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Participants may have the ability to make trades in accounts but they aren’t the “owner” of the account, the trustees are. The trustees have the ability to liquidate whatever account they want. If they haven’t done so, it’s on them.

Track it separately and manually adjust whatever reports you get from RK B?

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Yeah, I've never EVER even SEEN a SAR distribution date even questioned. Doubtless I just jinxed myself...

If you need the additional 2 months for the SAR, amend the 5500 and check the box

The Section 125 cafeteria plan nondiscrimination rules are going to create issues here. A "stipend" in this context would likely have to be a flex credit to meet the §125 requirements and avoid constructive receipt. That flex credit would subject to the same Section 125 nondiscrimination issues as a simple increase to the employer contribution of the premium. In other words, HCPs generally could not have access to flex credit amounts that non-HCPs do not. The main exception would be for regional classes. The workaround here is far more simple. They can pay the affected employees more in wages. If those employees use those additional amounts to pay for the increased cost of coverage on a pre-tax basis through the cafeteria plan, the net result can be the same for both parties. Here's more discussion: https://www.newfront.com/blog/designing-health-plans-with-different-strategies Here's the relevant cite: Prop. Treas. Reg. §1.125-7(c)(2): (2) Benefit availability and benefit election. A cafeteria plan does not discriminate with respect to contributions and benefits if either qualified benefits and total benefits, or employer contributions allocable to statutory nontaxable benefits and employer contributions allocable to total benefits, do not discriminate in favor of highly compensated participants. A cafeteria plan must satisfy this paragraph (c) with respect to both benefit availability and benefit utilization. Thus, a plan must give each similarly situated participant a uniform opportunity to elect qualified benefits, and the actual election of qualified benefits through the plan must not be disproportionate by highly compensated participants (while other participants elect permitted taxable benefits)…A plan must also give each similarly situated participant a uniform election with respect to employer contributions, and the actual election with respect to employer contributions for qualified benefits through the plan must not be disproportionate by highly compensated participants (while other participants elect to receive employer contributions as permitted taxable benefits).Prop. Treas. Reg. §1.125-7(e)(2): (2) Similarly situated. In determining which participants are similarly situated, reasonable differences in plan benefits may be taken into account (for example, variations in plan benefits offered to employees working in different geographical locations or to employees with family coverage versus employee-only coverage). Here's a slide summary: 2024 Newfront Section 125 Cafeteria Plans Guide

I agree with @Bri and suggest that Dr. X or his plan account pay the fee for the additional work.

Let us know when the DOL reaches out... 😟

Our service agreement lists pricing for each specific service listed in our menu of available services. For example, one service is posting payrolls and instructions to the custodian on where to invest the payrolls. This service is predicated on receiving timely and correct data and related funding. Any service that is not explicitly listed, and any variance from the conditions applicable to a listed service, are considered special services and billable at the hourly rates of the staff who perform the special services. Yes, if the time involved is inconsequential, we alert the client we provided a special service but may waive the fee. If client does not take steps to ensure that we get what we need to perform our listed services timely and accurately, we do invoice the client for the extraordinary efforts. It's amazing how often it takes a small charge appearing on an invoice is needed to motivate the client to act within the scope of the services agreement.

Here’s the Labor department’s rule: “When an extension of time in which to file an annual report has been granted by the Internal Revenue Service, such furnishing shall take place within 2 months after the close of the period for which the extension was granted.” 29 C.F.R. § 2520.104b-10(c)(2) https://www.ecfr.gov/current/title-29/part-2520/section-2520.104b-10#p-2520.104b-10(c)(2). A reader of the Form 5500 Instructions might interpret them to suggest an employer/administrator may (and perhaps should) check an extension box if either the plan’s administrator or the employer business organization filed for the extension, even if the employer/administrator has no need to rely on an extension for the Form 5500 report. BenefitsLink mavens, what do you think about a situation in which the employer corporation obtained an extension for its Federal income tax return but that fact is not shown on the Form 5500 report?

my vote is 9/30

If the employee was not a more than 5% owner when his original RMDs years age, and if the plan allows for active employees to defer taking RMDs until they separate from employment, then he can defer taking his RMDs now.

Consider keeping the contribution squeaky clean both for allocations and all other plan reporting, and having the plan pay an expense that would wipe out the excess. Confirm that the plan allows for payment of an expense and for the employer to reimburse the plan for any plan expense not paid for by the company.

If you turn 60 at any time in 2025, you are eligible in that year for the whole year. You will therefore turn 63 in 2028. Because you turn 63 in 2028 you will of course not turn 64, so 2028 is the last year. So 2025, 2026, 20278 and 2028 is 4 years (60, 61, 62 and 63). So your assumption is correct. Happy Coding to you!!

Just as you have in the past, send a letter letting the IRS know that the 5558 was timely submitted with the packet that was mailed on 7/30. If you want to send them your screenshots too, send the screenshots. I'm sure you know it wouldn't be wise to say you've misplaced or inadvertently deleted anything. Just let them know that the 5558 was mailed timely, and request a penalty abatement and all should be fine - as always.

True dat. Also, remember that many severance payments are made via payroll: in this case, the former employee is left on the payroll as a simple mechanism of making severance payments beyond the severance of employment date. This is mechanical in nature and does not define that person as an "active employee".

The only change made by SECURE 2.0 is that you don't need to contact participants to get the return of overpayments, or to notify them that the overpayment is not eligible for rollover.

I think you're OK. Plus, as of your plan termination date (2023) you were at 100% covered by QRP. Future employee terminations don't affect that, otherwise you'd be dead in the water. You don't say what the excess is but are you sure it can all be allocated in 7 years?

True "severance" pay is never Plan Compensation and is different from statutory post-severance compensation. If a person receives a "separation bonus" as part of their last paycheck, that may be includable depending on the terms of the plan - but if it's classified as severance it is ignored in any scenario. If this is includable post-severance compensation, and is not known until after the ASD, often a person is put into pay status based on the known (but incomplete) compensation amount and then after a final accurate benefit is calculated the future benefit payments are adjusted along with a true-up payment. Or, forms and elections are made using the aforementioned estimate prior to the ASD but then commencement is delayed for administrative reasons as the final actual benefit gets calculated and then paid effective back to the ASD. This is NOT an RASD if the QJSA forms are provided to the participant prior to the ASD. Plan language must specifically provide for an RASD and there are certain rules you must follow in calculating and communicating benefits.

agree on that as well.

The OP says "If you defer something other that 2,4,6...then match is 100% of deferrals." If literally true, that would mean if you defer 3% or 5% you get 100%. Is that true? If so, then I think you would have an issue of the match rate increasing when going from 3% to 4% (100% to 150%).

Ask the sister for the info or her help in getting this done.

So if you defer 2%, 4% or 6% you get 6% but if you defer 1%, 3% or 5% then you get 0%, 3% or 5%? I agree the RATE of match can go down on the INCREMENTAL deferral increase but not this, where the overall match decreases as deferrals increase. The plan could have a minimum deferral of 2% so that no one could defer more than zero but less than 2%, could it not? Could not it also require deferral elections in 2% increments so that only 0, 2, 4, 6, etc. were allowed? That would make more sense than what it seems they're doing.

For a governmental § 457(b) plan, a cure period and correction method have been in the statute since 1978: A plan which is established and maintained by an employer which is described in subsection (e)(1)(A) and which is administered in a manner which is inconsistent with the requirements of any of the preceding paragraphs shall be treated as not meeting the requirements of such paragraph as of the 1st plan year beginning more than 180 days after the date of notification by the Secretary of the inconsistency unless the employer corrects the inconsistency before the 1st day of such plan year. . . . . Internal Revenue Code of 1986 (26 U.S.C.) § 457(b) (flush language). https://uscode.house.gov/view.xhtml?req=(title:26%20section:457%20edition:prelim)%20OR%20(granuleid:USC-prelim-title26-section457)&f=treesort&edition=prelim&num=0&jumpTo=true

I agree that it could be done, but I would recommend against it. A better approach is to exclude all HCEs from the safe harbor, and rely on the plan's individual-groups allocation formula for nonelective employer contributions to make an allocation to some or all HCEs, if desired. This is a little bit more complicated (but only a little bit) and it gives the employer much greater flexibility.

At least some pre-approved documents provide for an "other" election for excluding participants from the Safe Harbor contribution, where they specify that it must be "an HCE, or" ............... so I don't see any prohibition about specifically naming an HCE as excluded. But I'll ask this - why? Given that documents can provide complete flexibility to exclude all HCE's, but make a "discretionary" Safe Harbor to "any or all" HCE's - what would be the point of limiting the flexibility by specifically naming one HCE?

If the document says that HCEs get the safe harbor then HCEs have to get the safe harbor. If they want to change that, it will need a plan amendment. Whether you can do that mid-year for the current year or whether it will have to wait to take effect until the next plan year is circumstance-specific. Did the safe harbor notice say that the employer may reduce or eliminate the contribution mid-year? Is the employer operating at an economic loss? Regardless, you can't eliminate benefits that have already been accrued. The anti-cutback rules protect both HCEs and non-HCEs alike.

You must follow the terms of the written plan. Look at the notes or other parameters around the safe harbor and see if the employer has any discretion there. If not, follow the written plan provisions, as a plan must comply in operation with those terms to retain its tax friendly (tax qualified) status. The plan may be amended prospectively to exclude HCEs from safe harbor, of course.

The match rate may go down as the deferral % goes up. The match rate may not go up as deferrals go up. So, all is good except for the participants deferring less than 2% of compensation. Their match rate needs to be at least 300% of deferrals (not necessarily 6% of compensation).