A SERP of a tax exempt org, provided for vested payment at age 65. Like most such SERPs it was structured as a 457(f) short term deferral. The SERP was later amended to allow the CEO/participant the right to select an earlier vested retirement date, provided it was (A) at least 12 months after the election, and (B) was forfeitable if he resigned prior to that new date.

Allowing a participant this much discretion at first concerned me. However, it is not illegal for employers to accelerate short term deferrals. What is wrong with an employer delegating that power to a covered participant? These are just short term deferrals.

If that does not trigger income tax at the date the power was given the participant, what would be the tax date? Would it be 12 months after the power was granted, i.e. the first day after the 12 months, or would it be the actual date the participant elected if later than 12 months? 

Hmmm. The person who drafted this amendment was in the HR Department and was insensitive to 457(f) but I wonder if this design actually works. My primary concerns are constructive receipt and/or the fact that IRS could consider vesting to be a charade after the first 12 months when the participant has this much control. 

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Curious on thoughts about offering both an cash in lieu incentive and a spousal incentive HRA. 

When reconciling employee deferral/Roth contributions to deposits on an annual basis there is a shortage (and overage) for some participants - but a net shortage overall. When this doesn't tie out to a specific payroll (or at least doesn't appear to since I don't have payroll and deposit detail by paycheck) and the amounts can be small ($4 or $20, for example) - do you report these amounts on the 5500 as late deposits? Would you need to track down the shorted paycheck for lost earnings calculations?

Hello,

I’m a terminated participant in a small employer-sponsored Defined Benefit Pension Plan that was retroactively amended after the plan sponsor realized employees were mistakenly excluded. I’m looking for advice from those familiar with ERISA compliance and DB administration — especially regarding timelines for distribution, participant communication, and what constitutes a “reasonable” delay.

Here’s a timeline of events for context:

🗂️ Timeline of Events

Mar 2012 – Began employment at Company A.
2015 – Company B launched; work shifted there, but payroll remained under Company A.
Jan 2020 – Owner established a Defined Benefit Plan without informing or including employees.
Aug 2024 – Employees notified the plan would be frozen effective August 31.
➡️ Plan sponsor claimed he had received bad advice and was correcting the error.

Sept 2024 – I was involuntarily terminated shortly before turning 55.
➡️ Termination was attributed to cost concerns related to plan corrections.

Oct 2024 – Received an estimated benefit calculation (2020–2023 only).
➡️ Sponsor stated 2024 portion was still pending.
➡️ I turned 55 and became eligible for benefit commencement under ERISA.

Dec 2024 – Mar 2025 – Followed up multiple times. Sponsor provided vague responses, no new documents, and no updated calculation.

Jun 2025 – Sponsor stated original actuary was replaced by a new vendor who is re-reviewing everything.
➡️ Promised to resend plan documents and updated estimate — nothing received.
➡️ I spoke with DOL rep, who said resolution was expected by September 2025.

Sept 2025 – With four days left in the month, still no update. I followed up again.
➡️ Sponsor responded defensively, said the situation is "stressful" and “complicated,” and that he “can’t provide details” until authorized. Also discouraged me from speaking to DOL or other employees — despite his lack of communication.

My Questions:

• Is it common or acceptable for a DB plan sponsor to take over a year to finalize calculations for 7 or fewer employees?

• Does switching actuarial firms justify months of silence with no updated estimate or election paperwork?

• At what point does this become a breach of fiduciary duty or an enforceable ERISA violation?

• What recourse does a participant have when the plan sponsor won't respond, and DOL appears to be passively monitoring?

Thanks in advance for any insights. I'm trying to avoid escalation, but the silence and lack of transparency have gone on far too long.

If a participant takes a loan out of their 401k plan account and they take the maximum amount available - 50% of their vested account balance (they are 100% vested).  A few months later, they have a hardship and would like to take a hardship withdrawal that would remove most of their balance in the plan.  Is this permitted?  If so, it would drop their investment balance and the outstanding loan balance would now be well over 50% of their total account balance.

Thank you for any comments.

A new 401k plan is adopted in March 2024 with deferrals effective 7/1/2024, but all other provisions, including the SH Match provisions, have no delayed effective date.  I am probably overthinking this, but logic tells me that compensation paid in the period before the employee could even make deferrals (1/1/-6/30) would not be counted when calculating the match.  Since the match is tied to the employee deferrals, is there any situation where the IRS would include the compensation before the effective date of deferrals in that SHM calculation?  

Thank you

Maybe once upon a time I knew the answer to this question but I wanted to ask because it just came up as a question on a call.  We use the Corbel PT formatted Adoption Agreement and thre is an option for loans that basically says "all outstanding loans will become due and payable in their entirety upon severance of employment..."

Can someone please explain to me why I have been checking that box on all of  my plans for 20 years 😂  It doesn't change when it's taxalbe.  I assume it doesn't affect a loan offset? Or maybe that's it.

I don't like dealing with this issue but we are being referred a chicken/egg farm.  There are maybe 5 US citizen FT employees and maybe 20 foreigners on a work visa.

The sponsor does not want to cover them.  I'm reading that if they have US based wages they are not a non-resident alien.  Well they always have wages in the US.  They come and go frequently.

The plan will exclude those under the "part-time" rule and I realize the implications if they do go over 1000 hours and the LTPT issue.  I will also include exclude by job classification in the document.   What is helpful is that there are no owners or other HCEs to be covered by the plan.

Given no HCEs, I think I'm good on the coverage test by including the 5 US citizen FT employees but excluded the 20+ foreign workers.

Agree? I think I'm solid but don't want any surprises!

Thanks

Sorry, SEP is not something we normally work with but someone is asking me so I'm trying to help them out.

They are just setting up a SEP Plan for a group, 5 employees during the year:

1. Can you have a last day requirement to get a contribution?
2. Can you have an eligibility period?  If so, can it be setup similarly to a 401(k) Plan?  Are there specific rules?

Thanks in advance!

We have a plan that terminated as of 12/31/24, but we just found out that there was a residual that came in during 2025 and then immediately paid out.  How do people handle this type of situation?  Do we just file the 12/31/24 as the final?  Or do we have to do an additional 5500 showing the money in and out in '25 (which is a small amount)?

We are in the process of taking over a 401(k) SH Plan. The adoption agreement from the current TPA is showing this under eligibility exclusions:

Has anyone else come across this? It's rather concerning.

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We have just taken over a 401(k) plan with a safe harbor match. The plan's eligibility has no age or service requirement. Union employees as well as part time employees as a class are excluded.. In previous years, the plan has failed the minimum coverage tests.

Now, for 2025, the client wants to change the eligibility to 3 months and 250 hours of service beginning 10/01/2025. Anyone hired on or after that date would be subject to the new eligibility. 

They are looking for ways this late in the year to avoid failing the minimum coverage test for 2025. I don't think the above is feasible and would help.

Any insights would be appreciated.

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