Suppose you have a 1 participant DB that started 1/1/2016. This is a plan that actually has always been more than 100% funded.

There are no freeze consequences for the first 5 years of this plan if an AFTAP was not signed.

So that would leave plan years ending 12/31/2016, 17, 18, 19, 20 with no freeze consequences correct? But if an AFTAP was not signed before 10/1/2020, benefit accruals would be frozen starting for plan year 1/1/2021.

This particular plan will have had no signed AFTAP until 9/30/2024 and the plan will be certified at about 115%.

My understanding is that when this AFTAP is certified on 9/30/2024, benefit accruals for 2024 and 2023 will be restored.

Is there any way benefit accruals can be restored for the 2022 and 2021 years as well? Is voluntary correction available or does the participant just lose the 2021 and 2022 year accruals with no possible way to get it back?

Thanks.

For my academic writing, I hope BenefitsLink neighbors will help me with some guesses or observations about what actuaries work on.

How many actuaries work 85% or more of one’s time on defined-benefit pension plans?

How many actuaries work 85% or more of one’s time on individual-account plans?

For actuaries between those outer ranges, what’s the split between db and dc plans?

Of work done for individual-account plans, how much (if any) requires an enrolled actuary’s certificate?

Of work done for individual-account plans, how much (if any) requires math skills beyond those possessed by other educated people?

And although I’m focusing on actuaries in this initial query, I might ask similar questions about people who hold another license or credential.

401(k) plan is closed MEP.  Two employers share common ownership, but not sufficient to be related group. A 401(k) is not a pension plan. I don't see that the Schedule MEP should be filed for a 401(k) plan.  I assume that plan sponsor should attached the same schedule that applied prior to 2023. 

Am I missing something? Thank you for any guidance.         

The participant died with no named beneficiaries.  The participant has 2 surviving family members, son and granddaughter.  The 401K company said that IRS regulations state that grandchildren are not eligible to receive distributions.  They asked for information about the estate with the expectation that the distribution would go to the estate.  After a 7 or 8 month delay the check was distributed to the son.  The son involved a litigation attorney to send a letter requesting the additional funds from the delay and then they responded with the distribution was done incorrectly and that the granddaughter should have received half.  This notification happened 1 and a half years after the check was distributed. From a beneficiary how does this get corrected?

It's a common situation. The employer is merging into another and is required to terminate the Plan. The insurance company requires a "market adustment" for its "stable value" fund. 

The Plan is broad-based and the employer does not want its employees, who thought the money was safe, to lose money because of this "market adjustment."

Is there any guidance that would allow for this, without making this a prohibited transaction or a contribution that needs to be counted for 415 or 401(a)(4) concerns?

I have a 457b plan that is changing its eligibility going forward. And one of the current participants will no longer meet the criteria. Can that participants still contribute and keep balance in the plan b/c he met eligibility previously?

Very sketchy info at this point, but likely that at least some years will be a large plan.

Sure, they can do DFVCP, but how far back do they go with this? And there will likely be no way to get full data for all the post-2009 plan audits. We'll see.

No, this isn't April Fool - I wish it was!

Heckuva way to start a Monday morning...

Anyone had one of these situations before? What were the results?

Thanks!

It's been over 20 years since I've actively worked with retirement plans, and I'm rusty.  Before I lead someone down the wrong path, could I please get confirmation that my route is correct?

• Over the years, a self-employed person has greatly benefited from SEP-IRA contributions.  Her business did well, and her SEP deposits were large. 
• For 2023, her SE income is unusually low.  Her SEP-IRA maximum is about $2,500.
• If she doesn't make a 2023 SEP contribution (she has no employees), she (1) isn't covered by an employer plan for the year and (2) can make tax-deductible, traditional IRA deposits for herself and her fully-disabled, nonworking husband.  The amount is about 5X greater than the available SEP-IRA.

Is my methodology correct?  I see this option as a good way to help someone who wants to maximize both her retirement savings and 2023 deduction.

Thank you for your help.

Large plan started a few years ago, but no 5500 was ever filed.

Currently working on past filings and ultimately DFVC.

They also never had a fidelity bond, or they can't find record of it due to complete change in personnel.

Question is - I know retroactive fidelity bonds can be purchased, and that this is not meant to be done illegally, but can the 5500 be marked Yes for coverage, when it is being filed late for the first time?  if not, is there any reason to buy the fidelity bond retroactively?  Alternatively, it would not be marked yes until the 2024 plan year during which it is finally purchased.

Client sold assets of his business and most employees terminated employment.

Client has a valid 242(b) election.

Client is considering freezing the 401(k) plan (and maintaining the entity that sponsors the plan) so as not to revoke 242(b) election.

I think terminating the plan (on purpose) would cause the 242(b) election to be revoked.

I think there was definitely a partial termination but I don't think this causes anything other than vesting of affected participants - I don't think this would revoke the 242(b) election.

Does anyone disagree?

We TPA a doctor's office.  The doctor is 100% owner of the practice but does not participate in the 401k plan.  His top assistant is an officer and makes over $250,000 but has no ownership.  Based on that, she is an HCE and a key.  She has 3 children working there not at that compensation level.  They are not HCE or Key.

The top assistant is 100% owner of a separate business that has most of its business with the doctors office.  We are looking into it but lets assume an ASG exists.  She is also the only employee of the separate business.

The separate business is not an adopting employer, but we still need to include the ASG for testing purposes.  With no other employees in that business, this does not impact the plan very much. 

(1) Unless, because of the Top Assistant being 100% of the other business, would she be considered HCE and Key regardless of income?

(2) And if so, does that mean her 3 children are now HCE and Key?

But if the separate business did become an adopting employer of the 401k plan:

(3) Would the top assistant would now be HCE and Key regardless of income?

(4) Would the 3 children also become HCE and Key in the 401k plan?  Two are over 21 and one is 20.

Thank you for any comments.    

403b plan sponsor wants to allow temporary part-time employees to make elective deferrals, but not "regular" part-time employees.  Assuming both subsets meet the definition of part-time under the IRS universal availability rules, would excluding "regular" part-time but not temporary part-time run afoul of the universal availability rules?

I'm doing the plan document for another TPA, 401(k)/PSP with effective date of 1/1/2023 except there will be no deferrals for 2023, deferrals to start 1/1/24 and the other TPA says to me- leave the effective date 1/1/23, we won't use the 401(k) portion until 2024.

I am more inclined to do a 401(k)/PSP effective 1/1/23 for the profit sharing with a "special effective date of 1/1/24 for deferrals, which I think makes more sense.

Owner only plan, no employees.

Other thoughts?

If I understand correctly, a one-person owner of a business with a DB plan can ultimately contribute more than their W-2 to a DB plan.

Can a Sole Proprietor (with no W-2 income) do that as well?  Seems the subtraction on Schedule C would make it impossible.

Hello..

Plan is going into black out... notices have been mailed timely, however some are returned for former terminated employees.

What do you do if a black out notice is returned via USPS due to insufficient address?

Thanks!

A prospect is wanting to set up a solo K plan for 2023.  My first reaction was the deferral for 2023 is not allowed since it was not elected by 12/31/2023 nor contributed on time.  But wasn't there a exception for first year plan adoption for sole proprietors.  I'm thinking I saw that somewhere.  I will research further but I know this group will know this right off the bat. 

Thanks

Tom

Just a simple clarification...

A client with a 5 participant 401(k) plan asked about the mega backdoor roth option.  I explained that every year we max out the plan to the 415 limit, there is no room for a voluntary after tax contribution.   Can she convert the PS contribution to ROTH each year with an in-plan conversion?

Terminated participant, instructions sent to brokerage firm to pay out said participant.  The payout didn't happen, and participant is asking for earnings on top of the original distribution amount.

Is there a standard for how to calculate "lost earnings"?  Should the brokerage firm have standards that would dictate this answer?

Thanks all!

"In the event hat a Plan is top-heavy for a Plan Year, no Key Employees shall be eligbile to participate to make any Elective Deferrals under the Plan."

Is that a valid exclusion? What I'm trying to do is have a stop-gap in the plan so that even if a Key Employee contributes to a plan that ends up being top-heavy they just have ineligible contributions and not a top-heavy minimum.  We have plans where we 'know' it's going to be top-heavy eventually. We just don't know if it's in 1 year, 2 years or 3 years for example.  And of course we tell them to stop contributing in January until we can run the test but I'm afraid if someone forgets it could cost them tens of thousands.

I will tell you I asked a guru and he felt that operationally it was a cutback.  I would be comfortable explaining that risk to the client but telling them on the plus side their plan as written can never be required to fund the THM.  And that is invaluable.

1. Plan established 2022

2. Prior year testing method elected in the document

3. Discretionary Match - nothing funded for 2022

For the first year, the 3% rule was used - HCEs 0% NHCEs 3% - plan passes ADP

They never made a match until 2023.  Since this was the first plan year of the match, can they use the 3% first year rule for the match contribution?