All Activity

If the plan says it is going to involuntarily roll over vested balances of < $7,000 following termination (as most pre-approved plan documents do), then you need to do as the plan directs. Otherwise, it is a failure to make a timely distribution under the plan terms (which is a question on the 5500). There should not be plan sponsor discretion regarding the timing of a distribution.

Then how/why were they reclassified as catch-up? My understanding is they would have to go over: Regular 402(g) limit. Nope. ADP limit. Nope. Plan imposed limit. Nope. Then why would they be 're-classified' as catch-up? These are my understanding of catch-up rules.

Hi As not being a DC person and dealing with very few DC plans, I have a really stupid question as I could not find anything on it. Owner only plan, owner (over 50 years old) makes 50k in w-2 and makes full deferral plus catch up. They are required to have Roth catch up, correct? The plan also needs to be amended to provide Roth deferrals/catch up as well by 1/1/2026, correct? Sorry if this was asked before.

I would tend to say that's not necessary. I've had IRS audits for clients where they checked the 'No' box and never got a bond, where the auditor simply says "...and tell them to get a bond". Your situation is even better because you can tell the agent that a bond was obtained and the year in question is retroactively covered. We can usually get the agent to tell us why a certain plan was selected for audit and my experience has been that it was never because of a lack of a bond.

for ASPCA (New York NY / Hybrid)View the full text of this job opportunity

Yes - I wasn't thinking, both short periods can be combined for an annual census. Thank you.

I think the IRS got this one right. You might enjoy the whole thread...

I just want to make sure I am understanding the rule correctly. Facts: Plan doesn't currently allow Roth deferrals Owners have SE Income 2 owners are 50+ and will defer up to their catch-up limit Employees have W-2 wages No employees are 50+ No employees have FICA wages greater than $150,000 They are possibly moving from brokerage accounts to a Platform in 2026, and will likely add Roth deferrals at that time. They would prefer to no allow Roth until they are at a platform because they will have even more accounts to move. This Plan is not required to add Roth deferrals NOR remove Catch-up contributions right now because they don't have anyone that the Mandatory Roth Catch-up applies to, correct?

for Strongpoint Partners (Remote)View the full text of this job opportunity

for Strongpoint Partners (Remote)View the full text of this job opportunity

Thanks, Brian

No. There no other contribution for key employees other than $7,500 of Deferral

so if I follow - the plan did not operate with an automatic enrollment provision - and because "the plan or contract is operated as if such plan or contract amendment were in effect" did not happen, it would not be a remedial amendment. The correction is still to amend retroactively - the various times I have submitted document issues to VCP that is always one of the requirements. Here, the plan would prefer SCP, so a corrective retroactive amendment still seems appropriate even if the plan decides not to utilize VCP. If that is the case - (and my apologies for citing the sunset provision and not the updated one) then I think it still follows that zero QNEC would be needed (assuming the plan satisfies the other requirements such as notice contents and timing). Where @Peter Gulia says "If that didn't happen, pursue corrections." corrections for which part? the document failure? the mandatory auto enrollment failure? the missed opportunity to defer/automatic enrollment? If the latter, the participants were given the opportunity to enroll, based on the plan's written provisions at the time. There was no operational failure, or failure to follow the plan document. So does a missed mandatory automatic enrollment provision in the document create an operational failure? I think I'm going a bit in circles. I do appreciate all the discussion and insight.

If they want us to do the final work, we will request the census for that short year, and then also the short year for the time they joined the PEP. We do not request an annual census.

for Ascensus (Remote / MN / WI)View the full text of this job opportunity

My observation was only about what tax law tolerates for when the § 414A-needed automatic-contribution provisions must be stated in what tax law imagines as “the” written plan. Among the conditions of the legal fiction of the remedial-amendment period is that “the plan or contract is operated as if such [delayed, but retroactive] plan or contract amendment were in effect[.]” SECURE 2022 § 501(b)(2)(A). So, a plan’s administrator must administer the plan according to the administrator’s prudent assumption about what the later-amended plan is deemed to have provided retroactively. If that didn’t happen, pursue corrections. For a convenient reference to C.B. Zeller’s pointer, my note above cites Notice 2024-2 and gives the particular hyperlink. (Because the IRS ended printing the weekly Internal Revenue Bulletins, https://www.irs.gov/irb is the official source.) This is not advice to anyone.

How did you do this? Was there some limit they exceeded?

This particular provision has actually expired: However, SECURE 2.0 sec. 350 codified essentially the same correction method into law at IRC sec. 414(cc). See also Notice 2024-02 section I, which gives further guidance, including how to apply 414(cc) to terminated participants.

for Vestwell (Remote / New York NY / AZ / PA / TX / Hybrid)View the full text of this job opportunity

In the year the stand-alone plan joins the PEP, are you running two short plan year compliance tests, one for the final stand-alone plan and one for the period of time when they join the PEP through year end? In the year they join a PEP, are you collecting three census data from the employer - stand-alone period, PEP period, and annual data?

A client established a 401(k) plan as of January 1, 2020, for which it never obtained a fidelity bond. The plan administrator filed Forms 5500-SF 2020-2022 and 5500s for 2023 and 2024, and correctly check the "No" box for the question of whether during the plan year the plan was covered by a fidelity bond. The client recently obtained current and retroactive fidelity bonds for all years going back to 2020, and the question is, can, or should, the plan administrator file amended 5500s for plan years 2020-2024 to show that the plan was covered by a fidelity bond? Thanks for your time!

I wanted to make two other points so as to more fully inform this discussion: (1) To the extent that the plan document does not automatically cross-reference the Code and/or ERISA section so as to incorporate the current cash-out threshold by reference, the decision to increase the cash-out threshold from $5,000 (which was in effect until the SECURE 2.0 change became effective) to $7,000 is optional for the plan sponsor. The employer could simply leave the cash-out threshold at $5,000 and there is no issue. (2) The plan should adopt a procedure where it looks at whether participant account balances exceed the cash-out threshold once per year. If the account balance is below the threshold, then it should be automatically cashed out. This is a way to avoid the problem of missing participants. You should use it to the advantage of your client to avoid administrative hassles down the road. Turning to your initial question, the plan can allow a participant's account to atrophy to the point below the cash-out threshold and then cash it out. For that, see point (2). The other side of the coin is that the participant should be monitoring his or her account and either redirect investments from time to time, request distributions or rollovers. If it atrophies, it is the participant's responsibility to prevent that, not the plan sponsor's.

I agree with Peter that, from a plan document standpoint, an amendment to require mandatory automatic enrollment is likely within the remedial amendment period. However, because this is a mandatory requirement for plans that do not satisfy the grandfather rule or are church or government plans, there is an operational aspect to this that would require correction. Effective for the 2025 plan year, automatic enrollment should have been implemented for the plan's participants. For that, it would make sense to provide qualified nonelective contributions allocated to the accounts of participant who were not already making elective deferrals to the plan in the amount of the missed deferral opportunity, as per Rev. Proc. 2021-30.

Here's my take-- https://www.newfront.com/blog/the-550-carryover-vs-the-grace-period Important Note for Health FSAs Moving from the Grace Period to the Carryover: Employers generally should not amend a plan that offers the grace period mid-year to convert to the carryover for the current plan year. Employees may have made their elections intending to utilize their health FSA balance during the grace period by combining a year-one and year-two election for a high-cost procedure (e.g., laser eye surgery). IRS guidance suggests that this approach may be subject to non-Code legal restraints, such as an ERISA breach of fiduciary duty claim. Any such amendment to move from the grace period to the carryover should be made in a manner that ensures employees are aware of the change when making their health FSA elections at open enrollment.

Thank you guys!