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I was reluctant to ever raise fees, but my business partner made me see the light. Rather than just implement a simple fee increase, we used this as an opportunity to rethink and rework our fee structure. Among the changes: 1. Moved from billing annually after the annual report is delivered, to quarterly (in advance) on the first day of each calendar quarter. 2. Increased fees under the new quarterly billing cycle - we didn’t flinch about substantial increases to ensure that the new fees were fair to us and to clients. 3. Implemented 100% offset of any revenue sharing to quarterly billings. 4. Started annual fee increases - so it was expected by clients. We rolled the changes out with a special mailing to all clients - about 4 or 5 months before 1/1 explaining the changes and included what the new quarterly fee would be. Then we followed that with new service agreements and updated plan level and participant level fee disclosures, as needed. Our objective was to get it right so we wouldn’t have to go through this again. The changes were a huge improvement in cash flow, reduced complaints about large annual billings and enhanced us as an attractive acquisition when it was time to sell.

I am assuming you are talking about a defined contribution plan. I am assuming that the divorce is final, and that the QDRO was signed by the Court. and that a certified copy of the QDRO and was sent to the Plan Administrator, and that the Plan Administrator approved the QDRO, and that no appeal of the Divorce Decree was filed by either party. If I am incorrect in any of these assumption, let me know. A timeline is essential. Some states provide that the court will lose jurisdiction to modify (including a recission) a QDRO within a certain number of days after the entry of the QDRO (e.g. after the time to revise a Court Order has expired), or after the expiration of the applicable statute of limitation that can be many years down the road. Res judicata will apply. Some states will not permit a modification (including a rescission) of a QDRO under any circumstance if it changes the terms of the underlying Divorce Decree. Res judicata will apply. Some states will permit a modification (including a rescission) of a QDRO even though it changes the terms of the underlying Divorce Decree but only if the Court has reserved jurisdiction in the Divorce Decree to do so. Some states view a QDRO as the source of the obligation to transfer pension and retirement assets from one party to the other. Other states view a QDRO as a tool, like an attachment or a garnishment, to enforce the Divorce Decree. The ability to modify it or rescind it will differ depending how they view it. I found this online: "The question of whether retirement savings plans, such as IRAs, 401(k)s, and pensions, impact Medicaid eligibility is complicated. There are no federally set rules on these plans and Medicaid eligibility; each state sets its own rules. Adding to the complexity are other variables, such as the type of retirement savings plan, payout status, payout amount, one’s other income and assets, and marital status. "The bad news is that it is likely an applicant’s retirement savings plan will be considered by Medicaid as either income or an asset when determining eligibility for long-term care. The good news is that most candidates can still gain Medicaid eligibility and preserve some or all of their savings for a spouse or another family member. "In states that consider a Medicaid applicant’s retirement savings account as an asset, it will count against Medicaid’s asset limit for eligibility. Some states will exempt one’s retirement account if it is in payout status, and therefore generating income. However, the payments are considered as income and will count against Medicaid’s income limit for eligibility. While this does not automatically mean the candidate will be Medicaid-ineligible, this is common because Medicaid’s income and asset limits are so low." You need to check with the eligibility requirements for Medicaid in the jurisdiction in which she resides. It may not be as onerous as she imagines. It may be that she can elect to take her 401(k) as an annuity. The payments will count as income, but the total amount will not impact Medicaid eligibility. And it may only impact long term care eligibility. See - https://www.medicaidplanningassistance.org/medicaid-eligibility-401k-ira/#:~:text=California%2C Florida%2C Georgia%2C and,payments are counted as income. Good luck, DSG

I know that you do not need to cover everyone under the automatic-contribution arrangement, but in doing so you lose the benefit of the 6-month testing window if you are otherwise an EACA. So I'm assuming in Nate's example with the Relius doc, if you do not include LTPT in the EACA you would lose the 6-month testing window, even though LTPTs are not part of coverage?

Wait, teamsters and possible pension fraud? Never would have crossed my mind in a million years, where is Jimmy Hoffa when you need him? If I end up next to him in the next few days you all know who did it - you won't find me, though, but if you a paint imperfection in the NY Giants or Jets logo in the Meadowlands end zone, that's probably where I'll be - LOL!

There are many possibilities. Just a few of them are: The data furnished to the TPA did not include a record of hours of service for a worker who in fact had hours of service. For some directors, officers, or professionals, the measure of service might not be obvious. Or, an employer or service recipient might lack records. An amount reported as wages might have been nonemployee compensation. For example, if a nonemployee director’s fee is not an employee’s wages, it might be the individual’s self-employment income. A director might be in the business of being a corporation’s director. If so, that separate business might establish its separate retirement plan. As just one illustration, a 50-year-old director’s fee of $20,000 a month might support a year’s individual-account retirement plan contributions of $76,500 [2024]. But a businessperson considering such a plan needs a practitioner’s advice about many qualified-plan conditions, including coverage and nondiscrimination, especially if the self-employed business might be treated as a part of a § 414 employer that includes the corporation the director serves. Renee H might face some delicate choices about whether to do the TPA’s work on the data presented, or to invite a conversation about a client’s information and a client’s (and perhaps others’) choices and wishes.

I'm pretty sure it is simply the 10 year rule with no consideration to the participant's theoretical RBD. I know I got quite a headache recently trying to sort our the old, new and newest rules.

You have to follow the plan document. If the allocation conditions say a participant must work 1000 hours to receive an allocation, and there is no other exception to this allocation condition (typically for terminations due to death, disability or retirement), then the participant does not get an allocation. There are other provisions that may be applicable and again, you have to follow the plan document. Are they employees? The definition of participant commonly requires an individual to be an employee to be able to participate. This likely will impact your cross-testing results. (This also opens up questions about why the amounts were reported on a W-2 instead of a 1099, and the company's accountant should have an explanation.) Is this pay included in the definition of plan compensation? The amounts 2 out of 3 of the owners may not be considered plan compensation for purposes of calculating the contributions, and you have to follow the plan document and exclude it from the contribution calculation. No plan compensation would result in no contribution. You may expect that the 2 owners will not be happy if they feel they are not getting a PS contribution and therefore are not benefiting from their inheritance. There are other strategies to address the situation without involving the PS plan (and possibly triggering compliance issues with the PS plan).

But the document language that Metsfan026 cited says it happens after a 5 year break (an earlier post by Kac2014 called for immediate deemed cashouts, but it was a different document). I think this is a mechanical exercise - if they had a 5 year break prior to plan termination, then they are 0% vested and forfeit; otherwise they become vested upon termination. Some (many) years ago, when we submitted plans for DLs, the IRS would ask about forfeitures within 5 years of the plan termination. It wasn't ever a problem, but I think the idea was that they were looking for terminations and forfeitures that were somewhat related to the plan termination. I think I even remember them asking for evidence that someone who term'd a couple of years prior was a voluntary term (quit vs. fired). I asked "what's the difference?" I think I got a mumbled answer about it possibly being related to the plan termination, but in any event it wasn't challenged.

That's how I would read it. I think because of the deemed cash out provisions, folks probably should have been deemed cashed out if they terminated in prior years. Folks that terminated in the year of plan termination, I think you'd have a tougher time deeming them cashed out. I'm not sure what the IRS position is on folks who were deemed cashed out in the 5 years proceeding the termination, if you have to restore them because they don't have a 5 year BIS, but I personally have not done that even on Plans that used to be submitted to the IRS for a DL on termination.

It looks like you are hoping to pass the Ratio Test. Keep in mind that when you are testing a plan for coverage within a controlled group, the numerator is the count of individuals benefiting in the plan, and the denominator is the number of nonexcludable individuals in the controlled group. For A, you have 25 out of 100 HCEs and 100 out of 1350 NHCEs. The ratio is (100/1350) / (25/100) = 7.41% / 25% = 29.63% < 70% = fails. For B, you have 75 out of 100 HCEs and 1250 out of 1250 NHCEs. The ratio is (1250/1350) / (75/100) = 92.59% / 75% = 123.46% > 70% = passes. (Please double check the math). You can test the plan together (permissibly aggregate) the plans and get a ratio of 100% = passes, or try using average benefits testing on A. Also keep in mind, when it comes to coverage testing, Elective Deferrals are a "plan", Match Contributions are a "plan" and Nonelective Employer Contributions are a "plan".

I'll be honest, I don't think these penalties will actually be collected, except for extreme cases. Going to 10X penalties was the "revenue raiser" to make the math work on paper, but there is just no way they will collect these penalties in 99.9999% of cases.

Going to climb up on my soapbox for a minute. These penalties are asinine beyond belief, and the authorities should be thoroughly ashamed of this. Totally inexcusable. I don't object to "reasonable" penalties for compliance failures, and to be a little bit fair (although it pains me) the IRS is usually pretty reasonable if good faith efforts have been made. But the assumption of guilty until proven innocent just frosts me, particularly when the penalties are all out of proportion to the severity/effects of the violation. Climbing down now. A long, steep climb...