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Distributions paid to a beneficiary of a deceased participant are exempt from the 10% early withdrawal tax. IRC 72(t)(2)(A)(ii)

They would be receivables if you also adjust the outstanding loan balances down to their value as of those payments posting. Like, let's say 12/31's payment is scheduled payment number 59. Either the loan balance is still at payment 58 (higher balance) with no payment receivable, or it's as of payment 59 (lower balance) with the payment in transit as a receivable. I've done it both ways, but always consistently within one plan's batch of loans. And I sorta remember being mad that John Hancock's recordkeeping "accrual" basis would adjust for receivable contributions but not receivable loan payments. (Does that sound accurate?)

From context, I guess the plan you ask about is an individual-account (defined-contribution) plan. If a fiduciary (such as the employer in its role as the plan’s administrator or trustee) pays an amount “to restore losses to a plan resulting from actions by a fiduciary for which there is reasonable risk of liability for breach of a fiduciary duty under title I of the Employee Retirement Income Security Act of 1974 . . . or under other applicable federal or state law,” such a payment is not an annual addition for Internal Revenue Code § 415. For the details and conditions, see 26 C.F.R. § 1.415(c)-1(b)(2)(ii)(C) https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFR686e4ad80b3ad70/section-1.415(c)-1#p-1.415(c)-1(b)(2)(ii)(C). If there is no risk of liability, an employer could pay the plan an amount that adjusts the stable-value contract’s values, but would do so within annual-additions limits, and within coverage and nondiscrimination constraints. Either way, the employer pays the restoration or other adjustment into the employer’s retirement plan. When the stable-value insurer or bank gets the money, it and the recordkeeper adjust the individual accounts’ balances before the plan pays its final distributions (whether rolled to an IRA or not).

I agree with Bri. You have to follow the formula in the document. Of course, the formula can be amended, but watch out for anti-cutback issues. Most likely you can amend it for the current year if there is a last day requirement, or for the next plan year if there is no last day requirement.

TPApril, it is so unconventional that I will reiterate QDROphile's comment. You can't rename a qualified plan into an IRA. You are presumably terminating the 401(a) and distributing the property from it. The custodian (obviously, line up a willing custodian in advance if you have not already done that) will then take a trustee-to-trustee transfer of the property. The distributing plan will issue a 1099-R, the IRA a 5498.

To support the 60-day bridge loan the participant seeks, shouldn’t we assume the steps are: 1. Claim a distribution from the employer’s plan. Do not instruct a direct rollover. 2. For 50+ days, use the money. 3. Before the 60 days for an indirect rollover runs out, complete a rollover contribution into an IRA. 4. If the individual prefers an employer’s plan over an IRA, do a rollover contribution (preferably, a direct rollover) from the IRA into the employer’s plan.

If the plan is ERISA-governed, an order does not fail to be a DRO or a QDRO (as ERISA § 206(d)(3) defines those terms) because of when the court made the order. (An order might fail to be a QDRO based on how what the order would provide relates to facts and circumstances that might have changed since the court made the order.) If the plan is a governmental plan, a church plan (that did not elect to be ERISA-governed), or otherwise not ERISA-governed, read the plan’s governing documents. Some plans of those kinds set detailed conditions for an order the plan recognizes, and those conditions might be stricter than ERISA § 206(d)(3) and Internal Revenue Code § 414(p).

Yes, this is normal. The number that they need is the EIN of the trust, not the EIN of the employer.

When a company wants to have 401k plan and health insurance enrollment occur on the same day, we will use either 30/ 60 days because this is the way the health insurance documents are written.

All good points, Dorian. But I believe the question was about mandatory HSA contributions. That's different from automatic contributions, which always has an opt-out option as you noted. I believe the question was asking if the employer can actually mandate employees contribute to the HSA--not just use default elections to automatically initiate contributions absent an affirmative election to the contrary. I also have posted some info on automatic/passive elections here if that's the context for the question: https://www.newfront.com/blog/automatic-enrollment-medical-plan-2 https://www.newfront.com/blog/passive-enrollments-with-rolling-elections

The short answer is YES. An employer’s cafeteria plan may auto-enroll HSA-eligible employees and set a default pretax HSA contribution amount (e.g., $X per pay period, X% of pay, the difference between the PPO and HDHP employee required contribution amount, etc.) unless the employee files an affirmative election not to contribute to the HSA. Similarly, if an employee is currently contributing to an HSA and enrolls in HDHP coverage for the upcoming plan year, a cafeteria plan may automatically continue the employee’s pretax HSA contribution at the current amount into the next plan year, unless the employee files an affirmative election to change or end HSA contributions. These types of automatic elections are sometimes called “negative” or “default” elections for new or initial pretax HSA contributions and "rolling," "evergreen," or “passive” HSA elections when carried over to the next plan year. While cafeteria plans can implement these types of automatic elections for pretax HSA contributions, IRS imposes certain conditions (see below for “IRS Notice Requirements”). In addition, see below for “ERISA Considerations” and ”State Wage Withholding Law Concerns” which may present other constraints. The ability to implement these types of automatic elections was confirmed in the IRS's August 2007 proposed cafeteria plan regulations. In addition, IRS Notice 2004-50, Q&A-61 states the following regarding cafeteria plan “negative” (or automatic) HSA elections: Q-61. Can employers provide negative elections for HSAs if offered through a cafeteria plan? A-61. Yes. See Rev. Rul. 2002-27, 2002-1 C.B. 925. Automatic elections (whether negative/default or rolling/evergreen/passive) can prove more challenging to use for pretax HSA contributions than for comprehensive medical plans (e.g., the underlying HSA-qualifying HDHP). Unlike the need for medical coverage, an employee’s HSA eligibility (or desired contribution level) often varies from year to year or even month to month. Just because an employee is enrolled in an HSA-qualifying HDHP does not necessarily mean the employee is HSA-eligible. For example, if an employee has other disqualifying coverage, such as Medicare or a spouse’s general-purpose health FSA, automatically initiating (or continuing) the employee’s pretax HSA contribution election would present problems. Similar issues arise even if an employer automatically establishes HSAs for employees by merely seeding accounts with employer dollars rather than employee pretax contributions. As a result, many employers hesitate to use automatic elections for HSAs, even though nothing in the cafeteria plan or HSA rules prohibits this practice. IRS Notice Requirements IRS rules impose notice requirements if an employer implements an automatic election for employee pretax HSA contributions. Before each plan year, the employer must give employees a notice that explains the choice to elect to receive either cash (i.e., declining pretax HSA contributions) or make pretax HSA contributions. Employers may provide this notice in new-hire packets and annual-enrollment materials. The notice should contain the following information: Details about the automatic pretax HSA contribution election process and the employee's right to decline pretax HSA contributions (i.e., receive cash) The default pretax HSA contribution amount, if any (e.g., $500, $1,000) The procedures for exercising the right to decline pretax HSA contributions The time by which an election to override the automatic election must be made The period for which the election will be effective For a plan with rolling/evergreen/passive elections, a description of the employee's existing pretax HSA contribution amount, if applicable So, while the IRS confirms that a cafeteria plan may provide for automatic elections into certain benefits (including HSA pre-tax contributions), the IRS conditions such elections on the employer providing a required notice to employees – specifically, new hires must be notified of their ability to override an automatic election; likewise current employees/participants must be notified annually of their ability to override an automatic/negative/default or rolling/evergreen/passive election. ERISA Considerations The US Department of Labor (DOL) has provided guidance (Field Assistance Bulletins 2006-02 and 2004-1) outlining conditions for keeping HSAs exempt from ERISA. One of those conditions is that an employee’s HSA participation must be “completely voluntary”. This requirement raised concerns whether an automatic pretax HSA contribution election process (whether negative/default or rolling/evergreen/passive) will inadvertently cause the HSA to be considered an ERISA-covered plan. Under the 2006 DOL guidance, an employer may unilaterally open an HSA for an employee and deposit employer funds into the HSA without causing the arrangement to be subject to ERISA, as long as other conditions for exemption are met. In addition, as long as an employer adheres to the IRS's automatic election procedures for cafeteria plans (described above), DOL seems likely to view automatic pretax HSA contribution elections as sufficiently "voluntary" for ERISA exemption. Unfortunately, DOL guidance does not directly address this point, so employers should vet this issue with their legal counsel. Q-1. In the absence of an employee’s affirmative consent, may an employer open an HSA for an employee and deposit employer funds into the HSA without violating the condition in the FAB that requires that the establishment of an HSA by an employee be “completely voluntary”? A-1. Yes. The intended purpose of the “completely voluntary” condition in FAB 2004-01 is to ensure that any contributions an employee makes to an HSA, including salary reduction amounts, will be voluntary. HSA accountholders have sole control and are exclusively responsible for expending HSA funds and generally may move the funds to another HSA or otherwise withdraw the funds. The fact that an employer unilaterally opens an HSA for an employee and deposits employer funds into the HSA does not divest the HSA accountholder of this control and responsibility and, therefore, would not give rise to an ERISA-covered plan so long as the conditions described in FAB 2004-01 are met. (emphasis added) State Wage Withholding Law Concern Employers should also consult legal counsel to determine whether any state wage-withholding laws could restrict automatic pretax HSA contribution elections. Some state laws require an employer to get an employee’s written authorization before withholding any amounts from pay, unless legally required to do so (by law or court order). While ERISA pre-emption may prevent these state laws from affecting auto-enrollment in ERISA covered employee benefit plans, HSAs generally are not considered ERISA plans. I hope this is helpful.

I wanted to also add that mandatory HSA contributions could be administratively problematic for the employer since there's a dollar limit on the HSA contributions. Personal example: as part of my benefits package, my employer contributes up to the HSA limit for family coverage. My spouse who is not covered by my employer, but his own employer's coverage, signed up for an HSA and "unknowingly" received a minimal contribution to his HSA account (-he didn't bother to read the fine print). It was a pain trying to correct the overage.

A couple issues as you noted, Debb-- All employee HSA pre-tax contributions through payroll are made through the Section 125 cafeteria plan. The Section 125 rules require a choice between cash and qualified benefits. There's no choice in this scenario. State wage withholding laws generally require the employee to expressly authorize any withholding any benefits deduction in writing. That won't be preempted by ERISA here. Here's a couple relevant cites: IRC §125(d): The term “cafeteria plan” means a written plan under which— (A)all participants are employees, and (B) the participants may choose among 2 or more benefits consisting of cash and qualified benefits. California Labor Code §224: The provisions of Sections 221, 222 and 223 shall in no way make it unlawful for an employer to withhold or divert any portion of an employee’s wages when the employer is required or empowered so to do by state or federal law or when a deduction is expressly authorized in writing by the employee to cover insurance premiums, hospital or medical dues, or other deductions not amounting to a rebate or deduction from the standard wage arrived at by collective bargaining or pursuant to wage agreement or statute, or when a deduction to cover health and welfare or pension plan contributions is expressly authorized by a collective bargaining or wage agreement.

l I don't know the answer and have never looked at this until you asked, Debb, but I think under FAB 2004-1 if you require an employee to have an HSA (which you'd have to do if you want to require them to contribute) the HSA would become subject to ERISA. Also, if not subject to ERISA, then you would not have ERISA preemption and would need to be concerned with state payroll withholding laws (which for a lot of states this would probably violate).

I think they can't technically call it a match, because there weren't actually any deferrals. So calculate what the match would have been, and make that as a nonelective contribution.