On a webinar and they said something  I didn't think was right.  SECURE 2.0 only says that as of 1/1/2025 the plan must be an EACA.  An EACA need not be applied to all eligibles - it can be applied only to new hires (ok I don't get the extra time for my ADP test).

On the webinar they felt that the best reading was that the auto enrollment had to be a sweep on 1/1/2025, and pick up all eligibles.  But to me it is clear as day that only new hires must be subject.

the statute:

"An arrangement or agreement meets the requirements of this subsection if such arrangement or agreement is an eligible automatic contribution arrangement (as defined in section 414(w)(3)) which meets the requirements of paragraphs (2) through (4)."

Nothing in paragraph 2 through 4 has anything at all to do with the groupings of who needs to be auto enrolled.
 

Have a plan that uses a recordkeeper to load contributions with the payroll company with 360 integration.  A new participant had contributions withheld but the recordkeeper did not accept the contributions for the participant due to their failure to set up the participant's account.  This happened earlier this plan year and the contributions were made a month later. The total amount of late contributions is $58 and the missed contributions were corrected by back dating the contributions.  The recordkeeper is telling the client they have to go through VCP and file a 5330.  Is this correct?

Company A and Company B are a part of the same controlled group.  Company A has a 401(k) Plan and Company B has a 401(k) Plan.  C is employed by Company A and participates in Company A and Company B's 401(k) Plan.  Company B leaves the controlled group, but C remains employed by Company A and has a balance in Company B's 401(k) Plan.  Can C receive a distribution from Company B's 401(k) Plan after Company B leaves the controlled group?   Is the departure of Company B from the controlled group considered a distribution event?  

This is in relation to a 403(b) Plan. 

We have an individual who was an employee and a participant in the Plan.  The individual had a termination of employment, at which time the individual was eligible for a distribution under the terms of the Plan.  The individual never took a distribution, but has since been re-hired by the employer, but in a position that is not eligible for Plan participation.

Since the individual is now an employee, is the individual no longer eligible for a distribution by virtue of his earlier termination (note: the individual is not eligible for an in-service distribution, so that issue is off the table)?

Would it matter if the individual were re-hired in a position classified or treated as an independent contractor or nonemployee? 

I realize the terms of the Plan will control a lot of the above, but I'm looking for more general guidance as to how this normally works or if there are any legal requirements that control, regardless of Plan terms.

Thanks to all!

I took over a plan where the safe harbor contributions was not made for an employee who left June  2021.  They were a  HCE - and made over $250,000 for that six months in 2021.  The safe contribution was never funded for them and is still showing as an $11,000 receivable.  The primary question is do they have to make it?  He was not an owner.  

We have a new plan with 2 participants. One of the participants is a 100% owner. The other one is an HCE. There have been no contributions funded to the plan so far.

The owner would like to fund at least 3% to herself. Would it be possible to exclude the non-owner HCE (by division, for example) and not have to fund the 3% Top Heavy Minimum to this participant? Or would the excluded HCE still be counted in the Top Heavy Test and therefore would have to receive the 3% minimum?

Thanks.

So - I know that ultimately the Plan Sponsor is responsible for all plan compliance, and this is clearly stated in any service agreement with a TPA.

In this case, prior TPA did not seem to communicate effectively that a new plan set up a few years back had a 5500 requirement. In fact, they are a large plan with an audit requirement attached to the 5500.

There are more circumstances related to lack of consulting services, such as creating a Plan Doc that wasn't really a fit for the organization. As a result there are major, and costly corrections that need to be made.

I think there is no recourse, due to my first statement above, but just wondering about any other similar experiences. The Plan Sponsor wants to press the prior TPA for costs incurred due to negligent servicing.

We are setting up a Cash Balance Plan with two participants.  One participant is age 41 with an average annual compensation (3 year) of $49,263 at 12/31/2023 and she has 3 years of service with the employer.  Interest credit rate = 5% and Actuarial Equivalence is 5% and '23 417 AMT.

How do others calculate her maximum account balance at the end of the first year of the Plan? 

My process is:

415 Maximum Accrued Benefit as of 12/31/2023 payable at NRA (62) as a life annuity = the lesser of 1) Comp Limit = $49,263x(3/10) = $14,779 or 2) $ Limit = $265,000x(1/10) = 26,500.  415 Maximum Accrued Benefit = $14,779 payable as a life annuity at age 62 (NRA).

Based on the 415 Maximum Accrued Benefit, her Account Balance as of 12/31/2023 must be limited to ($14,779 x a62) / 1.05^21 =  $71,779.  

My understanding is that the Accrued Benefit under the plan is the actuarial equivalent of the Account Balance.  The Accrued Benefit cannot exceed the 415 Maximum Accrued Benefit.

I think this is pretty straight forward, but we took over a plan from a large TPA/Actuarial Firm who seemed to ignore this.

Is there something I am missing?

A participant in a 401(k) plan ended up with lower than expected salary and consequently violated the 100% of compensation limit.

This is a 415 violation and we are in the process of correcting this by forfeiting some of his employer contribution allocation from last year and refunding some of his salary deferrals. The participant is an NHCE.

In applying the earnings on the corrections, we are lucky because the plan has self-directed investments that make it easy to determine the applicable earnings.

Question: suppose his account has 11% losses. Can we apply those losses to the $4,000 of salary deferrals to be refunded and $3,200 of employer contributions that will be forfeited and kept in a suspense account? I would think this should be ok, especially since he is an NHCE. Does anyone else agree / disagree?

Thanks!

A terminated 75 year old employee died prior to completing distribution forms.

It was her intention to take a lump sum distribution after paying  her RMD.

Since there are no papers to support this distribution, what should be done?

There is a living spouse.

The lump sum = $140,000

2023 RMD                18,000

Does her 2023 1099R show  158,000 with !8,000 taxable.

Or does the husband have a say regarding the distribution.

Any advice would be gratefully accepted

I have a feeling this happens more often than it should.

Financial Advisor convinces one-person business owner to start up Cash Balance Plan. It is explained clearly that the plan is meant to be long term, at least 5 years. Nice contribution made in first year. Nothing in second year and Plan Sponsor decides it's not for them. No 5500-ez filed as of yet.

Contemplating how to react.

I am taking over a plan that was previously a Solo K.  The plan was making deposits after their tax deadline with extensions for a few years.

For example.  They would fund their 2022 contribution after their tax deadline with extensions - but, not actually extend their taxes.  They were provided bad advice by the previous administrator that they had until 9/15 - of any given year to make the previous years contribution.

I am not exactly sure how to fix this or what the ramifications might be - as it is all owners money - Solo K.  

Any thoughts?

A participant in a qualified plan, stopped making loan repayments in which after 90 days the loan was deemed and reported on a 1099R the following year.  The active participant would like to borrow again from the plan, the plan allows for one (1) per participant at any time, is the participant permitted to take a brand new loan?  Or will he be required to pay-off the prior deemed loan first before he is able to initiate a new loan?

I should know this, but I am having a brain freeze.  Since partners deduct their own profit-sharing contributions on their own personal returns, is the funding deadline for a partner the due of the personal return or is it the due date of the partnership return?

Thanks for any guidance.

Under 20 hours/week is roughly equal to 1000 hours/year.  Our 403(b) plan would by definition possibly exclude individuals who work 500-999 hours, which would fit the LTPT classification.  Based on the guidance that was recently released, I would conclude that LTPT applies to any 403(b) employees who have been kept out of the plan but who have worked 500-999 hours each year since 2021.  They would have to be provided with the opportunity to contribute to the plan.  

Would you agree?

Thank you

Is Life Insurance permissible in a cash balance plan? If yes, how is the 'incidental' limit calculated? Is it 100x projected benefit as in DB plans, or a % of contribution? Is it discriminatory unless policies all purchased on all participants? Any guidance is appreciated! Thank you

ARA requests immediate administrative relief in the form of of delay of application and enforcement of LTPTE rules... 

https://www.napa-net.org/news-info/daily-news/american-retirement-association-asks-irs-more-time-ltpte-rule

https://www.napa-net.org/sites/napa-net.org/files/ARA letter_relief re LTPTE Rules_112923.pdf

Hi

DB plan - one lifer

Client takes full annual RMD on 4/1/2023 instead of monthly (12x)

Client decides to terminate the plan today and wants to rollover prior to 12/31/2023.

No further RMD is due, correct?

Thanks