Hi

Asking for a friend.

Existing 401k plan with SH and PS.

PS allocation requirement is: Either employed on the last day or accrue 500 hours of service.

Plan sponsor wants to exclude bonuses for 2024 for all purposes.

Can it be done now or has to be tested for participant who fall on either allocation requirement?

Thanks

looking for ERISA attoney specializing in public sector reference, Oregon.  You can DM if you prefer.  TIA.

Thanks for the help in advance!

Has anyone run into a situation where the SSA is sending out wildly incorrect account values to retired participants receiving the "Potential Private Retirement Benefit Information" letter?

I currently have two participants who have reached out to me and sent copies of the aforementioned letter which shows their account values as their recorded account value on the 8955-SSA with two additional zeroes added onto the reported figure.  For example, one individual was reported on the 8955 as having an account value of $10,201 but the letter he received shows a reported account value of $1,020,100?

I understand that this is a "may" letter, but that seems wildly inaccurate and for it to have happened to two participants is a little disconcerting.

Thanks again!

Hi, we're dealing with a likely VCP situation in a 403(b) plan, where the plan was a) administered with a one-year wait, and b) wasn't properly drafted to exclude part-timers. We have no experience with VCP filings, and were hoping to see if there's a gold-standard guidebook out there on doing them, or perhaps some online resource where we can see other/sample filings.

I think it doesn't strictly need to be 403(b) related, if there's a good resource for 401(k) that would probably help. 

Thanks!

Employee was hired 8/22/2022 and terminated 1/31/2023 and worked over 1000 hours in that period. Employee was rehired 8/15/2024. The document states the following eligibility:

Each Eligible Employee shall become a Participant eligible to make Elective Deferrals on the first day of the calendar month coincident with or next following the date he attains age 21 and he completes 6 consecutive month(s) of service; provided that he is an Eligible Employee on such date. If the service requirement is not met in the first consecutive period of months, each successive period shall begin immediately after the preceding period and shall end on or before the first Eligibility Computation Period after which time the Plan will revert to 1,000 Hours of Service in an Eligibility Computation Period. The service requirement under this Subsection shall be deemed met no later than the end of an Eligibility Computation Period during which the Employee completes 1,000 Hours of Service; provided that the individual is an Eligible Employee on the applicable entry date. Service taken into account for purposes of this Section shall be determined under the terms and conditions as is specified for determining a Year of Eligibility Service. 

The Eligibility Computation Period is the first 12 months from commencement of employment to the anniversary of commencement of employment. Then it switches to the plan year of January 1 to December 31.

Since the employee did not work 6 consecutive months but did work 1000 hours in his first period of employment, would the employee be eligible upon rehire? Am I determining this correctly?

 I was told that 'husbands' annuity  $650,000 was bought. for him by the company therefore it was 'his'. I found an letter written by my attorney stating that he, 'husband' bought the annuity, and my attorney knew it was a lie, awarding him an asset, purchased during the automatic orders, with marital funds.

The statute od limitations against my lawyer has expired, but I was denied a motion to open the judgement, and am in the CT Court of appeal--pro se.

Any information about collusion between opposing counsel, automatic orders would be appreciated.

Thank you!

Gaslit

Hello,

In a recent audit, we discovered some errors that my employer made to participant accounts. Basically, some accounts were overfunded. The overfunded amounts are between $10-$1300) so we need to recoup those funds. Aside from informing the employee of the error, are we required to obtain their authorization to pull the funds from their account due to an employer’s mistake?

I have a plan where 3 or 4  people were over-funded for profit sharing due to max comp issues, and severance being used.  But of course they closed their account.

I read 4 articles on SECURE 2.0 provisions and each was less clear than the last.  None of them have nuts and bolts examples about what should be done. 

Do I have to ask for the money back?  I can't tell.

Does the Employer have to deposit the overpayment to the plan's forfeiture account?  This would make no difference as the forfeitures are used to offset contributions anyway, but for the same reason it seems like a ridiculous requirement.

The articles all seem to go back a forth between distributions of vested money before they were eligible for a distribution, and paymetns of funds they were never  entitled to, which is what I have here.

Doctor A, age 45, has her own corporation, Corp A.

Corp A is a participating employer in the ABC 401(k) PSP, sponsored by Group G.

Doctor A decides to move out of state and leave Group G, and her corporation signs a new contract with Group H, which has no affiliation with Group G.

Corp A signs a "Withdrawal as Participating Employer" document to cease participation in the ABC 401(k) PSP.

Group H sponsors the DEF 401(k) PSP. Corp A receives no further revenue from Group G; all of its revenue is now from Group H.

What options does Doctor A have with respect to her ABC 401(k) PSP account, which includes salary deferrals as well as 2 other money types?

Can she establish a rollover IRA? Or is the only option to become a participating employer in the DEF 401(k) PSP, and establish an account registered as such?

We administer a 2 participant traditional defined benefit plan. A 100% shareholder and an employee. The plan has been in place for 10 years and has a calendar year end.

3 months ago the one employee / participant quit to move across the county. She was paid her 100% vested benefit. 

Today the 100% shareholder called and mentioned that she wants to retire next month and terminate the plan.

Question: If the plan is terminated this month and distributed to the 100% shareholder by October there may be a small amount of excess assets that can be absorbed by the 100% shareholder. Must the terminated employee who was distributed fully three months ago be entitled to any of the excess assets?

Thanks!

I am looking for some insight into a QSLOB issue. My client has two business entities that are commonly controlled. One entity conducts the business operations ("Entity 1"). The other entity ("Entity 2") provides administrative support (e.g., payroll, HR, etc.) for both entities. Ideally, my client would like to offer a 401(k) plan for the employees of Entity 2. However, due to the demographics of Entity 1 and Entity 2's employees, and due to the fact they are commonly controlled, offering a 401(k) plan to only the employees of Entity 2 would likely result in coverage testing issues.

My initial thought was to have Entity 2 make an election to be a QSLOB. My question relates to the 50 employee requirement. Specifically, Treas. Reg. §1.414(r)-4(b) requires those 50 employers to "not provide services to any other separate line of business of the employer for the testing year." Am I correct in saying that, if Entity 2 made a QSLOB election, that Entity 1 would be treated as a "other separate line of business", even if Entity 1 does not make a separate QSLOB election for itself?

If the question prompts any alternative solutions that would allow Entity 2 to sponsor a 401(k) plan, I would be interested in hearing them. Thank you in advance for your time.

Quite a few years ago I sat audit for an EZ filer.  Although we had always advised him to value his real estate investments at Fair Market Value each year, it did not take our advice.  Consequently, the very eager IRS agent sanctioned him $15,000 (after negotiating from $25,000) for failure to do so and for carrying the real estate at cost year after year.  No harm to anyone, no issue with RMD's, but she wanted to get him for something, or so it seemed at that time.  I remember her coming into the office on September 30, picking up the check for $15,000 before she went on furlough the next day.  Obviously, a very unpleasant situation and I posted on this Forum about it at the time.  Fast forward to today.  I have a new EZ client who has real estate in the plan and has never been told by his prior TPA about this requirement.  So I went looking for it in the IRS 5500 instructions.  And what do you know?  The blurb about "fair market value" is included in the 5500SF instructions with a reference to ERISA section 3(26).  But it is NOT in the instructions for the EZ form!  Is it possible that EZ filers are not subject to this rule since those plans are not subject to ERISA??????

Employer is winding down, and let go off an employee prior to termination of the plan.  Employer wants to re-hire the former employee on a P/T or TEMP basis.  The former e/e is a pension plan participant, is now a retiree and began monthly pension payments in July. If rehired and plan was in effect, benefit would be suspended.  Can the employer re-hire this ex-employee without impacting his monthly pension payments, now that the plan is terminated?

Hi

A terminated DB plan participant has 6K coming to him.

Current plan states 5k for immediate pay out.

Under the law, one can increase the limit to 7K without an amendment so if this is true, can pay the participant without the spousal consent.

This would be done after the participant terminated.

What am I missing here? Something smells.

If a plan already allows in-plan Roth rollovers from all sources, what would be the benefit (or downside) of adding the new Secure Act option to allow Employer contributions as Roth?  It seems like the outcome in either case is exactly the same.  Am I missing something?  thanks!

recently took over a non-safe harbor 401(k).

Both ADP and ACP tests for the last several years have failed.

Is there a specific time frame to correct?

Here is a new one. I have done many many PBGC terminations but never such a mess and screw up.

PBGC termination with 20 participants. 10 chose rollover into the existing 401k plan and 10 wanted lump sum.

Advisor was provided all necessary information to proceed with the distributions and the deadlines.

Despite my constant reminders and follow ups:

Not only the advisor did not do the distributions timely, the advisor, in order to avoid any 1099 responsibility, sent all the monies to the 401k plan without even discussing with me.

Once the monies were transferred to the 401k plan and allocated to the participants accounts as rollover, in return, they were allowed to withdraw as lump sum from the 401k plan. Some of the participants who elected lump sum, decided to leave the monies in the 401k plan.

How can this be corrected?

Thanks

I've got the EOB in front of me (both hardcopy AND online) and this still makes no sense.

I took over a plan that says eligibility is no age, 6 months with 500 hours (reverts to YOS if not satisfied), entry date is January 1 following satisfaction.   What?*

EOB says that there is a way to design the plan so that this is OK, and it discusses using more-lenient-than-statutory requirements, which is what I've got.  But the example shows someone hired in the first half of the year with 6 month eligibility - that's the easy situation!  So if I'm hired in June 2024, I'm eligible 1/1/25, and if I'm hired in July 2024, I'm eligible 1/1/26.  People hired in the second half of the year are getting the shaft, right?

What am I missing here?  Why does this look so shady?  And, more importantly, is this plan OK as is (the prior TPA has done other questionable things, so I'm not taking anything they produced as good unless I can prove it)?  Is there something that explains is differently that I can check out?

Thanks.

* I love that, 30 years in, I still find things I've never seen before.  Yeah, "love"...

Hi Folks,

My client is using Relius (I'm not) and they are telling me they can't override the Schedule SB calculation of box 10b. Any Relius users out there? Can you tell me if this is realistic?

Thanks for reading

I've got a tax/accounting question regarding how to handle dividend payments.  The company made a compensation contribution as well as paid a dividend on preferred shares. (The ESOP holds all of the preferred stock.)  These two payments were then returned to the company as payment for the ESOP loan principle.  These two payments paid off the remaining  ESOP loan balance. The issue has to do with the fact that there were not enough shares available to be released for the "make whole" principle.  There were approximately 54,000 shares available to be released but 71,000 were needed for the dividend to abide by the make whole rule.  How would this payment be accounted for?  How much  of the payment would be tax deductible?