Group:

Over the years I've seen Plan Sponsors (for ESOP's) setting up

sinking funds to pay for future participant benefits.

Where do I find the citation/authority for types of assets

a plan sponsor can use to fund the repurchase obligation? Is there a specific DOL citation? Treas regulation?

I was thinking about this awhile back at a conference for civil/criminal tax matters and one speaker

referenced that there's no guidance even on investing in Crypto.  Other than a DOL letter/notice (?)

with a stern warning that retirement plan investments in 'crypto' may be a breach of fiduciary duties.  I don't have the date

readily available.  I may be conflating the two items as this didn't per se relate to ESOP's.  But,

could a ESOP trustee invest in crypto as their asset for the repurchase obligation?  Seems the IRS/DOL

leaves this in a grey area on purpose.

Thoughts and comments appreciated. 

An individual works full-time as a private school administrator. She receives 20% of her income from her employer and the other 80% from a separate grant organization. Each pay period she receives two checks, one from her employer and the other from the grant organization.

Both sources of income are considered taxable income.

She is eligible to participate in the employer's 403(b).

QUESTION: Can then money from the grant organization be considered compensation for calculating her contributions as well as for purposes of determining includible compensation (415c limit)?

I assume further guidance is required, but The Secure Act text states that the lookback 145k compensation for determining the HPEs  is from the employer sponsoring the plan.  

So if a worksite onboards with a PEO and the PEO sponsors a MEP, and the worksite adopts the MEP, then could we make a case that the lookback compensation is based on the compensation under the PEO only?

Otherwise, the operational processes of onboarding a PEO, collecting  prior-year  FICA wages, and possibly year-to-date compensation plus deferrals (if HPE) will be a bigger administrative lift given that employers join PEOs continuously throughout the year.

Consideration:  Worksite now receives W2 from PEO EIN.

Does anyone know what the IRS user fee is for requesting a change in funding method that does not get automatic approval? It is classified as a letter ruling request but the fee schedule does not specifically show changes in funding methods and actuarial assumptions. I see changes in accounting method at $11,500 and then all other requests at $38,000 - big difference. The IRS does not make this easy!

If a bonus is paid out to a participant after they have already entered the plan, but the period for which the bonus compensation was earned was before they had entered the plan is this eligible compensation to defer? 

A 401k plan's eligibility requirements are age 18 and One Year of Service.  Let's say an employee without a Year of Service earns 500 hours in 2021, 2022, and 2023, is age 18 on January 1, 2024.  Is the plan permitted to continue to exclude the employee until after they have attained age 21, or does the plan's age 18 requirement apply for purposes of the LTPT rules.

Thank you.

The IRS entered into a closing agreement with plan sponsor agreeing to treat their DB plan as disqualified.  Plan sponsor filed Form 5500 with an explanation stating the Sched SB is not required due to the provisions of the closing agreement.  The IRS is threatening penalties for non-filing of Sched SB.  Based on the instructions and the regs is a Sched SB required for a disqualified plan?  Thanks!

We have a SH plan where the business has sold. The employees now work for new company and all have rolled over to the new company's plan.  Only the former owner remains and wants to keep the plan - so it is essentially back to being a soloK next year for 2024.  I have reviewed the instructions for the 5500SF and EZ and only see the requirements for being eligible to file 5500EZ.  Does the owner have to keep filing 5500SF or can he start filing 5500EZ?

Hello - I have a client with an enhanced safe-harbor match 401k plan ($1 for $1 up to 6%.)   When negotiating salary contracts for new employees, the client wanted to tell some employees (none are excluded) that their negotiated salary will be reduced by the 6% safe-harbor match as well as the 6% deferral if they sign up for the plan.  I told them they can not do that, and as there's not rhyme or reason to the employees that the plan sponsor wants this to affect, it can't really be fixed by excluding a class or some other document provision.  The client asked me where these rules are written and to provide in writing.  I can't seem to find anything that specifically says a plan sponsor can't reduce an employee's pay in order to receive an employer contribution.  (Obviously the salary is reduced by employee deferrals.)  Any help with written guidance would be appreciated.

A previous employer (whom we acquired, but didn't take on their 401(k)) had a short limitation year, and, thus, a small 415(c) limit.  Accordingly, a few employees hit the 415(c) Limit and the previous employer reclassified some as "catch-up" (even though they hadn't hit their deferral limit) so they could max out on 415.

I don't think that affects us, but does anyone see any issues?

An employer is terminating their POP early (plan runs Jan 1 - Dec 31 ... they're terming it 8/31).  The company itself is completely dissolving and there will not be any employees left.  Do they still have to conduct the POP non-discrimination testing before the plan is dissolved?  

Under the IRS hardship distribution "safe harbor reasons", one safe harbor reason is for "Burial or Funeral Expenses". Payments for burial or funeral expenses for the employee's deceased parent, spouse, children, or dependents. What is the definition of children - for examine is it limited to biological and legally adopted children. Or would a stepchild qualify. Assume the stepchild is not the primary beneficiary. Is there a distinction between your stepchild and your biological child for this purpose? I am not sure if they are a dependent but I can look into that because it would seem a dependent would qualify.

I appreciate any input.

Hi

Might be a stupid question, also made up numbers to understand the method.

Assume all calculations are for 2022.

73 year old has a prior db distribution, let's say $15,000/month after all actuarial calculations. done many many moons ago.

The new salary average for 2022 is $24,444.44/month - 100% of compensation limit (385k+290k+305k averaged)

415 dollar limit is $30,000 - made it up.

What is his 415 maximum AB?

1. Is it $24,444.44/month less $15,000/month i.e. $9,444.44?

OR

2. Is it $30,000/month less $15,000/month i.e. $15,000/month?

If it is (1) then the 415 LS would be $9,444.44 * APR @ 2022 417e table @73 @5.5% (assume plan AE assumptions provide much higher LS)?

What am I missing here to determine max 415 AB and LS?

Thanks

Terminating Plan: 01/01/2022 to 10/17/2022

When is the due date for filing Form 5558 Extension?

We recently took over a safe harbor 401(k)/profit sharing plan, new comparability, grp 1 officers and owners grp 2 all other eligible employees.

There are 4 participants: owner (100%), spouse, adult son over 21 and one common law employee.

The plan had passed 401(4) only because the son had not been treated as an HCE.

Under IRC Section 318, am I off base here, or is not the adult son an HCE as well?

I have a plan sponsor who would like to allow a loan for a NHCE participant who has fallen on hard times but is young and doesn't qualify for a "safe harbor" hardship. He would like to amend his plan to allow loans and then has asked how quickly he can amend to no longer allow it.  Is there a general rule of thumb for this?

Participant auto enrolled and had three paychecks worth of auto deferrals taken.  Then she left the company.  Age 31.

Can she take a permissible withdrawal (plan allows them) and avoid the 10% penalty tax?  Or is that only for in-service withdrawals?

General question for you attorneys out there who deal with health insurance claims and "clawback" of expenses paid, if a legal settlement is reached

I was talking with someone a few weeks back, who had sustained some significant injuries in an auto accident that was the fault of the other driver. Her health insurance had paid significant amounts for medical bills. She was in the process of suing the at-fault driver.

I have heard that many health insurance policies require repayment if the injured party receives a settlement, but I don't know anything about it. I asked her if her attorney had mentioned any such thing, and she admitted she didn't know. So I have two general questions:

1. Is it in fact a common clause in health insurance policies to have some sort of "clawback" or repayment clause in the event of the injured party receiving a settlement?

2. If her attorney DIDN'T mention it, if there is such a clause, would this likely be some sort of legal malpractice? I mean, if the settlement is completely or nearly eaten up by clawback and legal fees, why would anyone go through the agony of a lawsuit?

Again, I freely admit I know nothing about all of this, so I my be asking stupid questions here, in which case, my apologies!

Sorry for all the questions today!

Have 2 participants in similar situations:

Participant 1:
Was eligible for the Plan, having worked 1,000 hours  from 2014-2016
Worked about 250 hours in 2017
Had 0 hours from 2018-2021
Re-hired and worked 900 hours in '22

So it would appear that there was a 5-year break in service.  Does that mean that this participant needs to re-establish eligibility, or do they become eligible again from the re-hire date?

Participant 2:
Was eligible for the Plan, having worked 1,000 hours  from 2014-2017
Had 0 hours from 2018-2021
Re-hired and worked '22

This participant only had a 4-year break in service.  I believe this means that they do become eligible immediately upon re-hire, since there was no 5-year break.

Is that accurate for both participants?