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This is to share with you the happy news that today is the 25th anniversary of the first day on which the BenefitsLink Newsletter began daily publication. I didn't see this coming when I decided to go daily in 1999, at age 41. (The newletters had begun four years earlier, but they weren't being published every day.) The free information must be helping employee benefits practitioners to help their clients, which translates to the ability of employers to effectively run and fund programs that improve the lives of so many millions of working people (and retirees, and beneficiaries), even if most of them wouldn't know (or want to know) the difference between an ERISA and an eraser. What a noble endeavor, to be an employee benefits practitioner! Some lawyers and TPAs and other benefits practitioners have found work through our job board that's been running since 1996, which means they've gone to new workplaces and sometimes new cities, which means some of them have met people they wouldn't have met otherwise, which means some of them have fallen in love and then had children... which means there are people walking around on the planet now who wouldn't be here but for this "web site" thingie that started in 1995, and then the idea of sending "newsletters" by "email." None of that would have been possible without readers. The existence of "BenefitsLink babies" didn't occur to me until one day about 10 years ago, but I kept it quiet -- at that time, they were still teenagers! True to form, I and my business partner and wife Lois Baker (formerly an employee benefits lawyer, whom I met on CompuServe in 1990 while trading ERISA questions using dial-up modems) have failed to do any marketing of this happy day. But as I sat here at the keyboard today I had the idea that we would get so much joy by celebrating the occasion with readers. I hope this hasn't come across as a commercial but instead is the lifting of an E-flute of cyber-champagne -- here's to employee benefits practitioners everywhere! It's a wonderful community, and for 25 years now and still counting, we are so happy to be a part of it.

Post-severance compensation has specific defined meaning(s) under the IRC and should be covered in the plan document as to what is and is not included. True severance pay - money paid upon/after termination of employment on account of such termination that would not have been earned/paid under continued employment is not plan compensation in the eyes of the IRS and cannot be considered for retirement benefits or contributions.

Frankly, in this scenario, I would recommend the client do the VFCP and the payroll company pay the costs.

Yes, as long as you use the same definition of compensation for all participants. You might also consider restructuring your test into component plans to avoid testing the young HCE on accrual rate.

Imagine how joyful things will be here if the "tribe of Guardians" comes through in October just one time, too!

Whether or not the individual is a 5% owner for RMD purposes is determined only during the year in which they attain the applicable age. Let's say this person's applicable age was 72, which they attained during 2021. If they started the business in 2022, then they were not a 5% owner during 2021 because the business didn't exist in 2021. So they are not required to commence RMDs before their actual retirement, because they don't meet the definition of a 5% owner for RMD purposes. Regarding the comment about the contribution being made after the end of the first plan year, there is a rule in 1.401(a)(9)-5(b)(2)(i) which says that you may determine the account balance on either a cash basis or on an accrual basis. So using zero is not incorrect, because you are permitted to ignore contributions actually made after the end of the calendar year.

CONGRATULATIONS, Thank You So VERY MUCH! Wishing you ANOTHER 25 YEARS! DPS RICH

It seems very reasonable to provide with enrollment materials.

Thanks, Dave. Your webpage was one of the first bookmarks I ever saved (prior to 1999).

IMHO, BenefitsLink has changed, for the better, the way benefits professionals do their jobs. Attaboy Dave!

Agree - either get the distribution back, contribute enough to make the plan 110% funded, or satisfy one of the other exceptions (which I have actually rarely seen in practice).

Much thanks to you and Lois - it certainly makes all of our lives much easier. You guys can't retire EVER!

OMG - thank you SO much for creating and maintaining this forum which has proved invaluable for many practitioners, not to mention entertaining at times! Echoing Peter, you should be very proud and never hesitant to promote the impact you've had on our industry. Doing the math (it's much of what we do LOL), that makes you a young and not ready to retire age 66 so we can all rest assured BL will continue for years to come, right? Truly, thanks for all you and Lois have done and continue to do, it is greatly appreciated.

David, many thanks for this great publication. I read it every day although sometimes I only have time for the headlines. Remember you fondly from your Orlando days. Thanks a bunch! Love the comment "ERISA and an eraser"! Too funny!

I think you should check exactly when those "forfeitable" amounts are supposed to be forfeited. If that date hasn't occurred, then your amendment could then fully vest those previously not-yet-vested amounts. I'd be more concerned if you tried to un-do forfeitures processed before the effective date of the change.

Short of clawing it back, I don't think there is anything you can do to "fix" it, but you could take action to mitigate the issues. Is if possible to make a contribution so that the plan is 110% funded? Would they sign a letter of credit now. You could pressure them to assist with some correction by threating to report is as an improper distribution that was not eligible for rollover.

The Form 5500 Instructions tell a plan’s administrator to report a late contribution until the first plan-accounting year that begins “after the violation has been fully corrected by payment of the late contributions and reimbursement of the plan for lost earnings or profits.” The Instructions call for reporting even if the late contribution and the correction happen in the same plan year.

Curious why how this is a possible resolution. The contributions were late, regardless of who was at fault. Assume the worst - amending the 5500 flags the plan for an IRS audit. The IRS auditors find that the original 5500 was correct (with late contributions) and the amended 5500 was incorrect. It would appear that the Sponsor were trying to hide the late contributions. VFCP is a hassle, but not nearly comparable to a Plan audit.

Well the V stands for Voluntary so you don't have to, but if you get the invite from the DOL and don't take advantage of the program, you do have a higher risk of DOL Audit, or so I've been led to believe from other threads on Benefitslink. But it sounds like you have properly reported late contributions, so I'm not sure under what theory you would file amended returns to remove them from the filings.

HSA eligibility is determined as of the first day of each calendar month. You can therefore become HSA-eligible again once you satisfy all of the requirements on the first day of a month by a) no longer being enrolled in any part of Medicare, b) having no other disqualifying coverage, and c) enrollment in an HDHP. If this occurs mid-year, you will have a prorated contribution limit (including prorated catch-up amount) based on the number of months of HSA-eligibility. You can avoid that prorated limit if you take advantage of the last-month rule by maintaining HSA eligibility from December of the year at issue through the entire following year. Here's an IRS Information Letter addressing the issue and referring to the same form you mentioned: https://www.irs.gov/pub/irs-wd/17-0003.pdf The question of whether an employee enrolled in Medicare can withdraw from the program and thereby participate in an employer’s HSA program is not within the jurisdiction of the IRS. This question should be directed to the Social Security Administration at 1-800-772-1213; ask for Form CMS-1763, Request for Termination of Premium Hospital and/or Supplemental Medical Insurance. More details: https://www.newfront.com/blog/how-medicare-affects-hsa-eligibility https://www.newfront.com/blog/the-hsa-proportional-contribution-limit Slide summary: 2024 Newfront Go All the Way with HSA Guide

I think you can only change NRA for compensation deferred after the amendment.

This brings up so many more questions about the TPA. I assume the 401(k) is OK on its own but that's probably not a good assumption on my part.

It sounds like it was reported to the IRS in other fashions as well. This is messy. No question.

This is correct.

It depends on whether they were a 5% owner in the year that they attained the applicable age. If they were a 5% owner at any time during that calendar year, then they must take an RMD. If they were not, then they can delay RMDs until their actual retirement. Age 75 in 2024 means DOB was in 1949, which was the SECURE transition year. If the DOB was on or before 6/30/1949 then it is age 70-1/2 and the applicable year would be 2019, if was on or after 7/1/1949 then the age is 72 and the applicable year would be 2021. Regardless, the 2024 RMD would be zero, since as you note, the 12/31/2023 account balance was zero.

The regulations on the Special Tax Notice are in §1.402(f) and require that notice be given no less than 30 days or more than 90 days before a distribution is made, but the participant can waive the notice requirement if they want to receive their distribution earlier than 30 days after receiving it.