Can a plan loan policy have a provision that per diem employees are not eligible to take a loan?

I've got a plan where they often move employees to per diem (I don't know the mechanisms or legality behind that, but let's assume it's kosher), so participants who are still considered active will want to access their money.  So they take a loan... and then don't work again for three months, so the loan gets behind and eventually far enough behind to need to be defaulted.

Defaulting a loan is a process, and something that no one wants to deal with.  Plus, there's the question of was it really a valid loan in the first place (the situation that brought this to light is one where the participant was told she was being changed to per diem and then requested a loan immediately) if the Loan Administrator know that it couldn't be paid back through regular payroll deductions. Maybe it was a fiduciary breach by the plan sponsor, maybe it was an intent to get around the distribution rules by the participant.

So that's what led to the question.  My gut reaction is no, but then is it OK for the plan administrator to continually deny loans to per diem employees and therefore create a de facto exclusion?

[If it matters, we are in New York State, where participants have the right to request that their loan stop being paid through payroll deduction, regardless of what the loan policy says.  This is not something that we recommend our clients make known.]

Thanks.

Section 101 modifies IRC 414 with the new 414A requirement. Specifically regarding paragraph(b)(3)(A)(ii), does the language require that the participant must make a new election each year, or if they make an election other than the auto enrollment percentage in 2025, does that election carry forward, if the plan so provides, until such time as the participants makes a new election? I believe it is the latter, but I'm not 100% certain.

Instructions for 5500-SF say 'Have 100% of its assets invested in certain secure investments with a readily determinable fair value...'.  I have a client who has an investment in https://truelinecapital.com/.  We get statements showing the value is unchanged and all interest payments are deposited to another plan account.  I'm wondering if I should be using the long form given the nature of this investment.  Any thoughts?

I had a client that made a mistake and never filed the 1099-R and 1096 to the IRS (they were sent to the participants timely).  Does anyone know what the penalty is for filing them late?  I just want to be able to let the client know.

Thanks!

Would the payment of COBRA premiums (in full or subsidized) in addition to salary continuation benefits be counted toward determining the amount applied to the 'twice compensation' limit in §2510.3-2(b) of the Department of Labor regulations? 

I have a situation where one company was bought.  Both have plans, one being a safe harbor match plan and the other discretionary match.  They have apparently missed the deadline to merge the plans/make the plans equal with same benefits.  Is it possible to elect safe harbor option for the non safe harbor plan before the end of the year (each plan is calander year) given that the plan is out of compliance or do we need to wait until the start of the next plan year with notifications provided in the 4th quarter?  Any thoughts are appreciated.  

Can New Company start a 401k plan effective 1/1/24?
New Company with new EIN - owned 100% by one of the partners of Old Company.
Old Company - owned 50/50 with a partner. They split up and dissolved the company (12/1/23) and each started their own company. Employees went with them mostly. Old Company had a 401kPS and DB plan. Both plans are terminated (December 2023) but not fully paid out yet.

Plan has 6-month waiting period for deferrals with entry on the first of the following month.  I know I can exclude those with less than a 12-month wait but I am wondering about the entry date.  The plan has monthly entry date for deferrals and match (no SH nor PS).  I'd like to apply the semi-annual date which would remove lots of zero NHCEs. I know it would be more conservative to use semi-annual. 

Thoughts?  Thank you

Can an investor with a real estate investment LLC but no "earned" income establish a solo 401(k)? The 401(k) would receive rollovers to be invested, but no contributions unless there is future earned income. Is establishing and rolling into a 401(k) allowed, even if contributions aren't?

Hello.  An employee turned in her paperwork and payroll missed setting her up.  We are fixing with the 50% amount of missed deferral plus income.  My question is does the plan safe harbor match apply?

How should the IRS compliance question for nondiscrimination testing for "how the plan intended to satisfy" the requirements for a plan that terminated in a prior plan year? The form instructions say to "Check N/A" if the plan is not required to test for nondiscrimination under Code section 401(k)(3), such as a plan in which no HCE is benefiting. I took a look at this section which discusses safe harbor requirements and saw a statement about the final plan year but it still wasn't clear to me all of the exceptions the form instructions were trying to refer to.

There is a reference to the final plan year and says the following:

Quote

(4) Final plan year. A plan that terminates during a plan year will not fail to satisfy the requirements of paragraph (e)(1) of this section merely because the final plan year is less than 12 months, provided that the plan satisfies the requirement of this section through the date of termination and either— (i) The plan would satisfy the requirements of paragraph (g) of this section, treating the termination of the plan as a reduction or suspension of safe harbor matching contributions, other than the requirement that employees have a reasonable opportunity to change their cash or deferred elections and, if applicable, employee contribution elections; or (ii) The plan termination is in connection with a transaction described in section 410(b)(6)(C) or the employer incurs a substantial business hardship comparable to a substantial business hardship described in section 412(d).

Since the plan year relating to this 5500 is one following the plan termination date and is when the final distributions occurred, would N/A be the appropriate response?

We have a new client that recently purchased annuities for all of its participants (small plan with under 20 participants, all either retired or term vested at time of purchase).  This leaves the plan with zero participants and about $500K in assets that will be used to pay the remaining administrative expenses (final valuation, government forms filing, audit fees, etc.), with whatever is left over after that being reverted to the employer (with applicable taxes due on the reversion at that time).

The client now wants to officially terminate the plan.  Obviously this approach is opposite of what we usually see (i.e., usually we formally terminate the plan first, then move on to the purchase towards the end of the process).

Has anyone ever dealt with a plan termination after all participants have already left the plan?  Does this change the typical IRS and PBGC filing timeline/requirements?

Does anyone know the penalty for a late filing of the 1094/1095?  Have a client that messed up and never provided the information.  Will be filing with the IRS today, just wanted to let them know what to expect the penalty to be.

I just want to make sure I'm not overthinking this.  There's no issue with a Plan design of:

Profit Sharing (and Cash Balance) - Immediate Entry
401(k)/Safe Harbor - 21 & 6 mos.

Obviously we'd have to pass all testing, and as far as I see there are no complications/issues.  They'll just have to make a Profit Sharing contribution for everyone, which will be subject to vesting, but wouldn't need to give Safe Harbor. 

I'm not overthinking this, right?

I've got a plan that we've been working on for a couple of years, and the three original partners (who were the only HCEs) have life insurance policies in the plan that they rolled in when they left their previous firm 20+ years ago.  Since I took over, I've been telling them that they therefore have to offer life insurance to all participants, and provided them a cobbled-up form to have the other participants decline such an election.  I can tell you that no NHCE has ever opted for life insurance, though whether that is a result of those forms, or just not saying anything... well, I've advised them as best I can on that score.

Anyway, 2 of the 3 original partners have left, and their policies are now gone.  There are new HCE partners to replace them, and they do not have insurance.  The last doesn't want to come up with $250K to purchase his policy for the plan.  I'm wondering if I can somehow grandfather that in and have the document say that it is no longer offered going forward effective on some date.  Am I going to run into a BRF issue?

Thanks.

My ex-husband took early retirement at 55 years of age back in Feb 2023. Since he is drawing from that pension how will I receive my payment? Will I get an actual monthly payment or a payment into a pension for when I retire?

Thank you

So there is both k-1 income and W-2 income for the former partner. There seems to be some gray in this area. It seems clear that the compensation for the former partner is the sum of k-1 income and W-2 income. But, how is the K-1 income calculated? Do you just take the k-1, taking into account a PROPORTIONATE share of the common law employees' contribution (let's say 6 months for sake of illustration) or use some other method? Or to put it another way, it appears that another method might be acceptable, but maybe not...?

Any opinions welcome! Thanks.

A client received a letter that I have never seen.  The notice tells them that the IRS has made changes to the form 5500 and as a result the client owes $49,500 + interest (see attached).  What is this?

We don't really do anything with ESOP's, but I was just curious: if/when this applies to an ESOP, does the TPA have any obligation, or is this just a corporate/legal reporting issue that the TPA does not need to worry about?

I have a plan that joined a PEP with an effective date in January of 2024.  The assets have already transferred to the PEP.

Now, they would like to make their 2023 PS contribution.  Can they make this to the PEP ?

In a perfect world, it could be made to the prior recordkeeper before the transfer of assets, but that is not the case.

Any issue in making the 2023 PS to the PEP ?

Thanks!