I'm looking for service provider recommendations to determine Creditable Coverage re: Medicare Part D.   We have a client who has a high deductible health plan combined with an HRA that needs to obtain an actuarial determination as soon as possible.   It's a small client (roughly 45 employees) so any referrals to firms that are affordable (if at all possible) would be greatly appreciated.  Thank you. 

Hi,  A non-owner participant, DOB 01/22/36, terminated on May 10, 2022.   His RBD was 4/1/23, I believe.   His RMD forms were forwarded in late 2023 to the plan contact when I learned of his termination.   The contact never returned the forms because she never heard from the participant.

It turns out he died on May 5, 2022.  Primary Beneficiary was his wife, DOB 2/6/40.   Turns out the wife died March 18, 2023.  Her Beneficiaries are their two adult sons.  

Questions:

1.   I am right to think that since participant died before his RBD, no RMD’s are required for 10 years? (Per a certain webcast)

2. Since the wife died before his RBD, are the distributions still delayed for 10 years?  Is the wife now considered the participant when using the tables?  Which table?

This has stumped me and my colleagues.  One colleague suggested that this is pre-Secure, so the old rules apply, which really confused me.

Help!

I am embarrassed that I don't know how to turn the 417(e)(3)(B) factor that is published each year into a formula that would convert an account value into single life and J&S 100% survivor annuity forms at age 67 (or older age if the person is older than age 67). I've got clients who self administer their DC plans and they need to come up with the hypothetical annuities each year (with December 1 assumptions and December 31 account values) for the required SECURE ACT ERISA 105 disclosure. Is there a formula to convert lump sums into the annuity equivalents with the 417(e)(3)(B) assumptions that DOL requires? Even better, is there an easy conversion table like we see with 401(a)(9)?   

For example, Notice 2023-73 says that at age 67 there is a factor of 0.00920. How do you turn a lump sum into the single life and  100% jt and survivor annuity equivalents? There is a great calculator on the DOL web site, but it generates annuity equivalents that cannot possibly satisfy the Department's 105 guidance. It grossly understates annuity equivalents and must still be using the outdated 10 year CMT rate that was much lower in 2019. 

Actuarial firms I contacted are charging outrageous amounts. Is there some way to do this without hiring an actuary? Frankly, I'd like to learn. Converting a lump sum into annuities for a fixed term is easy. It's genrating a SECURE Act mortality table for age 67 and later years that has me stumped.

I was on my wife’s HDHP with an HSA  in January 2024 when I started a new job January 3rd 2024. My benefits started February 3rd 2024. I started a FSA with my benefits thinking since we had our own health plans that it was okay. I was wrong. 

I know my wife will need to return of excess since she has been contributing to the HSA. 

I need to know if she needs to return the money that her employer put in and her contributions in January 2024 since my benefits didn’t start till February. 
 

I have a potential client approach me with the following situation:

Established a Solo 401k in 2021 (he was only employee) & contributed for 2021, 2022.  He hired a full-time employee in the beginning of 2023.

The eligibility requirements (if relevant) were non-existent in the Solo 401k document (immediate entry).

For 2023, contributions were made & deducted for the owner, nothing for the EE.

For 2024, contributions have been made already for the owner.

What are his options for both fixing 2023 & making sure that the contributions made for 2024 are allowable? If I open a Qualified Plan effective for 2024, can he make the contributions for the EE covering both years?  Essentially, is this something that falls under the ability to "self-correct"?

Thank you

I've got this auditor on a couple of my large plans who insists on pro rating the final payroll and including that accrual on the 5500 Schedule H and audit report.

Example: weekly payroll, final week included on 2024 W-2 is the payroll of 12/28/24.  He will prorate the 1/4/25 payroll as 3/7 belonging to 2024, so therefore 3/7 of the deferrals on the 1/4/25 payroll must be counted as 2024 receivables and added to the 2024 reporting.  I refuse to add them to my administration, so we've got a reconciling item for that.

This is insane, right?  I'm no CPA, but I can't find any justification for this.  And it adds a bunch of extra work, which is even worse.

I'm meeting with the auditor next week, and I'm looking for something I can use to convince him to back off on this.  Any suggestions?  Thanks.

Pathology practice LLC owned by 4 doctors, had 12 other (NHCE) employees, operated a lab and sponsored a 401k safe harbor, cross-tested plan. Effective 5.1.2024, the practice LLC sold its business to Hospital, which employed all 12 staff people that had worked for practice LLC. The doctors remain employed by the practice LLC, which contracts their services to Hospital. I have little to no doubt that the practice LLC/doctors meet the IRS definition of 'hospital-based physicians'.

One of the doctors bought 1 share of Hospital. So, there is likewise no doubt that an affiliated service group now exists.

Hospital sponsors a plan that now benefits the 12 staff employees. It provides a 5%-of-pay profit sharing contribution to all Hospital employees, and sports a 401k safe harbor feature with a safe harbor match.

Here are some of my questions:

1-The practice LLC's plan can aggregate/is aggregated with the Hospital plan, right?

2-That permits the doctors to make 401k deferrals to the practice LLC's plan, to the 402g maximums, right?

3-Can the practice LLC make cross-tested profit sharing contributions to its plan for the doctors, since the employees of Hospital are receiving an amount from Hospital that serves as a gateway minimum?

4-For 2024, can the practice LLC plan compute profit sharing contributions and apply nondiscrimination rules just to the period of 1.1.2024-4.30.2024 for the 12 employees AND THE DOCTORS?

Pathology practice LLC owned by 4 doctors, had 12 other (NHCE) employees, operated a lab and sponsored a 401k safe harbor, cross-tested plan. Effective 5.1.2024, the practice LLC sold its business to Hospital, which employed all 12 staff people that had worked for practice LLC. The doctors remain employed by the practice LLC, which contracts their services to Hospital. I have little to no doubt that the practice LLC/doctors meet the IRS definition of 'hospital-based physicians'.

One of the doctors bought 1 share of Hospital. So, there is likewise no doubt that an affiliated service group now exists.

Hospital sponsors a plan that now benefits the 12 staff employees. It provides a 5%-of-pay profit sharing contribution to all Hospital employees, and sports a 401k safe harbor feature with a safe harbor match.

Here are some of my questions:

1-The practice LLC's plan can aggregate/is aggregated with the Hospital plan, right?

2-That permits the doctors to make 401k deferrals to the practice LLC's plan, to the 402g maximums, right?

3-Can the practice LLC make cross-tested profit sharing contributions to its plan for the doctors, since the employees of Hospital are receiving an amount from Hospital that serves as a gateway minimum?

4-For 2024, can the practice LLC plan compute profit sharing contributions and apply nondiscrimination rules just to the period of 1.1.2024-4.30.2024 for the 12 employees AND THE DOCTORS?

Trying to solve for a situation that keeps popping up 

- Cash balance plan 

- Participant with a deferred vested benefit dies. Death certificate indicates the individual was divorced.

- When we are on notice of a divorce through the death certificate, we ask the estate or beneficiary to provide a divorce decree or separation agreement to determine if there is a possible  DRO that was just never presented to the plan. Often times, the divorce was decades prior to the death and the beneficiary is therefore unable to locate any divorce documentation. 

- In these scenarios, does the plan sponsor have a fiduciary obligation to exhaustively seek out divorce documentation before paying benefit to estate/beneficiary? What happens if benefit is distributed to beneficiary and then ex-spouse comes forward with an old DRO. For what it's worth the plan document does not directly address these situations.  

- Would the same be true in scenarios where the participant divorced many years ago, they subsequently got remarried, and the benefit is payable to the new spouse. In these scenarios, the new spouse is almost never able to locate the divorce documentation. 

@QDROphile

We have not encountered this - first time for everything! I am, however, unsure of the exact process. So, our client joins a MEP with someone else effective (X) date - let's just say November 10. Assets will be liquidated from current investment provider, and transferred into the MEP - exactly how, not sure we care. My question is re the 5500 SF. Is the 5500 SF filed as a "final" showing the transfer on Lines 13(b) and (c)? Or would it be a full year 5500 SF since the plan isn't being "terminated." And would it be filed as a short plan year as of the date of transfer of the assets? It appears that no 5310-A would be required.

Just not sure of the process. Would it just be the new MEP that would file a 5500 for 2024, and we wouldn't file a 5500 at all? It'll be driven by the new TPA anyway, but I'd like to get a better handle on how this typically is/should be handled.

Thanks!

Hi,

Thank you all as always. A owner only DB Plan (husband and wife), has about 4,500,000 in assets. Part of the assets is a condo worth 1.5 million (they rent it out). They would like to invest further in real estate and have the plan purchase another condo, worth aprox 2 million, however the seller is willing to agree to sell it for 1.8. Is it advisable to purchase another RE Investment? It is in the same area as the first condo, so that might play a role in lack of diversification? Thank you

"The Roth catch-up wage threshold for 2024, which under section 414(v)(7)(A) is used to determine whether an individual’s catch-up contributions to an applicable employer plan (other than a plan described in section 408(k) or (p)) for 2025 must be designated Roth contributions, remains $145,000."

Why aren't they telling me today what the 2025 limit is, since this rule is first effective in 2026??

Hi there,

Does anyone know if SECURE 2.0 withdrawals are considered protected benefits?  I find conflicting information.  Some recordkeepers are enforcing it as protected benefits but I'm yet to see official guidance.  I'm wondering how others are handling and/or interpreting this?

if a participant had took a couple distributions and would like to increase the benefit formula to reach 415 limit in 2024

1) should we project the distribution amounts from the distribution dates to 12/31/2024 or simply use the actual distribution amounts?

2) do you normally calculate the 415 lump sum (excluding the exiting distributions) first then back in the accrued benefit/ cash balance credit to reach max 415 lump sum? or do you convert the exiting distributions into accrued benefit then subtract it from the 415 limit? do you handle this differently between DB and CB plans?

3) are there any guidance or regs that can answer these questions?

thanks in advance!

I understand that the monthly threshold hours that an employee must work is fewer that 130  for purposes of an ALE avoiding the shared responsibility penalty for not offering that employee coverage.

But what is the monthly threshold for full-time status to determine whether an employer is an ALE?  120 or 130?

IRS Publication 5208 states that the threshold is 130 hours:

"Under the ACA, a full-time employee for any calendar month is one who has, on average, at least 30 hours of service per week, or at least 130 hours per calendar month."

https://www.irs.gov/pub/irs-pdf/p5208.pdf.

But, when asked this specific question in the 2014 JCEB Q/As, an IRS representative stated that the threshold was 120:

"The Service representative disagrees with the notion of using either the 130-hour monthly equivalency or 30 hours per week for the applicable large employer determination.  For the applicable large employer status, an employer does not use 130 hours.  The statute requires employers to use 120 hours.  So, for purposes of counting employees for purposes of the large employer determination, an employer counts how many employees worked at least 120 hours in a month.  Each employee who works at least 120 hours counts as one full-time employee.  It does not matter if the employee worked 121 hours or 250 hours that month, the employee counts as one employee."

https://www.americanbar.org/content/dam/aba/events/employee_benefits/technicalsessions/2014_irs_qa.pdf

(Note that my reading of the statute indicates that it does not say 120 hours per month; it says 30 hours per week.)

I recognize that Publication 5208 is more authoritative than an IRS representative speaking for himself, but can anyone point to anything that specifically states the rule?  Perhaps the IRS's thinking changed?

Thanks!

2025’s limits on some kinds of early-out distributions bear what to some might seem an incongruity:
$1,000 for an emergency personal expense;
$5,000 for a birth or adoption;
$10,300 when one is a victim of domestic abuse;
$22,000 if one had a loss from a federally declared qualified disaster.

BenefitsLink neighbors, any observations?
 

So anyone who is 61, 61, 62 or 63 as of 12/31/2025 can do the super catchup for a total deferral of $34,750.  Is it that simple?  Anyone know why SECURE limited it to that odd age group?  

Thank you

Pre-SECURE, QACA default rate had to escalate to at least 6% of pay.

After SECURE, starting in 2025, auto-enroll plans must escalate to at least 10% of pay.

So must a new QACA plan for 2025 escalate to 10% of pay, or is 6% sufficient?

Let's assume an individually designed governmental DB plan received a determination letter at some time in the dim and distant past. I believe post 2017, such a plan could no longer apply for a D-letter, absent a plan termination, merger, or some other unusual situation that I can't recall. 

Has that changed?

Dad owns 100% of Dad's company.  He did a full asset sale to Son (his son, age 21+), who has created a new company for this.  The employees are terminating with Dad's Company and are being hired by Son's Company.

Dad is terminating his plan effective 1/1/24.  Son is looking to start up a plan in early 2025.  Are we (they) going to run into the successor plan rules because of the relationship between Dad and Son?  There was no direct ownership by Son in Dad's Company, and there is no direct ownership by Dad in Son's company.

Thanks.