I would appreciate any thoughts on the following two situations:

1. Employer wants to adopt a new PS plan in 2023 retroactively to the 2022 plan year (today's timing I realize is bad, but in theory). If the employer timely filed its 2022 tax return on March 1, 2023, and did not request/receive an extension, can the employer on, say, August 1, 2023, adopt a plan effective January 1, 2022, and contribute and deduct a 2022 PS contribution on August 1, 2023? The employer would have to amend its 2022 return, but is it permissible?
2. Employer wants to adopt a new PS plan in 2023 retroactively to the 2022 plan year. The employer did receive an extension until September 15, 2023, to file its 2022 tax return. The employer filed its 2022 tax return on July 1, 2023. Then, on August 1, 2023, the employer adopts a new plan effective January 1, 2022, and makes a contribution on August 1, 2023, that it would like to deduct for 2022. Can the employer amend its 2022 return to claim the deduction?

My co-worker who understands MEPs best is retiring.  The rest of us have picked up enough to be able to run them, but are there good resources for in-depth information?  I've already got the sections in the EOB tabbed...

Thanks. 

I am a financial advisor (used to be a TPA) working with a small company with a pooled 401k account.  The plan sponsor is terminating the plan.  There are 2 life insurance contracts in the plan.  One contract only has a cash value of about $450 so we'll ignore that for this purpose.  The plan has been paying the premiums.  However, the other policy which is on the owner of the business has a cash value of over $200k.  That policy is paid up so no premiums have been paid on it for as long as I have been involved with the plan.  The plan assets are pooled and valued quarterly.  I noticed on the most recent valuation that the account balances that are being reflected and given to participants do not take the insurance into account at all.  In other words, the value shown on the participant statements only equals the value of the plan investments exclusive of the life insurance contracts. Same for the most recent 5500 - no accounting for the life insurance.  The owner wants to take the cash value of his policy and roll it to an IRA.  I feel like the insurance is an investment of the plan and that if it is surrendered, it wouldn't just go to the owner.  But I am not sure on that.. ?   This plan has been in existence since the early 70's.  I don't know if the life insurance premiums for the owner's policy  were paid from plan assets or charged directly against his account.  Does that make a difference on whether the cash value of the policy all goes to him?

thanks for any insight!!

There has been a lot of talk recently about some plans switching to use the full yield curve for funding purposes to save PBGC premiums, and enjoying an automatic IRS approval to do so.  Is this really automatically approved for all plans/circumstances?  §1.430(h)(2)-1(b) indicates to use segment rates for the month containing the valuation date.  Alternately, under §1.430(h)(2)-1(e)(1) & (2) you can elect to use segment rates with up to a 4 month lookback.  Most plan I've seen use segment rates with a lookback. §1.430(h)(2)-1(e)(1) further indicates "Any election in this paragraph (e) may be adopted for a plan year without obtaining the consent of the Commissioner, but, once adopted, that election will apply for that plan year and all future plan years and may be changed only with the consent of the Commissioner."  So, it appears a plan that elected to use segment rates with a lookback does not get automatic approval to switch to the full yield curve under §1.430(h)(2)-1(e)(4).  What am I missing here?  Initially, I was always under the impression that you can have automatic approval to switch the full yield curve, but the analysis above seems to contradict that.  Thanks in advance!

A new client who has Engaged my office to provide Consulting Services, has a 401(k) plan since 2001, and now wants to move to a Pooled Employer Plan.  Where can I find detailed information regarding the transfer, along with the applicable Notices, potential Black-out period, etc.  As one knows if a 401(k) plan is terminated a new one cannot be started immediately as a 12 month waiting period is in play.  How does the preceding impact the transfer to a Pooled Employer Plan.  There does not appear to be enough information to properly advise one's client on how to proceed.  

Hi there.  Someone recently asked me what effect cash basis vs accrual reporting would have on compliance testing, and I drew a blank because all our plans are accrual.  

Now I'm thinking depending on timing of deposits limits could be exceeded (402g, 404c, 415).  Maybe issues with 410b?  

Anyone have any thoughts here.  Thanks!

We use the RElius Corbel formatted document.  Anyone have any idea what the  normal procedures would be for how to treat rehires?

One of the options listed below should be somehow selected or known. Can it be purely administrative policy or is there an absolute answer to this question contained somewhere in the BPD? I also understand (From reading the administrative provisions and BPD) that there is less flexibility if we are trying to use the 90 day permissible w/drawal EACA provisions.

Affirmative Election WAS Made
1) Do NOT auto enroll or resume any affirmative elections.
2) Subject the participant to a new auto enroll process.
3) Implement the old election on payroll.

Affirmative Election NOT made:
1) Do NOT auto enroll or resume any default elections.
2) Subject the participant to a new auto enroll process.
3) Implement the old auto enrollment rate on payroll without a new set of notifications/wait periods. This option is more important of course if there is an auto escalation feature.

Just curious if I'm the only who is struggling with this issue more and more as more plans add auto enrollment...

When running cross testing and need to use the average benefits percentage test, do you have to pass using the same method as you passed 401a4?

Ex: pass cross testing only by using the annual method imputing permitted disparity, but one rate group is at 50%.  In the ABPT, only the allocation method with permitted disparity is over 70%.  Since I have "a" passing method, am I good, or do I have to make the two line up so the same method is used for both tests?

Thanks.

I need help regarding DB partial plan termination. Below is the situation.

Company A sold company B. All company B unvested employees who had accrued benefits. Do the employees get 100% vested?

2011 -Form 5500 showed 178 active participants.

2012 showed 0 active participants. 

Does this consider Partial plan termination? I thought it was, but my other co-worker told me it was not. I like to find out if is there any exemption that the plan was not considered partial plan termination. Am I missing something? 

Thanks in advance!

Not sure if this has been asked before.  What if an excluded class employee (let's say person categorized as a Seasonal Worker) happens to work 1,000 hours during the plan year.  So, hired January 1, 2022 and has 1,000 hours by December 31, 2022.  Assume plan document has fail safe language so that this employee becomes eligible upon 1,000 hours in plan year.  According to the intent of Quality Assurance Bulletin FY-2006-3 (which I can't find anywhere online), this person would be eligible, but when?

In other words, if the employer makes an employer contribution for 2022 plan year, would this Seasonal employee be eligible?

How long is this person eligible?  Under 403(b) there is a "once in, always in" provision, but I can't find the same for a 401(a) plan.  

If this person continues to be classified as a Seasonal Worker in 2023 and beyond, what happens if this person works under 1,000 hours in any future year?

Thoughts are greatly appreciated!

I am starting a new TPA firm and wondering if anyone is willing to share some essentials to get started. I am not looking to steal anyone’s clients or information but could use some inspiration in creating my documents. 

If anyone is willing to share, I am looking for help on the following: 

1. Engagement letter/agreement
2. Form letters
3. New client checklists 
4. Takeover letters/checklists 
5. Year end census collection 
6. Administration checklist

I have a client which has an employee that has been paying back a plan loan with a remaining term of 48 months. The employee is considering leaving the company. My 3 possibilites are:

1. Assuming that the employees leaves their money in the plan, can they continue to repay their loan even though they are not employed there anymore?

2. Assuming they take all of their money, can they continue to repay their loan even though they are not employed there anymore?

3. Is it true that assuming they terminate from the plan, basically, the outstanding loan will forcibly become a deemed distribution at the end of the first quarter following the quarter when the last repayment was due and no further repayments are allowed after DOT.

Thank you for the help - Rick

Can a pre-paid legal services plan that an employer makes available to employees fit into the DOL safe harbor for voluntary plans and thus not be subject to ERISA assuming all the requirements of the safe harbor are satisfied? 

Controlled group has two companies ("A" and "B"), each with a 401(k) plan.  The plans are currently operating as QSLOBs.  As a result of a purchase agreement, the QSLOB status will cease to exist and they plan on terminating the B plan and merging the accounts into the A plan.  

Would the exclusive benefit rule apply to the forfeitures in the B plan?  If so, does it only apply to forfeitures that occurred immediately prior to the termination of the B plan?

Our Nonqual Plan provides that payment will be made 14 months following termination of employment.  

The idea is that if a participant terminates, he/she still has a couple months after termination to make a subsequent deferral election.  This seems to be compliant, because the 12 month/5 year rule only requires that the subsequent deferral be made 12 months before the payment date, not the date that triggers payment (e.g. the termination date).

Am I reading the rules correctly that this is allowed?

if a plan currently has provisions for non family participants, and has had non family participants in the past, but currently only the owner is participating, however the plan still allows for non family participants, would one file the 5500-SF or the 5500-EZ for 2022? 

Without considering any plan-document change (most of which can wait until 2025 or the later remedial-amendment time):

• For an individual-account retirement plan with a § 401(k) arrangement (with no auto-anything provision, and no need or intent to add any);
• allowing non-Roth and Roth elective deferrals, including age-based catch-up (with non-Roth not restrained for those who had wages more than $145,000 in the preceding year);
• immediate eligibility with no age, service, or other condition beyond employment;
• no matching contribution, and no nonelective contribution;
• distribution permitted on age 59½ or severance from employment;
• no involuntary distribution (except as IRC § 401(a)(9) requires);
• no risk of a coverage, nondiscrimination, or top-heavy failure; and
• with the calendar year as the employer’s tax year, all participants’ tax year, the plan year, and the IRC § 415 limitation year:

Which SECURE 2022 changes must the plan sponsor put in operation starting with 2024?

Which SECURE 2022 changes may the plan sponsor put in operation starting with 2024?

Wife and husband own 100% each of 2 different businesses, unrelated to each other.  The one has about 10 employees and has a 401k plan.  The other is spouse only and started a solo 401k for herself, well under $250K.  Neither performs any work for the other's business.  I do not see in the instructions that this would cause the solo plan to file a 5500EZ.  Would you agree?

Thank you

I have a client who owns 2 businesses.  Each single member businesses (one is an insurance company, the other investments).  He wants to use income from both businesses to enable himself to max out contributions.  I prepared a joinder agreement so both businesses can utilize one plan.  Correct so far?

If he makes a 10% contribution to the plan from Company A does it stand to reason he must make a 10% contribution from Company B?

Let's say he does, do these contributions need to be in separate accounts? or at least accounted for separately?

Thanks

Top Heavy SH 401k plan with basic match and cross tested PS (everyone in their own group)

• 2 HCE/Key 3 NHCEs (only 2/3 NHCEs have met PS eligibility of 1YOS+A21)
• Eligibility for 401k/SH is 3 months, all EEs have met this eligibility.

Plan Sponsor wants to provide PS to just one participant, a NHCE.

The way I'm looking at this is that PS to the NHCE means the plan no longer consists solely of deferral and SH, so TH minimums would apply if the plan is TH.  The 401k and SH for the HCE/Key is around 20% of compensation.  One NHCE received a SH match of roughly 1.9%  I think that NHCE needs a TH minimum to get to 3% of comp.  

I'm getting some pushback because the Key's only received an allocation of 401(k) and SH, and the only participant with a non elective contribution was a non-key.

I cannot find a reference to TH exemption when there is an allocation other than 401k/SH, but the allocation is only to non-Key EEs...  

Does anyone agree that TH minimum is not required because the key did not share in the PS allocation, and can you provide a citation or reference to this point?  I'm also open to arguments for TH minimum of course