[I know the answer is it SHOULDN'T be done, but I'm looking for CAN.]

Got a pooled 401k plan that is transitioning to individual accounts.  There are enough people such SDBAs for all of them would be horribly inefficient, so they decided to go with a fund platform.  However, the FA just told me that they will do SDBAs for the owners.  This immediately set off all the alarm bells.

Of course it's a bad idea, but what is the latest and greatest about how it can be done with some degree of confidence that it will pass the sniff test?  I'm thinking:

1. No minimums allowed to open one.  Note sure about minimums on any particular investment.
2. All participants must be given the option to do so.  We've got a few plans that have had this set up for years (and keep resisting change), and on those we already have a boilerplate participant election form.
3. 404a5 fee disclosure notice.

I was thinking about a set fee for the SDBAs each year to represent the additional time spent reconciling them; I'm not sure I could easily get the SDBAs to send me the fee from the account each year, but I think would be OK.

Ideally, there's some kind of citation that I can use to argue against this, but failing that, I at least want to put this on as solid ground as possible.  Any thoughts?  Thanks.

I'm sure Nike has this trademarked or something, but it would be fun to have this on our client engagement letters - the endless amounts of time we spend because the client is trying to "get around" something they have to do, or won't do what we tell them to, etc., etc. - wouldn't it be great if we could contractually point to "JUST DO IT!"

Just one of those pleasant daydreams...

Can a plan be changed mid-year to have the safe harbor match allocated/calculated on a payroll basis versus what their plan currently has, the last day of the plan year?  I have a client that does not want to true-up the sh match at year end.

We have a terminating Cash Balance Plan that has excess assets compared to the benefits owed.

I just want to make sure I'm reading the Plan Document correctly.  It is allowed to allocate the overage to the participants, in ratio to their balance at the time of termination?  So instead of reverting the money back to the Employer (which would cause taxation), we can pay it all out as long as the document allows?

I'm 95% sure, I just want to make sure I'm not crazy

Due to some issues with the plan sponsor, we are just now working on the 2023 contributions and allocations.  We discovered that the 2022 Employer Safe Harbor contribution was never deposited to the plan.  What options are available to fix this?

Thanks.

Is there any provision in the Internal Revenue Code that prohibits voluntary, after-tax contributions to a DB plan?  Put differently, the plan requires mandatory employee contributions based on age of entry.  I'm asking if employees could voluntarily contribute additional after-tax amounts to accounts under the plan. Any insight would be appreciated.

Does this hold true for DB plans... all plans?

With Section 315, Reform of family attribution rule. 

Question 1: Can the client set up retirement plans under Property Management Company only and disregard Dad's Dental Practice with 20 employees?

Question 2: If the answer is No to Question One, can the client allocate 100% to Eldest Son and have Mom and Eldest Son receive payroll under Property Management Company and still disregard Dad's Dental Practice with 20 employees?

Question 3: If the answer is NO to both 1 and 2, can the Dad change ownership to 0% from both Dad's Dental Practice and Property Management (Second Son will own 100% of Dad's Dental Practice), Mom receives 5% ownership and Eldest Son receives 95% ownership and set up the retirement plans under Property Management only. Currently, there is no retirement plan in place for Second Son Dental Practice.

Participant is applying for a hardship - was in a FEMA county deemed a disaster. Seeking a hardship to cover the cost for repairs to a primary residence.

1.  The participant financed the initial work on the exterior of the house.

2. Now she needs to pay for the drains, repair to the concreate floor and drywalling. - This cost is $14,908

The question is, can the participant take a Hardship for the cost of the initial repair along with the second round of repairs?  The first part was  financed on a credit card with an outrageous interest rate. participant wants to combine the two costs and take on e Hardship. (1) pay off credit card for the initial work and (2) pay the contractor for the second round of work.

thanks

Teresa

Hi - 

Have an asset sale where the seller will terminate their FSA plan on 5/1 and open up the buyer's existing FSA plan to those seller's former employees.  They will roll the existing FSA balances of the seller's employees to the buyer.   To my understanding, any employee of the seller's who was not on their FSA plan when the deal closes does NOT have new FSA election rights under the buyer's plan (unless a QLE occurs down the road).   Can anyone confirm this is correct?   

And how does COBRA come into play here with FSA? If an employee had unused funds left over in the seller’s plan, could that employee elect COBRA for the FSA plan (to have access to their unused funds ) AND enroll into the buyer's plan as a newly eligible EE?

A company failed to make matching contributions to certain former employees for the 2021 plan year. (Company thought there was an allocation requirement to be employed on last day of plan year, but there was not.) Company made corrective contributions to those former employees. Is it necessary to re-run the ACP test using the new matching contribution data? 

Client is a PC, 2 dentists, 15 employees.  Each dentist has his own plan.

Yes "plan" - that is the way the accountant wanted it.

Employees in separate plan, all 3 plans tested together.

One of the dentists traansfered a portion of his account to a limited partnership that his son handles.

Not getting into prohibited transactions or part-in-interest here, but this owner, DOB 7/7/51 will need to take his 1st RMD at the latest by 4/1/25.

We are attempting to get him to rollover his plan's investment in the limited partnership to an IRA which apparently can be done.

Question is, can he get the investment out of the plan and into an IRA without having to take an RMD.  Once he rolls this out of the plan to his own IRA, it's not an plan issue anymore.

I have a couple of DB plans of sole proprietors, Schedule C.

I know the combination of "compensation" for benefit calculation plus contribution can not exceed the Net Schedule C for the year.

However, I have seen other DB plans for sole proprietors wherin the contriubtion plus "compensation" exceeds theNet Schedule C.

How can this be?

I'm 65.  I was offered a lump sum pension payment of $89,000.  I understand the amount will be recalculated when the new 417e table is released in June 2024.  Should I take the lump sum now or wait till after the new calculations are made in July 2024?

We've been asked to take over a plan that was effective 1/1/2023. Employer got mad at the TPA for reasons unknown, and wants us to do admin for 2023. The 2023 document that was adopted is the document sponsored by the prior TPA.

So - Employer A adopts a plan, effective 1/1/2023. Employer B's employees are allowed to participate in employer A's plan. Here's the problem.

The owners of A also have ownership in B, but NOT sufficient to constitute a Controlled Group. Nor are the businesses an Affiliated Services Group. And although A's plan provides for Multiple Employer Plan provisions, employer B did NOT sign any type of participation agreement/joinder agreement, etc., as required under the MEP provisions in A's plan.

In an ERISApedia webcast re IRS Notice 2023-43, this question came up in the context of a CG/ASG, where the related employer did not adopt the plan. The presenters' opinions were that although 2023-43 does not allow self-correction of failure to initially adopt a plan, because the plan had been adopted by the "employer" under the CG/ASG rules, that this is an operational failure that can be self-corrected.

Although it is a "no harm no foul" type of situation, I feel like extending this treatment to a situation where the employer *(B in this case) is not "related" under the CG/ASG rules may be stretching the point too far. Curious as to any thoughts you may have?

hello, i recently left my job, and i had around $4000 on my 401k account and i also have a loan for $500 that has not being paid yet, will i be able to cash out my 401k after a month?

Does anyone have experience drafting Pension Order for Washington Metro Area Transit Authority Plans (WMATA)?

I think I know the answer to this but please can someone confirm?  I have a 403(b) plan funded exclusively by participant contributions.  Under universal availability, EVERYONE is eligible but, since there is no match and there is a separate employer-funded plan, we have a large number of eligible employees who elect not to contribute.  We report them as participants on the 5500 but without balances.   We are a large plan and there is no question that we need an annual audit.

New for the 2023 forms, the audit requirement depends on the number of participants with account balances.  "Both Form 5500 and Form 5500-SF, and their instructions, are revised to reflect a change in the methodology for counting the number of participants used to determine when a defined contribution pension plan may file as a small plan, including determining eligibility for the conditional waiver of the independent qualified public accountant (IQPA) audit requirement. Beginning with 2023 plan year filings, a defined contribution pension plan counts participants with account balances at the beginning of the plan year, except for new plans which use the number of participants with account balances at the end of the plan year."  

But the definition of Active Participant remains the same as previous years--Active participants (i.e., any individuals who are currently in employment covered by the plan and who are earning or retaining credited service under the plan). This includes any individuals who are eligible to elect to have the employer make payments under a Code section 401(k) qualified cash or deferred arrangement. Active participants also include any nonvested individuals who are earning or retaining credited service under the plan. This does not include (a) nonvested former employees who have incurred the break in service period specified in the plan or (b) former employees who have received a “cash-out” distribution or deemed distribution of their entire nonforfeitable accrued benefit.  So as long as someone is eligible to contribute we count them in this section, whether they contribute or not--right?  

Just checking to make sure I am not losing it--Secure 2.0 is testing my patience.

An over age 21 employee is hired 3/1/23 and works between 501-999 hours in the 12 months after her initial date of hire.  She then works between 501-999 in calendar year 2024.  

Lets say she reached 501 hours on June 1, 2024.  Am I correct then that her LTPT plan entry date is 1/1/25 and not 12/1/24 (6 months later) since not only is the LTPT eligibility period 12 months but if she goes over 1000 hours later in 2024, she would be eligible to enter as a "regular" participant on 1/1/25 and would not classify as a LTPT?

Thank you

Hi Folks,

I believe I have a fairly unique and messy situation that I’m hoping to get opinions on. An annual compliance review was completed by a TPA and they provided a profit sharing calculation for an ineligible participant (who was also terminated). The plan sponsor funded the contribution to said participant and triggered a residual distribution. The transaction was sent to the TPA for review and was approved, even though the participant should (1.) Not have been eligible to receive a contribution and (2.) Should not have been allowed to take a distribution of these funds.

The plan sponsor has decided that it’s going to be less of a hassle for them to allow this individual to keep the funds as a “bonus” (for a multitude of reasons that don’t need to be explained here). The individual is not an HCE but I still have concerns.

In my opinion, the plan would still need to be made whole because the assets that went into the plan never should have been segregated from the plan and now, the sponsor is looking at having to fund double the original amount to make the plan whole.

Here is my question: considering that the TPA provided an online approval of the distribution (to my knowledge, the sponsor was not prompted to provide an online approval), at which point could a TPA be held responsible for a loss like this?

Ultimately, I know that the sponsor of the plan is responsible for operating the plan but we are in this business because we are the subject expert matters and plan sponsors should be able to rely on their third party providers to help them avoid costly mistakes like this, especially when the third party overlooks important details such as participant eligibility when providing profit sharing calculations.