A summary plan description I’m reviewing includes this paragraph:

If your distribution is an eligible rollover distribution and exceeds $200, you may instruct a direct rollover of all or a portion of your distribution to an eligible retirement plan. But you may instruct a direct rollover of a portion less than all of your account only if each portion is at least $500 (with this minimum counted separately for each portion of Roth or non-Roth amounts).

Are those amounts still current?

I have seen this statement, or similar wording, in several places, and I think I must be misunderstanding something. If the pre-approved plan language for eligibility allows for, say, "3 consecutive months of service from the Eligible Employee's employment commencement date and during which at least 250 hours of service (not to exceed 1,000) Hours of Service are completed. If an Eligible Employee does not complete the stated Hours of Service during the specified time period, the Employee is subject to the 1 Year of Service requirement..."

So, if an employee works less than 250 hours in that first three month period, they become subject to the 1 year of service requirement. Suppose they work 600 hours during the next 3 (or 2) consecutive plan years. Why would they not be considered LTPT?

The LTPT rules will only affect 401(k) plans whose eligibility requirements require employees to complete at least 500 hours of service in a 12-month period to participate. 401(k) plans that require fewer hours - or none at all - will never produce a LTPT employee, making the new rules moot.

Division A has match going in every pay-period because these are basically salaried office workers.  The vast majority of the HCEs are in division A.  There are a bunch of employees with more sporadic work schedules and the client does not want to provide them with the match unless they work 1,000 hours and meet the last day requirement.

1) Straight coverage, my ratio %age fails but a hair, but my Average Benefits Test passes by a mile,

2) If I treat the timing as a BRF then I am still good because even if I treat the pay-period match as a BRF I'm over the nondiscriminatory classification threshhold.

Am I thinking this through correctly?

In my many years of practice, I have never ran across this question: Can a plan have an "inservice rollover" provision for any reason?  No age restrictions or years of service provision. I have never seen this in a pre-approved plan document. Several internet providers are saying this is possible and we know how reliable the internet is. 

Could it be done with an IDP?

For plans that have 401k entry on the first of month after meeting eligibliity, which payroll do they start it with when twice monthly payroll at the end of the prior month is on, say the 5th?

that payroll which is paid after date of eligibliity or the next one which includes the date of eligibility for which payroll is run?

We are coming across issues where the vested balance is more than the actual balance for certain rehires.

Im waiting on the details, but in a nutshell:

• Participant terminates in 2021 at 20% vested and takes a partial distribution.
• Participant is rehired in 2022 and is 60% vested at 12/31/23.
• Relius says that the vested balance is more than the actual balance in the account. 

Any ideas?

When a plan sponsor asks for your advice about whether to provide or omit an eligible distribution to a domestic abuse victim, what do you recommend or suggest?

We administer a 401(k) plan that has an in-service distribution provision. The age is 59 1/2 for salary deferrals and safe harbor contributions and 59 1/2 for profit sharing. We sent the client an amendment to eliminate the age on the profit sharing source about two months ago. The amendment indicated that the change would be effective November 15, 2023. Even though we told them to execute before November 1, 2023, they executed today. The plan has a participant who is requesting an in-service distribution.

There is no reduction of benefits here nor is there any cut-back. Does it really matter that this became a retroactive amendment because they waited so long to execute? Since no other participant has ever taken an in-service distribution I would think that even though the amendment has an effective date of 11/15/2023 it really has an effective date of December 6, 2023 because it was signed today.

Anyone disagree?

 Thanks.

We are correcting a missed opportunity to defer for 2023.  We owe the employee a QNEC based on 50% of the ADP for the employee's group (NHCE) multiplied by the employee's compensation.

The problem is, we don't know the ADP for 2023 yet.  We'd like to correct immediately.  Is there another way to determine the missed deferral opportunity, or do we just wait until the Plan Year closes out to correct?  I know it's nearly the end of the year, but there has to be some alternative (e.g. a situation where we are trying to correct mid-year, rather than in December) other than waiting until the Plan Year's ADP is known -- right?  

I was wondering if anyone had direct experience or could point to guidance on an acceleration of payment/acceleration of vesting question.  

The regulations clearly permit an acceleration of vesting (Treas. Reg. 1.409A-2(j)(1)).  For example, if an amount of deferred compensation vests after ten years and is payable upon a separation from service, it is not a violation for the service recipient to reduce the vesting requirement to five years, even if a service provider receives a payment in connection with a separation from service before the initial ten year period. 

What if the payment provision provided that a service provider would receive a payment of deferred compensation upon a separation from service that occurs after the participant reaches age sixty.  Would an amendment to the Plan that provides a payment upon a separation from service at age 55 be compliant under the above reference provision (i.e. changing a condition constituting a substantial risk of forfeiture), or would it be considered an acceleration of a payment. The effect appears to be the same, but does the condition being in the payment event provision rather than a vesting provision change the nature of the amendment.  

Curious to hear what everyone thinks, or whether it is clearly answered anywhere. 

A shot in the dark here, but does anyone know of a good contact number for TD Ameritrade to get statements? We have a takeover plan with 30+ individual accounts that is being (has been) converted to a platform. We managed, with great difficulty, getting about 20 of the accounts transferred over, and we have access to the TDA website for account activity. Somewhat unbelievably, at least to my way of thinking, anyone who was paid out immediately drops off of their website, so we have no activity information on those accounts. (All we are trying to do is get statements; the money is gone.)

Unfortunately, this part of TDA's business was sold to Schwab, and they are pointing fingers at one another as to who has this info. The TDA area I've been talking to is really for transferring money in or out, but the client services number they give me is for Schwab, and they insist that they don't have info on accounts that weren't transferred, which I believe. The broker is of no help at all; not only do they have the same problem with the accounts disappearing, but we took "their" money so they are refusing further assistance (and in general are worse than useless anyway but that is a given).

So...any ideas for getting info on TDA "legacy" accounts?

This only tangentially related to cafeteria plans, but I don't know what other forum to use. We have a retirement plan customer who has asked us what the 2024 Federal Child and Dependent Care Tax Credit is, so she can determine whether to use this, or use the Dependent Care Assistance Account in her 125 plan. (Don't ask me why she doesn't get this info from her 125 plan administrator, except that perhaps she "handles" 125 admin on her own...).

Anyway, trying to assist her, within limits. But the information I'm finding is WILDLY variable, and the IRS forms 2441, and Pub. 503 are from 2022!

Some of the information I'm finding says that the Federal Child and Dependent Care tax credit has been greatly enhanced, and that it is available to be applied against qualifying expenses of up to $8,000 for one qualifying dependent, and up to $16,000 for two or more. And, the tax credit can be up to 50%, sliding down to 20% based on income, rather than the previous maximum of 35% sliding down to 20%.

Does anyone know of an accurate source to determine the correct answer? Or does anyone know the answer already?

Thanks!

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?