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Roycal, please see https://www.napa-net.org/news-info/daily-news/can-plan-charge-fees-terminated-participants-not-active-ones

When we have this many changes, we will probably reissue the SPD in full. Easier. The key is timing here....

Sounds like some good Fiduciary Guidance Questions. Assuming the Plan allows for payment of expenses with forfeitures, most do but some do not. I think would be pretty comfortable for non-settlor fees for the current year. I think I might be comfortable with non-settlor fees for the prior year if billed in the current year. I think any further back and you're getting on very thin ice and would want ERISA counsel to opine.

Bill we we do that and get it filed immediately. But Lou I will check on that.

I think the ONLY way it can revert is if it cannot be allocated to anyone because of 415 limits and cannot otherwise be used to pay eligible expenses.

If it's small enough to cover a final admin invoice, that's not atypical since the plan may reimburse the sponsor's direct payment of those expenses.

Don't think that's allowed.

And that is the sleeper issue that few are talking about. It is a nightmare to track "regular" participants, LTPT participants, and "former" LTPT participants who may have already achieve vested status, or who will gain vested service under rules different from "regular" participants.

This is boiling down to a philosophical question. What is the purpose of a 401(k) plan. Originally, as noted by Paul, it was a tax deferred savings vehicle, as a "supplement" to a pension plan. Now, however, it is clearly the predominant *retirement* financial resource and as such, IMHO, leakage is a very real concern. What most employers we deal with consider (because we discuss it with them) is that the downstream impact of leakage is employee who can't, and therefore don't retire when appropriate - resulting in an aging workforce, with attendant decreases in capabilities and productivity, loss of open slots for other's advancement, and - and most importantly - skyrocketing health care costs for that aging workforce. We have this discussion especially when a client is acquiring another entity with a plan, and deciding whether to demand it be terminated before closing or kept/merged into an existing plan. Fundamentally, while most clearly perceive their 401(k) balance as theirs - it really isn't (legally) - they are beneficiaries of a trust, established for certain purposes, subject to certain restrictions, and for which they receive a tax benefit. Leakage is real, and a real problem for the employers we work with. There is a balance here - and requiring documentation (especially since we, as recordkeeper do the review) isn't really a burden (except to my ops team!)

My view is that hardship withdrawals are a vestige from the early days of 401(k). At that time, the IRS focused on the tax deferral aspects of 401(k) "salary reductions". The IRS agreed to go along with a current tax deferral in support of a participant saving for retirement with the expectation of collecting taxes upon distribution. To hold participants accountable for their commitment to save for retirement, the disincentive of a 10% excise tax was put in place for early withdrawals. Recognizing that there could be situations where participants had financial emergencies, the hardship withdrawal rules were put in place but they retained the disincentive of the excise tax. There was a reluctance to allow participants to decide what was a financial emergency, so there was a need for a gatekeeper. The Plan Administrator often is the default plan fiduciary, and was saddled with the responsibility to enforce the rules to determine if a financial emergency existed. The rapid spread of 401(k)s and employers pushing more responsibility for retirement readiness onto participants by promoting higher 401(k) contribution levels has made 401(k) contributions a recurring participant "expense" that rivals a home mortgage. Today, we are emerging from the torsion of the pandemic. The pandemic accelerated the shift in the role of 401(k)s from a retirement focus to the 401(k) being a financial resource for any life event that put a financial strain on the participant. Hence, the recent enumeration of these life events in the Code and regulations that allow early access to 401(k) balances. There is paradigm shift in the approval process for allowing early withdrawals. Part of this shift is creating this list of predefined life events that the participant self-certifies and the gatekeeper's responsibility is (effectively) removed from the duties of the Plan Administrator. Another part of this shift (and one that makes the IRS bristle) is a growing number of legislators that now see taxes on distributions from 401(k)s both as a revenue source and as a mitigation for government-funded financial aid. Bottom line, traditional hardship withdrawals with their excise tax penalties and Plan Administrator approvals are an anachronism.

That's right.

I agree, and I want in on that bet. I expect the "may" is meant not to decide WHO is allowed to do a rollover, but more WHAT rollovers may be accepted. The Plan Administrator has the right to reject a rollover request if, for example, it would jeopardize the tax-qualified status of the plan, or if there's no evidence that the rollover is from acceptable qualified source, etc., etc.

Yes, exactly. Section 310 of SECURE 2.0 added a new paragraph to IRC 416 which says that employees who have not met the minimum age and service requirements of IRC 410(a) are not considered when determining if a DC plan satisfies the top heavy minimum.

I'm surprised i didn't see a recommendation for ASC come up on this thread yet. So here I am. I will say that I've only had experience with FT William for 1099 production. But for valuation / compliance testing I was raised on ASC many years ago and am still using them to this day. I would say their customer service is a life-saver when something gets difficult with a plan. They have constant educational resources on their website (webcasts, system tutorials, news letters). We also use their web-based software for 5500 / government reporting which is equally fantastic. Lots of support from their service / consulting team and very FAST! Best part is they will communicate by email or PHONE to troubleshoot any issue you have. Some larger vendors stay stuck behind an email when trying to "help". Gets frustrating. But not ASC and their helpful team of consultants (who are all also pension professionals with administration backgrounds and credentials). Lastly, I have never encountered a problem getting a massive plan to calculate on ASC within only a minute or two. I am an ASC cheerleader forever! Thank you, ASC!

On both a 5500 and an SF, the opening wording to question 4 or 10 (and their a through i or n subsections) says, "During the plan year:" So I don't think you're properly answering the question if you obtain it after the year-end but still suggest it was covered (unless retroactive). And as for the "part of the year" scenario - I think it's reasonable to say that "the plan year" does not specify the entire plan year. Meaning, if you got your coverage on December 31, then the answer of "yes" is a true answer because during the year it was indeed covered. Heck, I'd suggest you get to leave "yes" as your answer if your policy expired on December 30. (Recall on the SF, you're asked if the plan had loans, even if the they're all paid down to zero by 12/31, so you still admit there were loans, even if it wasn't all year long.) As for the dollar amount, I'd use the largest amount of policy in effect during the year. Or if the plan just uses an inflation guard, I'd use the 10% BOY amount.

Yes, but not exactly. Since there is a portion of the plan that is not safe harbor (the portion of the plan covering employees with less than 1 year of service), the entire plan loses its top heavy exemption. So all employees are now eligible for the top heavy minimum. The top heavy minimum can be satisfied by the matching contributions, but if you have an employee for example who defers only 2% of their pay and receives a 2% match, the employer would need to make up the additional 1% to get them to the 3% top heavy minimum. All non-key employees who receive no match - whether because they have less than 1 year of service and are not eligible, or because they are eligible but simply do not contribute - would need to receive the entire 3% top heavy minimum as an additional employer contribution, if they are employed on the last day of the year. It's worth noting that SECURE 2.0 changed the rules a little. Starting in 2024, employees who have not met age 21 and 1 year of service do not have to receive the top heavy minimum. This doesn't entirely fix your situation though, as your plan would still lose its top heavy exemption and still need to provide a top heavy minimum to those employees who have completed a year of service.

No. The IRS does have a rule for this, Lou S. See Treas. Reg. 1.402(g)-1(e)(8). The Roth excess deferrals, when they come out, are not qualified Roth distributions and cannot be rolled over to a Roth IRA. I have no knowledge as to whether this is uniformly administered correctly.

Yeah, that's what I'm talking about. So you potentially have a new SPD (or SMM, or multiples) due within 210 days after the end of the plan year - so you have one due in 2024, one in 2025, and one in 2026. Blech...