All Activity

Re followups - we were late to the party for implementing electronic signature software. I'm not sure what the technical name is (that's for the systems wizards - I'm just a user). It is an Adobe system, and OMG, the time it saves! When you send the document to be signed and dated, you input the need=by date, and the follow-up frequency - once every week, for example. System does it for you, and sends you the signed and dated document once the client does it. I love it!

for BPAS (Huntingdon Valley PA / Hybrid)View the full text of this job opportunity

My note above mistakenly suggests one might undo a before-the-month provision. I apologize; § 457(b)(4)(B) continues the before-the-month provision for a plan of a nongovernmental employer. About minimum-distribution provisions, all or some changes might be unnecessary to the extent that the written plan states a provision by reference to Internal Revenue Code sections. If that doesn’t obviate a need to consider a plan amendment about a required beginning date’s applicable age, whoever drafts a plan’s amendment or restatement might ask an employer whether it prefers to allow a delay up to age 73/75 or to compel a distribution based on some earlier age (for example, age 70½, or even the first day of “the calendar year in which the participant attains age 70½” [I.R.C. § 457(d)(1)(A)(i)]) or an earlier occurrence (for example, severance from employment). Likewise, a plan sponsor might prefer to restrict a distribution to a period shorter than ten years. Internal Revenue Code § 457(b)(5) refers to § 457(d)(2), which refers to § 401(a)(9). Accord 26 C.F.R. § 1.457-6(d) https://www.ecfr.gov/current/title-26/part-1/section-1.457-6#p-1.457-6(d). I see nothing there that precludes delaying a required beginning date until what follows from “[t]he calendar year in which the employee retires from employment with the employer maintaining the plan.” 26 C.F.R. § 1.401(a)(9)-2(b)(1)(ii) https://www.ecfr.gov/current/title-26/part-1/section-1.401(a)(9)-2#p-1.401(a)(9)-2(b)(1)(ii).

Right, it can be funded as after tax only up to the lesser of 100% of compensation or the $70,000 dollar limit. The extra $7,500 catch-up is only available as a deferral.

It’s now 20 years since I last had an inside-the-service-provider responsibility about scheduling plan amendments. So, other BenefitsLink neighbors might help you with current thinking about business interests in organizing the work. Consider plan sponsors’ preferences. Although some might like delay, some might prefer to avoid being time-pressured or feeling burdened in a cycle or season of the plan sponsor’s business. If some of your clients use a lawyer’s review to supplement yours, consider a courtesy of allowing time before the last months of a year. Many lawyers, including employee-benefits lawyers, face increasing work compressions as a year’s close nears. If a December 31 is a relevant due date, time in November and December can be heavily pressured, or even no longer available. If some of your clients neglect to respond promptly to what you send, consider how many reminders and warnings you want to build into your work process.

Hello, My employer has done quite a few layoffs this year and has offered those former employees COBRA subsidies as part of their severance agreement. My question is: if an employee is offered a COBRA Subsidy for a certain number of months, but does not actually elect COBRA, does that amount still need to be reported on their w2 for informational purposes? Or does it only need to be included if they elect COBRA?

Agreed. It seems to be 12/31/2025, so you should at least include the later RBD ages. If you offer installments to beneficiaries, you need the to be sure that installments are limited to 10 years for non-spouse adults and annual withdrawals are required. If anyone is still interested in RBDs for non-governmental 457(b)s can someone tell me why the RBD is not the later of the age or termination of service. I have read in various places that the RBD must be the April 1 following the applicable age, with no exception. I just can't find that in the Code or the regs.

I wanted to follow up on the comments regarding whether Schedule C, line 5 needs to be completed when there are not multiple disqualified persons involved. What's odd is that Line 4 states that if "you" have corrected all prohibited transactions reported on this return, then "complete Schedule C, line 5 on the next page." If you answer "yes" to Line 4 and do not complete anything on Line 5 will the IRS be content that you have contemplated/completed Schedule C, line 5? I didn't know whether a N/A would be appropriate for 5(b) and 5(c). Appreciate additional insight to this question!

Curious? Why the reimbursement process? That's strikes me as violation of the VEBA trust - assets reverting to employer? Why not pay claims directly from the trust? What's the purpose?

From DOL website https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/efast2-form-5500-processing

I have had it where it was an NHCE who wanted to do it. It was a married couple, and the NHCE was married to someone who made a gazillion dollars so they were looking to contribute the full 415 limit. And the plan sponsor was willing to accommodate (small employer).

Unless you’re also in the business of providing tax or legal advice we only provide a recommendation to seek such professional counsel.

QDROphile, thank you. My question presumes an adviser has advised her advisee to do the right thing. And that the adviser is not a preparer of, or otherwise associated with, a tax return or other act that supports an incorrect thing. Others’ observations?

Not to aid and abet the actions that the client chooses to pursue that the advisor has declared unlawful? It depends. Inter alia, see “zugzwang” and, for fun, the definition of “lawyer” in The Devil’s Dictionary.

We just received the 2025 SECURE 2.0 Amendment from ftWilliam. Most, if not all, of our clients will be going with the default selections in the amendment. Out of curiosity, are firms having their clients formally adopt the amendment now, or are most waiting until the required deadline of December 31, 2026? Thank you!

The underlining is not mine.

Q1 Beyond whatever tax law might provide about remedial-amendment periods: Nothing in SECURE 2019 or SECURE 2022 (or the IRS’s guidance about law other than ERISA’s title I) provides relief from ERISA’s commands that an employee-benefit plan “shall be established and maintained pursuant to a written instrument” and “specify the basis on which payments are made to and from the plan.” ERISA § 402(a)(1), 402(b)(4), 29 U.S.C. § 1102(a)(1), 1102(b)(4). Nothing in SECURE 2019 or SECURE 2022 excuses a fiduciary from her responsibility to administer an employee-benefit plan “in accordance with the documents and instruments governing the plan[.]” ERISA § 404(a)(1)(D), 29 U.S.C. § 1104(a)(1)(D). One way some plan sponsors and plan administrators hope to follow those commands is to keep records of writings (including emails and other computer systems’ messages) by which the plan sponsor told its recordkeeper, third-party administrator, or other service provider which provisions to implement, or a service provider told its service recipient which provisions it treats as deemed adopted if the service recipient does not instruct otherwise. Some might argue that those writings, even if informal, are “written” and are “documents . . . governing the plan[.]” I’m unaware of a court decision that supports or rejects such an interpretation. About whether a deemed Roth-contribution election must be in “the” plan documents now or need not be until December 31, 2026, some might read the Treasury department’s recent rule to interpret § 401(k) and § 414(v)(7) as allowing a delay until December 31, 2026. Even if that’s a fitting interpretation for tax law, the Secretary of the Treasury lacks authority regarding ERISA §§ 402-404. Some might argue that service instructions, if written, are “documents . . . governing the plan[.]” Q2 About something that might be an ERISA command but that neither ERISA nor the Internal Revenue Code commands or expects as a plan provision, a plan sponsor might prefer to omit a plan-document provision (unless something is needed to negate or revise a plan-document provision that’s inconsistent with the ERISA command). But consider whether the plan’s administrator wants a revision of a recordkeeper’s, third-party administrator’s, or other service provider’s agreement. My observation about either question is not advice to anyone.

How confident are you that W was or became the beneficiary of H’s IRA? How confident are you that W did not take § 401(a)(9)-required distributions from other IRAs? (For IRAs, a minimum may be taken from any of the holder’s or beneficiary’s IRAs; it need not be taken from a particular IRA.) If W failed to take one or more years’ § 401(a)(9)-required distributions, does W’s personal representative want to file Form 5329 [https://www.irs.gov/pub/irs-pdf/f5329.pdf] and pay each additional tax? For which years, if any, does W’s personal representative have authority to file that tax return? Might “moved into an ‘estate account’” be a colloquial description of something that happened in the IRA custodian’s records but without creating a non-IRA account?

A few questions questions regarding SECURE Act amendments: 1. My understanding is that 401(k) plan documents have until December 31, 2026 to be amended for any secured act provisions, even if operationally implemented earlier (e,g, Roth catch-up elections implemented in 2025). Is this correct? 2. Are plan amendments required for: a. The annual paper statement requirement of Secure 2.0 Sec 338 - my inclination is that you wouldn't have to unless there were something in the plan document that suggested something to the contrary. b. The disclosures for eligible unenrolled participants requirements of Secure 2.0 Sec. 320 - again, my inclination is that you wouldn't have to unless there were something in the plan document that suggested something to the contrary. Thanks!

I have a similar question but a slight twist on the question. Plan is terminating 12/31/2025, distributions are expected to be paid and plan liquidated April/May of 2026. The participant turns 73 during 2026, in fact August 2026. RBD would be 4/1/2027 if the plan was still ongoing and the ppt has not retired (he is an HCE). At the time of plan distributions he is not yet 73. He is planning to elect a lump sum rollover. I am thinking because he has not reached his Age 73 birthday he is not subject to an RMD. Any thoughts?

"Bueller? Bueller? Bueller?"

Our firm might be able to help. I will send you a PM.

We have a small group of DB plans and work with an excellent actuary. Our plans are generally small but for one with several hundred participants. The sponsor wishes to start a new DB plan but would like it to look like their 401(k) - online access to see balance, process distributions online, etc. Does anyone know if Ascensus has such a product. I did a search on them and was directed to their subsidiary Future Plan. Thank you for any comments.

Lou S., thank you for mentioning professional-conduct standards. About the “alphabet soup” associations’ codes, does any call a member to do something beyond a duty to provide correct advice? If a client receives and considers the professional’s advice but decides to do what the professional believes is contrary to law, does the professional have any further responsibility?

We're going through this now, the employer Plan Sponsor has a change of mind after signing the Plan Documents, no Trust Account established, no funding. It is our interpretation that a Plan is established based on our reading of guidance that we can find from the PGGC addressing Title IV, "A plan is covered … upon the date of establishment or the effective date, whichever is later. Thus, your plan is covered on the date of establishment, which is normally the date on which the plan documents are executed.” Although this applies to PBGC coverage we feel this is a good interpretation of when a Plan is established. Additionally, ERISA Section 402(a)(1) requires a plan be established and maintained under a written document. In this case since we do have a written Plan Document there is a Plan and therefore needs to be formally terminated. This may be an ultra-conservative view and would appreciate if anyone else has a different view.