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Here’s a rhetorical question about the two business owners and the certified public accountant: If several third-party administrators told the CPA the desired design is okay, why have the business owners not implemented the design with one of those TPAs?

Peter knows what you want to know Arthur. And you know what the answer is too. He was pointing out that the CPA knows as well and that's why they are hesitant to act.

Just some general thoughts: It seems a little early to be making decisions on these items, without truly knowing what is involved in processing such transactions, for both the recordkeepers and the TPA's. And how is a fiduciary supposed to make an informed decision on such matters until these things are known, and communicated to the fiduciary? That said, I generally am squeamish about the idea of a plan sponsor/fiduciary disfavoring such distributions by charging a higher fee. However, that's just my general bias, not backed up by any specific information. I also generally favor keeping distribution fees the same for different types of distributions if possible, for administrative ease and clarity as much as anything else. Again, I just feel like it is too early to have a reasonably informed opinion - the recordkeepers/TPA's are going to have to charge as much as they need to, and this could be structured in many different ways, to THEN be analyzed by the fiduciary as to whether the fees are reasonable and appropriate. I dunno - I'm just blathering here... P.S. - I do seem to recall that when Roth first came out, some recordkeepers/TPA's charged more for a Roth distribution than for a taxable distribution. Seems like that is pretty much gone now.

I'm going from MEMORY, such as it is, but I seem to recall that pre-2023 service is disregarded for eligibility under the SECURE 2.0 LTPT 2-year rule. But I'd have to re-read it - I don't have much confidence in my memory on this, as I wasn't looking at this specific scenario.

I could be wrong but believe if you have language to forfeit sooner than the earlier of 5 yr BIS or payout then your document also has to have language automatically restoring forfeitures if the participant is rehired within 5 years.

just being part of an ASG does not require a single plan. ASGs have multiple different plans for different entities all the time. As mentioned above, they just have to pass combined test. If it is a single ASG, then any plans of the employer need to be tested together. Sounds like you are proposing two DB plans(for the HCE), and one 401(k) plan(for the NHCE) for a single affiliated service group. I am not an actuary, but seems minimum coverage under 401(a)(26) would likely have a hard time passing, even if the benefits in the 401(k) plan were generous enough so that overall benefit testing with all three plans passed. I agree with the others, if the CPAs are sure its allowed, they should do the testing and admin for the three plans. And i'd be curious to know what actuary would sign off on it.

Is there anything different or special on administration of these other distributions (abuse, emergency, etc.)? Is there adjudication or are these self-certification? If it's only a matter of whether the 10% premature distribution tax applies, I don't see a huge reason for charging a higher fee. Personally, I think the majority of service providers will be increasing their fees in general because of this, not to mention general inflation, although this is all my opinion from the outside as I do not directly work on the inside nuts and bolts of these plans.

We too (as TPA) have (and have had) clients on the Vanguard platform with Ascensus. I hope this isn't anything new!

I agree with CuseFan approach assuming this is an NHCE. Maybe a simple amendment that preserves the the 417(e) lump sum as of date of the request for participants who submit a request for payment in 2022 but is not processed until 2023 due to administrative delays beyond the participant's control. Oddly specific but I would think it would cover this situation and make everyone happy. Might be a question about whether such an amendment might take your document out of prototype status but I think the IRS would be OK with it. Especially if the plan is "well funded" and the participant has always be an NHCE.

The QJSA notice is provided 30-180 in advance of the ASD, although you can provide closer to the ASD if the person ultimately waives the 30 day notice to get payment ASAP. If a claim for benefits was made, then the plan's claims procedures should be consulted for timing. Also, the TPA's service agreement should hopefully have some standards for this. This is not "administrative delay" in the context of the ASD and how the IRS interpret. I agree to can increase an NHCE retiree benefit without much issue but would do so via plan amendment.

While I totally agree with Lou, I think it is important to consider if the retiring person is an HCE or not. If the person is not an HCE I would be OK (I think?) giving a larger lump sum to him/her on account of the admin delay.

The annuity starting date must be a date after the QJSA notice is provided (which required the benefit calculation) unless the plan allows retroactive annuity starting dates, which some do but I always exclude lump sums in such instance that I've seen. I think you are stuck with the 2022 rates for 2023 lump sum unless the retiring employee in question was NHCE and the employer wants to amend the plan to increase this person's benefit.

What was the reason for the delay? If the sponsor was pushing for it to be done in December, why didn't it get done? Was the participant late returning paperwork? I don't think you can process it now using the 2021 417(e) rates as you would not be following the terms of the plan.

Sounds like you're in a small group age-rated plan. I don't see any issues with that approach under the Section 125 cafeteria plan nondiscrimination rules that govern employee contribution rates.

So, the policy was surrendered while still owned by the plan and the cash value was deposited into the annuity while still owned by the plan? Then there's no distribution and no taxable transaction. It's no different than selling a mutual fund and depositing the money into a money market account. Also, to be clear about the broker's comments: there was no "distribution" (as we use the term) and the money wasn't "rolled" (as we use the term).

Others employees with at least 800 hours of service entered on 07/01/2022. The Amendment applied to all employees going forward, effective as of 07/01/2022. with at least 800 hours of service in a 12 consecutive month period.

The HSA is not a group health plan subject to ERISA, so there generally are no SPD terms addressing HSAs. It's really just a tax vehicle. Employers definitely have been making more efforts in recent years to communicate HSA features, strategies, and eligibility issues at OE, etc. both as a service to employees and to make sure employees are informed about these concerns. Also because the HDHP is often the best plan option from a cost perspective for both parties.

I found this confusing at first and then after re-reading and thinking about so more came to same conclusion as CBZ.

My best understanding at this point is that employees who worked 500 hours for 3 consecutive years from 2021 through 2023 will enter plans on 1/1/2024. Then, employees who work 500 hours for 2 consecutive years 2023-2024 will enter plans 1/1/2025, and any two consecutive years after that will enter the plan the following year.

My read of 414(v)(7)(B) is that if you have any participant who is at least age 50 with compensation above the limit, then you have to allow Roth if you want to allow catch-up contributions at all.

The Senate Finance Committee’s EARN Act would have prohibited recharacterization. That prohibition was not in the final law. With the ability to have in-plan Roth rollovers, seems like a pre-tax excess contribution could be converted to a Roth catch-up. Then the question is which year is it taxable. I’d say the year of the conversion just as though there had been a distribution of the excess. Of course this is just an interpretation and we’ll hopefully have IRS guidance before this goes into effect.

@austin3515 you can speak to them without the POA, they just cant speak to you. You can give them proof of mailing without the POA, they will record it / fix it, they just wont give you any information.

I don't see a problem with that.

It should be the date that it would have been effective if adopted timely.

Last year a client was referred that needed both an EGTRRA restatement and a PPA restatement. We made the EGTRRA restatement effective 1/1/09 and the PPA restatement effective 1/1/15, and both documents were signed with a current date in 2021. Filed both with VCP and received a compliance statement with no problem.