Leaderboard

Before imagining potential corrections, a service provider might first evaluate whether it wants as its client a person that acts without asking for advice.

I got a couple requests but told the auditors I was really busy and maybe @jeanh could do a few. 😇😂

The deductible limit is 25% of pay. But the 415 limit is 100% of pay. Is the participant 50 or older?

I would think "yes" since the QACA is also an EACA.

Suffice it to say that the more volatile investments that the fiduciaries ask to include as investment options, the more exposure they have to a participant who mismanages their account and claims that the fiduciaries shoulda, coulda have prevented the participant from harming themselves. When the fiduciaries really, really want to include these volatile investments, they try to create rules to keep participants from harming themselves. Here are some rules that I have seen fiduciaries apply: you can invest your deferrals as you like but you must invest match or employer contributions in prescribed set of funds. you cannot change your investments more frequently than once per week/month/quarter. you can trade covered call options in your SDBA only if you pass a test demonstrating you know how options work. you can invest no more than x% in sector funds/physical gold/REITs/commodities futures/private placements/limited partnerships. you can invest in any of the investment types listed above by providing a written note that you understand the associated risks of an investment. The biggest challenge for plans that permit these rules is dealing with investments that have limited liquidity. Participants expect that any investment available under the plan is fully liquid and they can sell anything overnight. The larger the plan, the more challenging it is to monitor and apply these types special rules. Hence most recordkeepers for large plans will not support these types of investments. The bottom line is there is nothing that prevents a plan from allowing some very creative investments as long as the plan provides a basic set of investments offering a conservative fund, a moderate blended fund and an equity funds. It is up to the fiduciaries to decide what is wise or unwise for the plan it participants.

Corollary: if such limit is applied to one investment alternative (other than ER securities), would/should/must it apply to every alternative?

Although technically a retirement topic, but nonetheless an important provision for individuals over age 65, "(Sec. 110204) This section expands eligibility to make tax-deductible HSA contributions to include individuals who are 65 years or older and are enrolled in Medicare Part A." This makes available a very tax-advantaged deferral opportunity that is in addition to 401(k) deferrals or IRA contributions. I have seen some discussion where the bill does not override the provisions of the Statutory Pay-As-You-Go Act of 2010 so the increased spending would trigger a 4% cut in Medicare payments starting in 2026. An HSA would help deal with the decreased Medicare payments.

Ah, so I DID misunderstand the question. If it is for coverage testing, then yes, I think you have to pass the ratio percentage test. The IRS position, as I understand it and unless it has changed, is that each person in their own group is tantamount to naming individual employees, and is not a reasonable classification under 1.410(b)-4(b).

I don't see this as a concern. As you noted, employers have discretion to set the HSA contribution interval. With respect to the nondiscrimination issue you raised, the comparability rules are essentially a dead letter because they do not apply to employer contributions made through a cafeteria plan. The comparability regulations, cafeteria plan regulations, and other IRS guidance all make clear that employer contributions to an employee’s HSA are made “through a cafeteria plan” where employees may contribute to the HSA on a pre-tax basis through the cafeteria plan by salary reduction. Therefore, virtually all employer HSA contributions are subject to the §125 cafeteria plan nondiscrimination rules (rather than the §4980G comparability rules) because almost all employers permit employees to make pre-tax HSA contributions through payroll. It is relatively easy for employers to satisfy the Section 125 nondiscrimination rules. The primary requirement is that employers satisfy the “uniform election” component of the contributions and benefits test. This generally requires that employers provide at least as generous HSA contributions for non-highly compensated participants as made available for highly compensated participants. That "uniform election" test allows employers to categorize employee groups based on whether they are "similarly situated" to permit categories of participants with reasonable differences in plan benefits. I would consider it fair to treat new hires differently because they are not similarly situated to those who are employed/participating on the one-time HSA contribution date for the plan after OE. More discussion: https://www.newfront.com/blog/employer-hsa-contributions Here's a couple useful cites: 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).

You need way more help than you can get from this board for free. There are people on this board who are qualified to help you but it won't be cheap. Your problem is fraught with all kinds of legal issues. I know that isn't answer you wanted but it really is the best answers. Unfortunately, the people who helped you in the past didn't warn you about issues like this long ago. You can literally search real estate in plans on this board and you will find threat after thread of people having this and other problems of putting this kind of asset class in a plan like this. I feel for your problem but it won't be cheap nor easy to get a fix.

assuming it is a DC plan and the participant died before RBD since the spouse is the beneficiary, the spouse should be able to roll to her IRA at treat it as her own and not an inherited IRA.

Whether a pairing or grouping of entities is or isn’t treated as one employer or otherwise related matters not only for qualified retirement plans’ coverage and nondiscrimination conditions but also for ERISA title IV about liabilities to a pension plan, including withdrawal liability to a multiemployer plan; general debtor-creditor law, including equitable-remedies law; bankruptcy law, insolvency law, or both; Federal, State, municipal, and international tax laws, whether for income, value-added, or other indirect taxes; and financial-statements accounting. A private-equity shop might use many lawyers to fine-tune the arrangements.