The more I read these rules the more convinced I am that the only possible option is to avoid these rules altogether by designing eligiblity rules to avoid exlcuding LTPT Employees. So for example the most simplified approach here will be to change the 1,000 hours in 12 months eligiblity to 500 hours (at least for 401(k)).  There are other options, but I am concluding that what is not an option is for a client to try and administer these LTPT rules in the context of a plan with 1,000 hours and 12 months "normal" eligibility.

Can I get an Amen?

DC Plan, only participant was owner, spouse pre-deceased, no children, no beneficiary designation.

There is a will directing how the Estate is to be distributed.

Do the plan assets get paid to the estate, and then distributed accordingly?

Can any relatives (or even non-related beneficiaries) roll to IRA's? Any other tax advantaged methods of distribution available?

Thank you in advance for your help with this!

Several times recently, distributions have been requested where the receiving retirement plan or IRA has requested a "qualification letter" from the sending plan. 
Sometimes the receiving plan is appeased with a copy of the IRS opinion letter, other times there is pushback. There is one right now where Fidelity is insisting the Opinion Letter is not what they want (the sending plan is not audit sized, so there is no audit statement, and while the assets are held with a custodian that does recordkeeping, not all plans pay extra for a certified trust statement either). 

What do they mean when they say they want a qualification letter? The receiving plan provider can't seem to articulate it, and it is holding up distributions. I don't think the sponsor (who is the named Plan Administrator) minds writing a letter saying they believe the plan to be qualified. They would be happy to. But is that what they want? At one point a receiving plan was saying the letter had to cover the qualification of the plan for this year (they didn't like the date on the opinion letter I guess, among other things). 

Anyone have a good resource or article or something that can help me understand? 

The increased catch-up limit is the greater of $10,000 or 150% of the regular limit.  The regular limit in 2023 is $7,500 and 150% of even that limit is $11,250.  Yet I cannot find a single article that references this contradiction.  I realize the $10,000 is indexed for inflation but so is the catch-up limit.  The 150% is so far ahead I can't see the $10,000 (even indexed for inflation) will ever be relevant.

The lack of commentary on this is so glaring I am starting to wonder if I'm the one missing something?

Is there a cut off on how much can be contributed before it is not longer exempt from testing for safe harbor non-elective?

I know for safe harbor match anything above 6% will then need to be tested for ADP ACP and Top Heavy so I was not sure if the same rules applied for Safe Harbor Non Elective 

Plan has QACA Match, so changing to SH Match effective 7/1 would be an amendment that increases everyone's match for the whole year.  Do we think this is possible?  The primary objective is to eliminate the auto enrollment.

During open enrollment, an (childless) employee elects HDHP coverage and therefore (implicitly) to receive the employer's HSA "seed" contribution.  Unfortunately, the employee also intended to enroll in the general purpose health FSA but instead enrolled in the dependent care FSA.  The employer's systems obviously would not catch this error.

Well into the year (the employer's cafeteria plan does not currently provide for a time limit of providing notification) and after the employer HSA "seed" contribution was made, the employee notices the mistake and notifies the employer.  Pursuant to IRS guidance, the employer corrects the mistake and converts all of the year's prior and subsequent FSA amounts to the health FSA.

The change would certainly make all HSA contributions, including the "seed" amounts, excess contributions.  The employee can avoid the tax penalty if he or she takes a timely curative distribution.  If the employee does so, the effect would be that he or she would get addition compensation from the employer but only as a result of the employee's mistake.

Under these circumstances, can the employer ask the HSA custodian to return the "seed" contribution to it? 

Under the HSA regulations, there are only limited circumstances when this can be done, most notably when the employer was never HSA-eligible.  Here, the conversion means that in effect the employee was "never" HSA-eligible but it was solely as a result of a change made mid-year.

Any thoughts are appreciated.

Company A:  Plan uses prior year testing method.  

Company A acquires company B on 9-1-21. 

Company B uses current year testing method

Effective 12-1-22, Company/Plan B merges into Company/Plan A.  We are testing Plan A for full year and including Plan B only from 12/1-12/31.  

Both populations are approximately the same.  What average do I use for the prior year testing adp/acp average?  Do I need to do a weighted average?  (Ideally, they should have waited to merge until 1/1/23. Or tested together for entire plan year).

Thoughts?

I have a 2 person profit sharing plan. Husband and wife. The only asset in the plan is an insurance policy for the husband. The cash value of this policy is now over $250K so I'll be doing a 5500EZ. 

My question is do I count the premium paid as a contribution? Is there anything else I need to do? 

It's been many years since I've worked with life insurance in a plan.

Thank you!

Is there a preferred (or possible) method to selecting a cafeteria plan's plan year where the underlying benefit components do not all run on the same period (e.g., life insurance is on a 1/1-12/31 plan year, but medical/dental are on a 7/1-6/30 plan year)? Or would you need multiple plans?

Why would an adoption agreement limit roth contributions to 50% of compensation?

A new company wants to join an existing MEP effective 6/1/23.  Do any of the 2023 limits need to be pro rated for them, or because the plan was in existence for all of 2023 that takes precedence and they get the benefit of the full numbers?  Thanks.

Is it OK for a Plan to have a different hours requirements for different classes to get an annual Pay Credit in the Cash Balance Plan?  For example, can I design a Plan to require 1,000 hours for Pay Credit for Direct Owners, 500 hours for non-HCEs and 800 hours for Non-Direct Owners?  I think  this would be OK if the requirements are more liberal for non-HCEs.   If I am correct, what would be the best way to accommodate with a Prototype/VS software?

Participant hasn't terminated and remains on the books but only does minimal consulting some years.  He hasn't earned over $1000 for over 5 years, so clearly hasn't worked at least 1000 hours in that long. But he does defer 401(k), even when he only works one day in the year.

Would this participant continue to be considered active and therefor share in top heavy minimum for the years he does receive some income?  (Plan has just become top heavy).

I have a small Profit Sharing Plan that wants to terminate ASAP. I wanted to confirm we could accomplish this with a 15 day notice to participants so I checked the IRS website and found the below information under "Plan Terminations - Required Notices". Did we loose the 15-day notice and/or 30-day notice of Termination for small plans? 

Retirement Topics - Notices | Internal Revenue Service (irs.gov) 

401k Safe Harbor Profit Sharing Plan with 1 Year of Service (12 mos 1000 hrs) wait, dual entry.

Owner's wife started assisting owner Jan 2020 with business. When Covid hit in March 2020 her services increased significantly and remain so to current (1000+ in each year). Spouse was not paid in 2020 or 2021 but was paid W2 wages in December 2022 and permitted to contribute 401k as an eligible Participant in the Plan. It is not clear to me if there were financial reasons the business did not pay the spouse in 2020 and 2021, and not sure if that necessarily matters.

Question:

Though her prior services went unpaid, is the Plan permitted to count her prior years' hours of service for eligibility purposes? I have read through many articles that debate the fine nuances of this and a reference from an ASPPA conference Q&A from more than 10 years ago. I am hoping someone may know of something more recent. (if so, she would have been eligible 7/1/2021 with $0 415 compensation, no contribution due)

The Plan defines Hour of Service as:  "Hour of Service" means (a) each hour for which an Employee is directly or indirectly compensated or entitled to compensation by the Employer for the performance of duties during the applicable computation period (these hours will be credited to the Employee for the computation period in which the duties are performed); (b) each hour for which an Employee is directly or indirectly compensated or entitled to Compensation by the Employer (irrespective of whether the employment relationship has terminated) for reasons other than performance of duties (such as vacation, holidays, sickness, incapacity (including disability), jury duty, lay-off, military duty or leave of absence) during the applicable computation period (these hours will be calculated and credited pursuant to Department of Labor regulation §2530.200b-2 which is incorporated herein by reference); (c) each hour for which back pay is awarded or agreed to by the Employer without regard to mitigation of damages (these hours will be credited to the Employee for the computation period or periods to which the award or agreement pertains rather than the computation period in which the award, agreement or payment is made). The same Hours of Service shall not be credited both under (a) or (b), as the case may be, and under (c).

To note, the State exempts the spouse from minimum wage requirements.

Thank you.

A wellness program imposes a surcharge on tobacco users who do not complete a tobacco cessation course. If a person completes the requirements to have the surcharge removed mid-year, could the surcharge that has already been paid during the current plan year be refunded? 

I'm thinking that would be an impermissible, retroactive election change. Prospectively, the surcharge could be removed and the participant's election automatically decreased assuming it's an insignificant change in cost. 

Any thoughts on the refund of the surcharge previously charged during the year?  Thanks in advance. 

I need to be sure that my thinking is correct on this situation:

Plan fails 2021 ACP test.  A refund of match is made to the HCE in February 2022.  Participant account lost money for the 2021 plan year.  Refund to HCE is made timely and net of losses.  Well known national 401k vendor prepares 2022 1099-R form, boxes 1 and 2a are the same amount and equal the gross amount of the refund and not the net amount that the participant received after losses.  

Is that the correct way to do the 1099-R form?  For example, I always understood that had there been earnings on the account, the participant would have received a 1099-R form for the gross distribution (including gains) as long as it was timely distributed.

Therefore if there are losses on a timely distributed refund, the 1099-R form should reflect the actual distribution amount after the losses are applied.

Am I incorrect or missing something - or was this 1099-R improperly prepared?

TIA for any comments. 

Background
Participating Employer-A of a 403(b)(9) non-electing [multiple-employer] church plan sent both EmployEE and employER contributions to the Plan for an individual who is not enrolled in our Plan under that employer. The funds came to the plan with remittance instructions while the employer and employee were working to get the employee enrolled under Employer-A. The Plan does not have an auto-enrollment provision but does require enrollment paperwork be processed before it accepts any contributions - for whatever reason, the employer sent the funds anyway. The employee has since decided not to enroll in the Plan under that employer. He is, however, enrolled in the same Plan under a different employer, Employer-B. Meaning, he works for two different participating employers.  

Question
If he is not enrolled in the Plan under Employer-A, are they even considered retirement plan contributions? What are the Plan's options from here? Employer-A wants us to send all the funds back to them. My understanding is we must keep A's employER contributions in the Plan which will be used to offset future employER contributions for its enrolled employees. We are unsure if the money sent to us as "pretax deferral contributions" should be distributed to the employee (per usual) or if some other type of arrangement could be made.

I know allowing after-tax contributions for intent of mega backdoor Roth conversions only tend to work for very large companies. Is there a minimum number of employees where this strategy generally starts to make more sense? 1,000 employees? 

We have a company that is around 800 employees that is considering adding an after-tax contribution source. They currently pass ACP testing easily using the top paid group election. The most recent ACP test had around 90 HCEs and 80 other employees who reached the 2022 income limit of $305k but are NHCEs because of the top paid group. 

If after-tax were to be added, I suppose it would depend on how many employees in each category actually used the source. If it were only a handful of the HCEs in the top 20% they'd be screwed. Are there any other considerations with respect to the demographics that should be considered?