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An irrevocable election not to participate must be signed before the individual is first eligible to begin participation in the plan (or any other retirement plan sponsored by the employer which I think includes any other member in a controlled group with the employer. As a word of caution to the plan administrator, this is the type of election where in individual who misses the cut-off date may be tempted into trying to convince the plan administrator that the individual intended to sign timely, or was delayed by circumstances beyond their control, or even attempts to back date a form. The plan administrator needs to hold fast to the timing.

Yes. Presumably the plan is tracking its elections (on RMD treatment and other provisions) to incorporate into an eventual amendment by the deadline if it has not already adopted one.

And particularly if this is a small employer I would encourage you to look at the problems that can arise from irrevocable opt outs, especially in the area of coverage failure that may be difficult or impossible to correct via amendment depending on your demographics which may or may not be applicable to this particular situation. Just don't want to see you tripped up by unintended consequence sometime in the future.

@Jakyasar You have the correct dates. Hopefully your RMDs due 2023 were paid to you in 2023. The following chart is handy for looking at start dates. BIRTHDAY RMD AGE Born before July 1, 1949 RMD age is 70 1/2 Born July 1, 1949 to December 31, 1950 RMD age is 72 Born January 1, 1951 to December 31, 1959 RMD age is 73 Born after January 1, 1960 RMD age is 75

You make them a participant by accepting the rollover, so I would argue that "not a participant as of EOY" is incorrect. They are a participant who has not met eligibility for contributions other than rollover.

Both the AA and the BPD comprise a plan sponsor's plan document. Therefore, to the extent a provision is delineated in the BPD without any corresponding AA selection, the BPD governs and should be followed. Not everything can/will/need to be outlined/selected in the AA and anything that is not expressly provided in the AA via a permissible selection is subject to any BPD mandates.

If a plan accepts an individual’s rollover contribution and credits the amount to the individual’s account, she is a participant, at least within ERISA § 3(7)’s meaning. That an individual has not met the plan’s conditions for sharing in a nonelective contribution or matching contribution, or even for eligibility to elect an elective-deferral contribution, does not mean that the individual is not a participant. A textualist, but acontextual, reading of the line 5 instructions might support a different finding for Form 5500 reporting. But caution suggests counting an individual who has an account balance, even if she has not entered the plan for anything other than the rollover contribution.

Then it would appear the statutory exclusion for non-resident aliens can be used provided such language is in the plan or, if not in currently, then amended in prior to this employee's otherwise entry date.

Way out of my practice area but I always read these H&W postings because I know you usually respond and I find myself learning something. Thanks

Agreed, and personally, I would not include. Parallel question - if plan accepts rollovers from employees before becoming participants and an employee does such a rollover but was not a participant as of EOY, would you include them?

I think what he is getting at is the change to the testing method generally needs to be done before year end which is why he is suggesting VCP to get the IRS blessing to change the testing method for last year after the year end. I think this falls under an VCP situation and not SCP situation. Though with expanded SCP, may it does fall under SCP but I would probably want an ERISA attorney to opine on that before proceeding under SCP instead of VCP. I have no direct experience with a case like this but I do think your approach is reasonable and one the IRS would be likely to approve. Again that's just my opinion, the IRS may have a different view. Yes agree that the IRS could require demonstration showing compliance with BRF.

Maybe a stupid question, but did you look at the average benefits test for coverage of the small plan? If yes, and that does not pass either, is there a defined failsafe in the small plan's document? If not, could an 11(g) amendment to the small plan allow for change in testing method to enable aggregation? Regarding #4, yes, aggregation is for coverage, nondiscrimination and BRFs, all or nothing.

I've removed the attachment, so that personal information will not be available here via BenefitsLink.

The Instructions for a 2023 Form 5500 report include this: Line 6g. Enter in line 6g(1) the total number of participants included on line 5 (total participants at the beginning of the plan year) who have account balances at the beginning of the plan year. Enter in line 6g(2) the total number of participants included on line 6f (total participants at the end of the plan year) who have account balances at the end of the plan year. For example, for a Code section 401(k) plan, the number entered on line 6g(2) should be the number of participants counted on line 6f who have made a contribution, or for whom a contribution has been made, to the plan for this plan year or any prior plan year. Defined benefit plans do not complete line 6g. https://www.dol.gov/sites/dolgov/files/ebsa/employers-and-advisers/plan-administration-and-compliance/reporting-and-filing/form-5500/2023-instructions.pdf Perhaps a reading of that text is that either count includes only a person who fit both conditions: she had an account balance and, at the specified time, was a participant. A few potential lines of reasoning: Even if a person has an account balance, that does not make her a participant. That an amount is mistakenly credited does not mean the individual had (in the sense of possessed) an account balance. That an employer paid a contribution into the plan’s trust does not mean that any portion of that contribution was for a person who was not a participant. This discussion is not advice to anyone.

I would check whether this plan is aggregated with another for the NHCEs, and if not I would inquire whether someone has thought through the 410(b) issue.

I'll play devil's advocate to be feisty and get you riled up. Apologies in advance. Excluding NHCEs from a 401(k) plan might be advisable where they do not work 1000 hours ever for YOS eligibility but the plan wants eligibility determined on elapsed time. Of course, as soon as one NHCE becomes non-excludable you have a coverage failure. We see NHCEs excluded from small employer DB/CB plans many times when aggregated with DC to satisfy coverage and nondiscrimination AND the DB/CB covers enough HCEs to satisfy minimum participation. BUT I agree with your WTF, and would grill the drafters of these plans as to HTF they satisfy coverage, nondiscrimination and for the DB minimum participation.

Tax-exempt entities do no have deduction limits but individual 415 limits apply.