee shall notify the Plan Administrator in writing of any change in her mailing address as set forth above.

[17] If the Plan is terminated, the Alternate Payee shall be entitled to receive the portion of the Participant's benefits as stipulated herein in accordance with the Plan's termination provisions for participants and beneficiaries.

[18] This Order does not require (i) the Plan to provide any type or form of benefit option not otherwise provided under the Plan; (ii) the Plan to provide increased benefits (determined on the basis of actuarial value); or (iii) the payment of any benefits to the Alternate with Plan provisions. Payee which are required to be paid to another alternate payee under another order previously determined to be a Qualified Domestic Relations Order."

"Should you always get a tax identification number when you are setting up a new retirement plan? I set up a lot of new plans every year and a lot of them are with recordkeepers, and my understanding is that, if the TIN isn't used, the IRS will shut it down. So, a lot of times I haven't been getting a TIN and have just been using the EIN of the business. I know this is technically not accurate becasue the assets are not the employer's assets but from what I have seen I think this is quite common. Most recordkeepers I work with have never asked me for a plan TIN for a plan and have just used the EIN of the business.

I've also set up a lot of solo 401(k)'s and have been doing the mega backdoor internal Roth conversion of after-tax employee money. These types of plans typically in my experience are set up in self-directed brokerage accounts so when I do the 1099 for the conversion I will need a TIN for the plan, so for these plans I've usually applyied for a plan TIN.

Is it recommended to always get a plan TIN no matter what? Or from a practical standpoint can you just get one when you know you will use it on 1099's, etc.?"

"Participants from a terminating 401k plan can transfer the funds to a SIMPLE account?"

"In my opinion, loan payment deductions from severance pay is perfectly fine and perhaps even required. The 415 regulations in my opinion disallow using severance towards contributions. But allowing severance pay to be used towards loan payments is perfectly fine. Agree?"