Good afternoon everyone, I hope all is well.  I have a new client that has a traditional DB Plan that started in '21.  They want to convert that into a Cash Balance Plan.

Is there a way to simply restate the Plan (which we need to do anyway) and convert it into a CB?  Or do we need to terminate and start a new plan?

Is any date acceptable for a traditional 401-k plan to start a plan and have a short plan year?  (assume all notices have been given to employees).  Does it have to be beginning of month?  Quarter? or could for example, it be December 20th?  Thanks

ICHRAs are brand new to me so I'm curious how an employer would comply with a National Medical Support Notice for an employee eligible to participate in an ICHRA. It's my understanding that ICHRAs are considered group health plans subject to ERISA requiring them to comply with a QMCSO. Anyone have experience with this? 

Any insight is greatly appreciated. 

The freezing of a defined benefit plan perforce seems to affect the tallying of accrual service, and perhaps also the reckoning of the remuneration of which the accrued benefit serves as a function. Perhaps conversely, freezing the plan might not affect the reckoning of the high three year remuneration streak for § 415(b) deliberations. Please provide helpful guidance on this situation. 

Also, the reckoning of years of service and/or years of participation might remain unaffected. If guidance has resolved this situation, please provide in a reply.

A non-governmental 403(b) plan has no class exclusions for elective deferrals so everyone is eligible to participate.  The plan has several class exclusions for match - of course they are all NHCE and the plan fails the ratio percentage test - the average benefits test is even worse.  We can get the ratio percentage test to pass with an 11g amendment to bring-in one of the excluded classes.  My question - if none of these employees being brought-in by the 11g amendment elected to defer, is the plan sponsor required to give them a contribution?  If so, how is it calculated?

Got asked this question today:

Owner of company requested an in-service withdrawal for $10,000  (numbers are rounded and fictional). Received two checks, one for $8,000 and one for $2,000. Owner then turned around and ran the $8,000 through payroll, taking no withholding or taxes whatsoever on it. And then, to top it off, remitted the $2,000 through EFTPS as a Form 945 tax.

The owner got forms from their payroll provider as to how to "correct" the error. I looked at them and have no idea what they want this individual to do. Has anyone ever encountered a situation like this?

Thanks for any replies.

We have a small cross-tested 401k Profit Sharing Plan that provides 3% SHNEC to all plus a discretionary Profit Sharing (PS), all in their own PS allocation rate group.

3 HCEs

2 NHCEs 

• 1 is newly eligible, older and 0% vested;
• 1 is a younger, long service employee who has terminated this year with less than 501 hours and is 100% vested (wage is about 1/3 of the older NHCE).
• Q: (1) Is it permissible to increase the terminated NHCEs PS allocation rate in order to pass (a)(4) testing? (2) Could it be argued effectively that increasing the terminated NHCE is more reasonable than the active NHCE because the terminated NHCE is 100% vested whereas the active NHCE is 0% vested? (3) If this could be considered abusive on review, would it be acceptable if both NHCEs received the increased PS allocation rate, noting that in doing so the terminated NHCE would still be the only one contributing to a passing test result?

Thank you

What does the Divorce Decree mean, It's Reads: the Plaintiff shall be entitled to her marital share in any benefits under Defendant's pension plan, or payments made in said pension plan, through his place of employment if, as and when Defendant's entitled to receive any such benefits, and Plaintiff's interest in said plan benefit shall be calculated as of the date the benefits are to be paid under said plan using the the Bangs Formula?

I should have addressed this with the court, but what does this mean for my ex-wife's portion of my benefits?

My company is being asked to take over an HRA (section 105) plan.  The plan has never filed a form 5500. 

I am assuming they should be.  Secondly, if there are over 120 participants - would they need an audit?  I again am assuming yes.  I would be thankful for any assistance on this.

Thanks!

Hi.  I've got a stand-alone plan that has 6-year vesting (2/20).  They are merging into a MEP run by a payroll/benefits firm that has 100% immediate vesting.  What happens to the vesting for these people?

For new money, I presume that it follows the MEP vesting.  What about the old money?

Thanks.

 

About healthcare services, a news article this morning describes wide price variations for the same service—even in the same hospital—based on prices negotiated with a health plan. For example, an injection of Rituximab at Rush University Medical Center in Chicago ranged from $899.33 to $9,260.13, and a vaginal delivery with post-delivery care in Los Angeles ranged from $1,183 to $32,563. Sarah Hansard, Hospital Pricing Data Troves Raise Stakes on Employer Plan Costs, Bloomberg Law Daily Labor Deport (Dec. 18, 2023, 5:05 AM EST).

Following size and some other factors, there are price differences for most kinds of services a retirement plan buys. But are the ranges as wide as the examples quoted above?

I don’t disparage price differences. There are many legitimate reasons for prices to differ. Among them: Some fixed costs are about the same for a plan no matter its size. Some variable costs can be much more for a small plan than for a big plan. And some economies of scale, with either a plan or a service provider, can affect costs and prices.

Rather, I hope to learn more about how much prices differ.

If everything was acquired during marriage in Maryland, does the have to divide any Retirement Plan/Assets that were acquired and purchased during the ask. I ask because my 401k was initated during our marriage, but my court order does explicitly mention the 401k. Is it possible for my ex-wife to go back to court and say that this was an error on the court part because it was Marital Money?

          I have a 401(k) plan with a terminated participant who accrued all of her benefits in Florida and has maintained her account in the plan. She has since moved to Virginia and now wants to take distribution of her account balance. Here's the question: when she takes her distribution, her CPA thinks that she will have to pay Virginia State Income Tax on the monies she received from the plan. I don't believe that this is the case. Opinions?

Thanks,

Rick 

Client moves plan from national 401(k) vendor #1 to national 401(k) vendor #2.

Vendor #1 has a fee they charge when the plan leaves and Vendor #2 reimburses a portion of that fee and puts the $$ in the plan unallocated cash account directing the client that it can be used for reducing employer contributions or to pay fees. 

If the client paid the initial fee to vendor #1, can the client reimburse the company for the portion that vendor #2 put in the cash account?

Hi

Husband LLC (filing as an S-Corp and owned 100% by Husband)

Wife LLC (filing as a sole-prop)

Neither entity have employees. No ASG issues.

They have children under age 21

Setting up DC and CB plans for 2023. They are both adopting the plans.

Husband LLC will fund his own portion of the DC and CB and Wife LLC will fund her own portion of the DC and CB.

My understanding:

For 2023, they are a CG so can file as a single employer using 5500-EZ and also can use Schedule SB, correct?

For 2024, they are no longer CG as SECURE 2.0 removed the under age 21 issue based on 1563e (finally).

How do they need to file for 2024 and also do I need to use SB or MB? This is a first for me.

Thanks for your comments.

I had a solo 401(k) that had a plan termination date of 12/31/21. All assets were distributed as of 3/21/22. To avoid the successor rule, I waited more than 12 months before establishing a new plan. I signed the adoption agreement for a new 401(k) on 12/12/23 but, following guidance on the application to typically have an effective date as of the start of the plan year, I put an effective date of 1/1/23. I realize now that perhaps this effective date should have been 3/22/23 or later to be a full year after 3/21/22.

For purposes of the successor rule, does the effective date matter or just the adoption date? If the effective date is wrong, how can I proceed? File an amendment? Shut down and make a new one? There are no assets in the account yet.

Client plan excludes those "scheduled to work <1000 hours" which we know has to change.  They amended their plan effective 1/1/2021 for this change so they stopped enrolling that part-time class since 2021.  The plan's normal eligibility is 3-month wait with quarterly entry dates.  

If a part-time person was hired say March 1 2021, their 3-year anniversary would be 3/1/2024.  I assume they would enter the plan for deferrals assuming they completed 500 hours in each of their 3 anniversary years.  (There is no plan year shift since there is not a Year of Service eligibility requirement.)  

I think they should amend and eliminate the part-time class exclusion now to avoid missed eligibility.  They can still exclude LTPT from the match.  They included the part0teim exclusion back for 2021 to avoid the match for these people and to try to stay under 100 lives (They have been subject to audit since they so this is a non issue now.) Does that make sense to eliminate the class exclusion?

One last thing - I believe I read that this part-time exclusion needed to be amended out of plans by Jan 1, 2024 yet the SECURE amendments are not due until end of 2025.  Did I see that correctly?  Maybe the writer meant in practice, but not in document.

Thank you in advance for any comments!

Tom

Do I need to withhold 401k contributions  on a retention bonus after the employee terminates? The bonus is for staying until the sale was complete. The agreement states that we have 2 weeks to pay the bonus after the close of the sale (close of the sale= termination date in payroll).

We are amending a lot of plans to have 500 hours of service instead of 1,000 hours to avoid the LTPT rules. Vesting will remain at 1,000.  I want to be able to accumulate and track how many plan years a participant has 500 hours of service (so same approach as vesting, just with 500).   That's an easy way for us to review eligiblity for accuracy because we see for exaple who never hit 500 hours of service.

Anyone have a suggestion for which field to use for that?  The LTPT fields do not turn on unless the person is ineligible for the plan.  The "Service" figure on the "Service Tab" (so the first one) seems like my number one contender but it seems to impact the determination of otherwise excludables (it codes people as OE's too early).  Curious if others are thinking ahead on this or have other thoughts.