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My experience of almost 40 years is that the check date is most often used. Otherwise, the administrative work is a mess.

There are a lot of great thoughts coming out of Congress (did I really just type that? queue music for It's the End of the World As We Know It or Dazed and Confused) from retirement industry specialists (sorry, not saying experts, already gave too much credit) where some well-intentioned people say there oughta be a law and then they enact one. However, the bridge between concept (nice idea) and reality (administration) is often an architectural challenge/nightmare/near impossibility. I'm not saying that is the case here but it sure does sound like a case of no good deed goes unpunished - or 10% of the special cases that suck up 90% of your time - pick your cliche. Agree that being able to administer in a fashion that protects the victim's physical, emotional and financial well-being, as well as privacy, without undo burden on the Plan/PA is the need, how to accomplish that in different employment environments will be challenging for sure.

This is a classic question where payroll periods and plan entry dates are not synchronized. In my experience, most plans have used the first payroll paid after the entry date, but I have worked with plans that start with the end of the payroll period that starts on or after the entry date. What is unsaid in these discussions often deals with other payroll practices like payrolls that pay in arrears, or one or two weeks in arrears, or pay in advance. The bottom line is for the plan administrator to decide how the rules will apply and then stick to that decision consistently.

Paul I and CuseFan and kmhaab, thank you for your further observations. My clients use procedures designed so a recordkeeper, without accepting discretion, can process as good-order or “NIGO” almost all kinds of claims. For a participant loan, an emergency personal expense distribution, a qualified birth or adoption distribution, an eligible distribution to a domestic abuse victim, and a hardship distribution, there is no tax-law need (and, in my view, no good reason) to evaluate the claim beyond good-order processing. Claims for retirement distributions and even death distributions ordinarily can be handled in the recordkeeper’s processing without discretion. A recordkeeper involves the plan’s administrator only when a claimant asserts her right to dispute the recordkeeper’s response, or the circumstances relate to a court proceeding, bankruptcy, or other trouble. Many recordkeepers have not built forms, procedures, and systems for SECURE 2022’s and SECURE 2019’s new kinds of distributions. Their explanations to plan sponsors (and consultants too) blame an absence or insufficiency of IRS guidance. Some of that blame is fair; much of it is unfair. Small plans are stuck; bigger plans negotiate workarounds. Many recordkeepers need to intensify identity controls, address controls, and cybersecurity protections. Like it or not, a retirement plan account is increasingly like a bank account in a holder’s power to take money out whenever she wants—yet with bigger amounts and bigger risks. Returning to my originating question about which provision one would recommend (after solving the plan-administration issues, or imagining a hypothetical absence of them): Some plan sponsors might dislike allowing a too-easy payout. Yet, if a plan’s opportunity to generate retirement income for a participant depends, exclusively or heavily, on participant contributions, providing SECURE 2019’s and SECURE 2022’s before-retirement distributions can be a way to help reassure reluctant savers that one’s money will be available to meet needs when they happen. And I suggest employers treat working people as adults, who make one’s own decisions about how to use one’s resources.

Personally, I don't think a plan or plan administrator can be too concerned about protecting the victim (I know that sounds terrible, but hear me out). They should treat the victim as being able to make a decision for themselves, and make sure the victim has all the relevant information needed to make the decision. This is somewhat similar to the principle that an employer can't make the decision for a pregnant employee to remove the employee from a job area that might be hazardous to the employee. It must be the employee that makes the decision. But the plan administrator should inform the victim of domestic violence if information is going to be sent to the house regarding the distribution, etc. I can't see a scenario where a plan admin would have any legal liability for a victim incurring further abuse following a distribution.

The 5-year period for a Roth IRA begins at the earlier of either 1) the first Roth IRA contribution, or 2) a rollover contribution from a designated Roth account. So if there was no pre-existing Roth IRA, then the rollover starts the 5-year period. If the rollover happens in 2029, then the 5-year period for the IRA begins in 2029, regardless of how many years the contributions were in a designated Roth account before that.

Those are the current maximum amounts in the regulations, although a plan administrator would presumably be allowed to specify a lower threshold for each. The $200 and $500 amounts are found in Treas. Reg. 1.401(a)(31)-1 Q&A-11 and -9, respectively.

This is a discretionary amendment so as long as it is signed by 12/31/2023 it can be effective retroactively to any date in 2023 - even 1/1. Obviously that is not w/o risk if you administer based on a stated intent and then the amendment doesn't get executed. This is kind of like a CARES Act situation - yes we're doing/no we're not/memo accordingly/amend later. The only thing might be if you have a RK that won't execute w/o a signed amendment (but at this point the dates both in 2023 don't matter).

Unless you are talking in-plan Roth conversions you have two separate issues at play: 1. Under the terms of the plan, as limited statutorily, what contribution sources are available for distribution and under what conditions? 2. Is the distribution rollover eligible? Some types of contributions (401(k), safe harbor, QNEC, defined benefit/cash balance, etc.) have age restrictions on in-service distributions. Other types (profit sharing, match) might be available earlier but may have conditions (like full vesting or be in the plan x years). Then there are conditions that could apply to 401(k) and other sources, like hardships. Most but not all distributions are rollover eligible. Read the plan - it may be (and usually is) more restrictive than statute, but can NEVER be less restrictive, and ALWAYS governs.

No matter how many different matching formulas you have it's all a 401(m) plan subject to coverage under 410(b) and nondiscrimination with an ACP test. You do have a BRF for each separate match based on the timing of deposits and, even though your rates are the same, if A doesn't have 1000 hours/last day rule then the rates really aren't the same. A term EE in A gets match but similar term EE in B gets zero. But if you're passing BRF for A on one you should on the other as well.

I have seen this statement, or similar wording, in several places, and I think I must be misunderstanding something. If the pre-approved plan language for eligibility allows for, say, "3 consecutive months of service from the Eligible Employee's employment commencement date and during which at least 250 hours of service (not to exceed 1,000) Hours of Service are completed. If an Eligible Employee does not complete the stated Hours of Service during the specified time period, the Employee is subject to the 1 Year of Service requirement..." So, if an employee works less than 250 hours in that first three month period, they become subject to the 1 year of service requirement. Suppose they work 600 hours during the next 3 (or 2) consecutive plan years. Why would they not be considered LTPT? The LTPT rules will only affect 401(k) plans whose eligibility requirements require employees to complete at least 500 hours of service in a 12-month period to participate. 401(k) plans that require fewer hours - or none at all - will never produce a LTPT employee, making the new rules moot.

Belgarath, the plan eligibility language for earlier entry has 2 components: a time period of 3 consecutive months starting on the hire date and a count of hours of 250. If a participant meets these requirements, they are eligible to participate in the plan and will never be considered an LTPTE. The 3 consecutive months period is anchored by the hire date and if the employee does not become eligible under this entry rule, the employee will never be eligible to enter the plan unless the employee subsequently meets the 1000 hours in a year rule (which the plan may or may not shift from anniversary hire dates to plan years). The LTPT rules will apply the employee will become an LTPTE once the have the requisite 500 or more hours in 3 (changing to 2) consecutive Eligibility Computation Periods. I, too, have seen comments similar to your bold, underlined text. These comments are misleading, and as Peter notes, the interplay between earlier entry provisions and the LTPT rules can be complicated. I believe much of the available commentary is part of a good-faith effort to alert plans that there are multiple options available in approaching how to administer the LTPT rules. Unfortunately, the commentary often does not come with a warning that a plan must follow its provisions and regulatory guidance on identifying LTPT employees.

Peter, I believe that you are offering several excellent suggestions that are applicable not only to the domestic abuse distributions, but also are applicable to several other recently enacted special purpose distributions that involve self-certification. It appears that the in the industry, systems development efforts related to these distributions is lagging behind the implementation of other new features that are not optional. We can only hope that when support for these self-certified distributions is implemented fully, the procedures will give high priority to concerns for the privacy and security of the participant.

This is likely a whisper-down-the-lane kind of thing where someone did in fact do an in-service rollover, because they were 59 1/2 and the plan allowed it, and someone else missed that subtle (hah) nuance and then repeated it to someone else who took it a step further and now it is a "fact." (Profit sharing money can be distributed earlier, if the plan allows it, which would be rare. I'm pretty sure that's not what this is about.)

It's hard to say without knowing what you are really asking. If you are referring to an "in service rollover" from a taxable account to a Roth account, yes, this is allowed, and is a common provision. Of course, your specific document must allow Roth deferrals, and must provide for such an in-service rollover/transfer, but that shouldn't be a problem. If you are referring to something else (can't quite imagine what it might be) you'll have to explain.

RatherBeGolfing, thank you for your observations about how some plan sponsors might dislike allowing a too-easy payout. Paul I, thank you for your smart caution about the participant’s address. Do you think it’s feasible for a recordkeeper’s employee to suggest the participant change the account’s address and wait two weeks before taking the distribution? About designing procedures to protect an abuse victim’s privacy (and a plan administrator’s and employer’s lack of knowledge): An administrator can instruct its recordkeeper to process a claim if the claimant completed and signed the plan’s form, which includes the self-certifying statements. An advantage of such a procedure is that no one sees the facts of the participant’s situation, just the claimant’s conclusion. A plan’s administrator can set up the communications, forms flow, and claims procedure so the administrator never sees the participant’s claim, nor sees or hears a participant’s inquiry. (One of my clients gets a report on the number of claims paid, but nothing that reveals any distributee’s or claimant’s identity. And for reasons you suggest and some others, human-resources people might welcome a lack of knowledge.) Yet, I recognize many plans might be unable to implement these procedures and services.

Tax consequences and the whole repayment of these special payments aside, the victim of domestic abuse taking a payment may result in unintended consequences. Imagine the scenario where a person is the victim of domestic abuse but is still dependent upon the abuser or does not have protection from the abuser. The victim self-certifies and takes the distribution which is then reported to the address on record where the victim and/or the abuser resides. This sounds like a situation that could trigger further abuse. It also seems that the victim likely will wind up revealing the abuse to the plan administrator in the event the recordkeeper or IQPA auditor inquires about the payment. Where the plan administrator often is in a role within HR, might this trigger a need for the plan administrator to take steps to protect the victim?

Was there a forfeited amount that was removed from the participant's account upon payment of the partial distribution, and the forfeited amount was added back into the calculation of the current vested amount but the forfeited amount was not in fact restored to the participant's plan account?

Assuming that you have verified that the was a Missed Deferral Opportunity (MDO) that must be corrected by making a 50% QNEC, then the correction is made in accordance with Rev. Proc. 2021-30 Appendix A .05(2) and Appendix B Section 2.02(1)(a)(ii)(B)(1), and you will need to have the ADP that passes for 2023 (determined without the use of exclusions for otherwise excludable employees) to calculate the correction. There may be a correction other than the need to make a 50% QNEC assuming the employee is still active and depending upon the plan or other circumstances: Although unlikely given the question, does the plan use auto-enrollment? There may be not need for a correction but you have to provide a notice to the employee. Was the MDO found and deferrals began within 3 months from the employee's eligibility date? There is no QNEC and you have to provide a notice to the employee. Was the MDO found and deferrals began after 3 months from the employee's eligibility date? The QNEC is 25% and you have to provide a notice to the employee. The guidance for corrections is fairly detailed and prescriptive once you can confirm the circumstances of the employee's MDO.

Bird, that really sucks. I've been around the TD space for years, but have not had to interact with them for a while due to job role. I have asked my co-workers that have TD logins to see if they still have access and they still do...... Accounts are showing closed, but can still get to statements. Being that you said someone still had access TD.... did they try to type the name into the search bar? We found some "old", terminated participants in there still.... Try calling 1-866-423-2683. The number works and is listed as a Schwab number now. Maybe you can get lucky and get to someone helpful that can search by the plan EIN or tax number and back track into the "purged" accounts. Good Luck

Agree with @Lou S.. When you have 2 people, the greater of (40% or 2) is 2.

No, the DB won't be OK if you have 2 and excluded one of them, even if one of them is an HCE.

Make sure you're billing time and expense? If you have account numbers a letter signed by the Plan Trustee requesting duplicate copies off all statements from X/X/XX -> Date of Account closure might help. Can't guarantee it but it might be a starting point.

In scenario 1 you did not change the event that triggered distribution (separation), you changed vesting. Yes, that indirectly accelerated potential payment timing. In scenario 2 you accelerated directly by design the timing of distribution which I think is impermissible.

On a related note, the dependent care FSA limit (sadly!) has also returned to normal levels. So the ARPA changes expired on both the tax credit and §129 side. In any case, I think it would be a very rare situation where the tax credit provides more bang for the buck than the dependent care FSA. Full details: https://www.newfront.com/blog/dependent-care-fsa-limit-challenges Slide summary: Newfront Office Hours Webinar: 2022 Year in Review

I expect FishOn can fill in the details. I read "the recordkeeper did not accept the contributions for the participant" to mean the recordkeeper did not keep the funds. I agree that some recordkeepers request the "as of" deposit dates and associated amounts to run through their corrections process. This works nicely if their system tracks a "plan date" (which is the as of date related to the amounts) and a "trust date" (which is the date the money is received into the trust). These two dates provide the documentation to show what happened and what should have happened.

Loans are evil. Run through 72(p) sequentially....