All Activity

401(k) plan with a 1/1 to 12/31 plan year, union and non-union employees, and they utilize the prior year testing method. In 2024, an ADP test is completed separately for union and non-union employees, due to the mandatory disaggregation rules. An ACP test is completed for the non-union employees (union group deemed to pass ACP). On 1/1/2025, the union is dissolved/decertified. All union employees are now considered non-union effective 1/1/2025. So for 2025, there is just one ADP/ACP test (given that all employees were non-union in 2025). When determining the prior year percent for the ADP test - is there any guidance on what to use? Do you just use the 2024 non-union NHCE average and disregard the 2024 union NHCE average? Calculate a weighted average? If a weighted average should be used, then how would you go about determining the NHCE average for the ACP test? (given that there was no ACP test in 2024 for the union group)

I realize this response is late coming to OP, but have a question for all the experts out there. The sample unenrolled participant notices I've seen look like a condensed "mini SPD." I understand that participants must receive an SPD at the point of eligibility regardless of the unenrolled participant "easing." The plan document system I subscribe to for my 401(k) clients does not yet offer an unenrolled participant notice in the system (many notice such as safe harbor, are available, and I'm hoping the system's authors will eventually add an unenrolled participant notice). Until then, we are left to draft our own based on the guidelines set forth by the government and "best practices." To me, rather than trying to write a notice from scratch, which contains information that is also wholly included in the SPD, seems like not a good use of the client's time nor funds expended on TPA consulting services. Does anyone have an opinion of providing the SPD annually to unenrolled participants, in lieu of an annual unenrolled participant notice, to unenrolled participants? Would doing so not be in the spirit of the unenrolled participant notice rules / guidelines? I realize that in lieu, we could simply continue providing all of the usual notices, but I do have some clients that for some reason (despite much explaining) wish to follow the new unenrolled participant notice guidelines instead of simply providing all of the usual notices to the entire eligible population. Appreciate any feedback on my SPD thought.

Anyone here have any experience with determining COBRA coverage where inpatient hospital stay billed to self-insured plan under diagnosis-related group pricing (DRG)? Participant's COBRA coverage ended 7/31 and was admitted to the hospital on the same day. She remained in the hospital until 8/29. Because charges were billed under DRG (as one claim dated 7/31), former employer's plan being told it is on the hook for the entire bill, even though her COBRA coverage ended 7/31 and 99% of the charges were incurred after COBRA coverage ended. Thoughts?

Thank you. That is what they will do.

for ASIFlex (Remote / Columbia MO)View the full text of this job opportunity

If you have a straight 6% profit sharing plan with 5.7% on wages above social security wage base what is the formula. I do not know if my formula is wrong or my procedure for checking after calculation is wrong. Anyone run into this scenario.

Kay

Lay: The client would need to obtain the Fair Market Value (FMV) of the life insurance policy to determine the value, which may or may not be the Cash Value. It may be the $620,000 or some other value based on the year-end FMV combined with the other assets.

RMD's are on the total account balance of the pre-tax assets, so $620,000

A plan sponsor wants to cover his LTPT spouse and children so they can make deferrals. I realize they will not receive any employer contribution. This plan is cross-tested and provides the minimum gateway for other NHCEs (3% SH and 1.4% PS) The family members' deferral rates will be a very high % of pay. I want to make sure their deferrals don't get included in the big average benefits test EBARs Otherwise they will cause that part of the test to fail and then cross-testing will become very challenging. Thank you, Tom

Santo Gold might also ask: What is my Company’s responsibility with regard to determining the answers to the relevant questions or simply following instructions (other than determining whether or not there is a service agreement with anyone with respect to which the Company is obligated)? Are the questions in the post a matter of curiosity or are they a matter of gaining some advice for making some judgments. decisions, or recommendations that will be passed on to a client?

To David Rigby’s questions about what might lurk in the deal documents, someone might consider adding, for each might-be provision: Is the supposed provision merely a wishful statement? If a provision is somebody’s obligation, exactly which person, whether artificial or human, is obligated? Is the obligation consistent with, or contrary to, applicable law? Or relevant law? Even if not contrary to law, is the obligation legally enforceable? By which person? A? B? Some other person, whether artificial or human? This is not advice to anyone. And Santo Gold might wonder: Does my company have a current service agreement with A? Does my company have a current service agreement with B? Does my company desire to revise either service agreement, or both?

Peter's info (as he is clear to remind us, not advice) is thorough and excellent as always. It sounds like the client is happy with the current tax situation, and ejohnke is just looking to correct the potential disqualifying defect of allowing a distribution that shouldn't have happened. Is that accurate? If the individual could have had a distributable event, but the plan didn't allow the distribution, could the plan be retroactively amended to permit it? For example, the participant is 60 years old, so amend the plan retroactively to 2025 to permit in-service distributions at age 59-1/2. Problem solved. If there really is no possible distributable event (don't forget that employer money sources can have much more liberal distribution restrictions than 401(k) deferrals), then you might still be able to get relief for the distribution (and leave the money in the Roth IRA) through VCP.

If making a payment payable to a payee other than the retirement plan’s participant, beneficiary, or alternate payee (presumably because the distributee requested a direct rollover), the plan’s administrator, trustee, custodian, and payer (among them) have some responsibility to check that the payee not only is the one the distributee instructed but also is a banking, insurance, or securities institution Internal Revenue Code § 408 recognizes as an IRA custodian. Else, the plan might not get a satisfaction or discharge of the plan’s obligation to pay the plan’s benefit. This is not advice to anyone.

If the custodian of the non-Roth IRA received an amount presented as a rollover-in contribution in circumstances in which the custodian did not know, and would not suspect, that the payment was not the employment-based retirement plan’s distribution, that custodian might not have erred. If the amount the employment-based retirement plan paid was not an eligible rollover distribution and so was not the source of the non-Roth IRA’s rollover-in contribution, the individual might want one’s lawyer’s advice about whether an IRA, and which of them, might have an excess contribution and, if so, what income and excise tax consequences might result from that excess. After considering that advice, the individual might want one’s lawyer’s advice about the probability or improbability of the IRS detecting tax-return positions that there was and is no excess. If the individual, the employment-based retirement plan’s administrator (if other than the individual), or a service provider can cut past a usual customer-service worker to someone who not only can recognize what happened but also can decide what the custodian is willing to do, there might be a fleeting and limited opportunity to persuade everyone on a complete undo, including correcting or adjusting all 2025 tax-information reporting. (In my experience, getting a custodian’s attention might turn on its desire to earn or maintain good will with the requester or presenter; even with a listening audience, even clear merits might not be enough to get a custodian’s favorable response; and a presenter’s ability to teach the custodian how to implement an undo often is a deciding factor in the persuasion.) If there is no unraveling from the IRAs, the individual might want one’s lawyer’s advice about whether the plan administrator’s failure to apply the plan’s provisions tax-disqualifies the employment-based retirement plan; if so, whether the defect can be corrected; and, if not corrected, how likely or unlikely it is that the IRS would detect the defect. This is not advice to anyone. ejohnke, how confident are you that the individual was not entitled to a distribution from the employment-based retirement plan?

Wow! Sounds like a scheme to skim off a fee. Why would the PA want to assist that? Never look for trouble.

A few thoughts (there are probably other relevant questions): Are the facts presented accurate? Are the facts presented complete? Did the buy-sell agreement contain any provisions relevant to the future of the plan? Did the buy-sell agreement alter (or attempt to alter) any plan provision of the A plan? Does A still exist or is it a wholly owned subsidiary of B? What does the A plan say about a distributable event? Does anyone in authority at B know what's going on? Has legal counsel for B made any statements about this?

Stock sale or asset sale? If asset sale: A still exists as a shell company and the owner(s) of A can sign on behalf of A. The participants can take distributions right after the sale date since they are no longer employees of A. If stock sale: B is now the sponsor of The Company A 401(k) Plan and has the authority to sign. Participants can not take a distribution until the plan termination date. Termination triggers the successor plan rule and B may not be allowed to maintain a 401(k) plan for 1 year after the distribution date. This is why, with a stock sale, it is important to terminate the seller's plan before the sale date, or be prepared to merge the plans.

There is a follow up question: Who decides (who signs) for Company A's plan termination, Company A owners or Company B (since Company A no longer exists)?

Company A has a 401k plan as does Company B Company A is sold to Company B. Company A employees are now Company B employees. No plan merger happening. Company A will terminate their 401k plan, but not for a few months. Can former Company A employees take distributions from Company A 401k plan immediately since they are no longer Company A employees? Eventually they will with when the plan termination date is decided, but can they do so before then? Thank you.

It appears there is an intermediary of some sort who would get the funds and then - we don't actually know. Does the intermediary get a fee, then send the balance to a bank or trust company? Is the tax deferred status affected? That's the kind of question we are having before telling the trustee to make the distribution.

Don't know of anything that can help. To repeat, it is my understanding that once the money is in the Roth IRA, it is not coming back.

Perhaps I didn't read your post closely enough, but when I read "to be paid, from plan assets" my focus was on the plan restoring the amounts.

An Individual Retirement Account’s trustee or custodian is a bank, trust company, or Treasury-approved nonbank custodian, typically a securities broker-dealer. An Individual Retirement Annuity’s insurer must be an insurance company. If neither the check nor any accompanying instructions names the individual, won’t the payee financial-services business decline to accept the payment?

This client isn't looking to reverse or recharacterize the funds. They really do want the pre-tax funds to now be Roth and intended to pay the taxes. The funds weren't eligible to leave the Plan. This transaction was supposed to be an In Plan Roth Conversion. They should have rolled into a Roth 401(k) account inside the Plan...not a Roth IRA outside of the Plan. I am struggling with the Custodian to return the funds to the 401(k) Plan since they never should have left.