Secure Act 2.0 contains provisions for Roth contributions to SIMPLE IRAs beginning 2023.  Has anyone seen any documents that offer that option?  I have looked at the IRS website at forms 5304-SIMPLE (Rev. March 2012) and 5305-SIMPLE (Rev March 2002).  Neither has been updated to provide for Roth.  Is that really an option if the federal forms don't offer it?

I am working on preparing notices to clients that sponsor SIMPLE plans and want to make sure I cover the options available.

Thanks.

So, aside from the fact that IRS guidance is badly needed (anyone heard any rumors of app. date?) I have the following item for general thoughts...

If your employers are like many of ours, it is an absolute given that many will screw this up (no matter how much we try to tell them) and will NOT immediately allow deferral opportunities to some people who qualify under the LTPT rules.

So, has anyone heard rumors of any special correction for some of these situations, or will it simply fall under the "normal" EPCRS correction procedures? We're not looking forward to the potential corrections for missed deferrals, some (many?) of which we won't find out about until sometime in 2025...

I'm always more pessimistic on Mondays.

I'm sure this question is somewhere in the archives, but I cannot locate any threads.

Profit Sharing only plan.

A former employee who worked from April 2013 through October 2015 was rehired in 2021.  We are currently trying to find out from the employer whether this participant - although they were eligible for the plan on January 1, 2015 - received an allocation for 2015.

The plan uses the Rule of Parity, which always makes me shudder a bit.  My understanding is that if a participant has more than 5 breaks in service and they were not vested at the time of termination, it is permissible to start from ground zero when they are rehired.

In this particular instance, the participant would have been 20% vested at termination.  She is not likely to have been eligible to receive a Profit Sharing for 2015 due to her termination prior to the end of the year.  (We are waiting for confirmation from employer since we do not have history).

My question:  Would prior vesting service but no vested benefit permit us to rely on the Rule of Parity?  OR was she immediately eligible for the plan on her date of rehire in 2021 because, although she may have never accrued a benefit in the plan, she had nevertheless accumulated vesting service?

Thank you!

The situation has come up before.  5500-SF filed for a sole prop 401K with employees for 2021, extension 10/15.  Not knowing at that time, client incorporated in 2021 .  5500 for 2021 filed under sole prop EIN.

Form 5558 filed for successor for 2022.  Attempting to correct ASAP in order to avoid any IRS love letters, we could amend 2021 under new corp EIN and complete box 4 with info from predecessor plan and move forward to 2022, BUT won’t DOL/IRS look for an extension on the successor sponsor with successor EIN, which had not been file as we were not advised of the error previously??

Employee (E) of Seller (S), a small company with a group health plan covered by Florida mini-COBRA, has twins age 28 on the coverage, thanks to Florida law that requires allowing certain unmarried dependents to remain covered to age 30.  Buyer (B) acquires all of the S stock in mid-July, 2023, and E continues working for S, with the twins remaining on the coverage, as before.  S terminates its group health plan on July 31, and E, along with other S employees and their dependents, enrolls in B's group health plan effective August 1.  Only the twins are left out in the cold.

B's plan is subject to COBRA.  Though operating in Florida, B's coverage is underwritten in Illinois, where it also does business.  The policy does not extend coverage to dependents beyond age 26, consistent with Illinois law.  B refuses to offer continuation coverage to the twins, who lost coverage when the S plan terminated, insisting that the carrier won't allow it because the twins are older than 26. 

In a phone conversation with the Florida Office of Insurance Regulation, I was informed that a company doing business in Florida but "headquartered" in another state does not have to follow Florida's coverage rules, at least insofar as allowing certain dependents to remain on the coverage to age 30.  My contention is that federal law, in the form of COBRA, supersedes whatever state law may have to say on the subject, and that B became responsible to the twins under COBRA when B acquired S, followed by S's termination of its plan.  The twins "aged off" of coverage at that time, thereby experiencing a COBRA qualifying event when they lost coverage due to B's policy failing to pick them up because of its lower age threshold for terminating dependent coverage.

Sound reasonable?  Even if B is unable to enroll the twins on its coverage, isn't B still under some obligation to them for failing to honor their COBRA rights?  Perhaps B can help offset the cost of the twins obtaining Marketplace coverage, for example.

      

new plan in need of a cpa to prepare financial statements for past couple years as plan was not aware of this.

seems that no local firms have capacity to take what I think is a pretty good revenue raising opportunity.

curious if there are more national firms that might be a better fit?

they understand they will not be filing 5500 for this last year on time.

Pooled investment fund profit sharing plan that used to allow installment payments.  The plan has related rollover funds from an old money purchase plan subject to QJSA rules.    Anyway - participant was receiving monthly payments directly from the plan until 2017 when he passed away.  QJSA and pre-retirement survivor annuity option was waived with proper consent by both participant and spouse.   He was over 70 1/2 and the installment payments more than covered the RMD amount each year.  After he passed away the plan began paying the monthly installment payments to his spouse as beneficiary.  She is also over 70 1/2.  How long can she receive those payments from the plan?  Is there a limited amount of time before the account must be completely distributed out to her as beneficiary?  

This is in the Basic Trust Doc - see item (3):  

(g)   Alternative forms of distribution. Death benefits may be paid to a Participant's Beneficiary in one of the following optional forms of benefits subject to the rules specified in Section 6.8 and the elections made in the Adoption Agreement. Such optional forms of distributions may be elected by the Participant in the event there is an election to waive the Pre‑Retirement Survivor Annuity, and for any death benefits in excess of the Pre‑Retirement Survivor Annuity. However, if no optional form of distribution was elected by the Participant prior to death, then the Participant's Beneficiary may elect the form of distribution.

 

(1)   One lump‑sum payment in cash or in property that is allocated to the Accounts of the Participant at the time of the distribution.

 

(2)   Partial withdrawals.

 

(3)   Payment in monthly, quarterly, semi‑annual, or annual cash installments over a period to be determined by the Participant or the Participant's Beneficiary. In order to provide such installment payments, the Administrator may (A) segregate the aggregate amount thereof in a separate, federally insured savings account, certificate of deposit in a bank or savings and loan association, money market certificate or other liquid short‑term security or (B) purchase a nontransferable annuity Contract for a term certain (with no life contingencies) providing for such payment. After periodic installments commence, the Beneficiary shall have the right to reduce the period over which such periodic installments shall be made, and the cash amount of such periodic installments shall be adjusted accordingly.

Any thoughts appreciated. 

 

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?