Plan has standard eligibility for ER contributions of 1000 hrs/1 yr of service.  If 1000 hrs not reached in 1st 12 months, determination period switches to calendar year.

Question --> Let's say an employee works a couple months, makes (immediate) eligibility for 401(k), but not for ER contributions.

Couple years later (< than 5), ee is rehired.  I'm wondering if that first period of employment means determination period must switch to calendar, or if plan calculates from date of rehire.

Example

• EE works 5/1/20 - 7/15/20
• EE rehired 8/1/22 and works over 1000 hours in 2022
• Eligibility for ER either 1/1/23 or 8/1/23

I have a client who has 8 employees, 6 of which whom earn a salary and 2 of which who get distributions from the fund each month as their compensation. The distributions are not W-2 compensation. Is there any way that these 2 employees can contribute to a 401k sponsored by the employer? Is there anything on the plan design that would allow for this compensation to be considered qualified compensation for their 401k? 

If that is not the case is there anyway that they can contribute on an after tax basis or since they technically are not earning any income and since a person cannot contribute more to their 401k then they earn in a year are they unable to add to this 401k? 

The employer has a plan that provides all sales employees (having worked a specific number of years) will continue to receive commissions on the book of business they created as employees for several years past retirement.  This is an actual plan, not individually designed agreements with the individual sales employees.

Is this an ERISA plan?

It clearly has an ongoing administrative scheme, it provides for a deferral of income past retirement, and provides for retirement income.

Our concern is that the plan is broad-based.  If it were limited to a "top-hat" group, I don't think we have an issue (because we can take some relief from the "top-hat" rules).

This appears to be a pretty common type of plan, but I can't find any guidance on the topic.  Is there some exception I'm not seeing?

I have a plan that has multiple Participating Employers in it. One of those PE's terminated with the original Employer 401(k) plan. They are wanting to start their own 401(k) plan. Would this cause any issues?

We filed an EZ form as final as of Nov 2022 on a 2021 form.  We received a Filing Received acknowledgement but with a warning message because of the short year and on a 2021 form I  suppose.  

Is there a way I can confirm the 5500 was filed with the DOL?  It isn't searchable on the regular search site of course.  But I wonder if there is a help line or other practitioner site.  Seems I knew of one at one time.

Tom

Hi

This is a first for me.

Existing calendar 401k plan with Corp A. Becomes CG in November with Corp B

Corp A has a 401k plan with eligibility of age 21/1year of service with 1000 hour requirement

Corp B has a 401k plan with eligibility of age 21/3 months of service.

When will the 2 plans need to be tested together?

How about if each plan passes the 410b and also 401a4 on their own, can they be tested separately? Top heavy issues aside.

What else am I not thinking of or not asking? May be something related to 410b6?

Thank you.

Brand new 401(k) plan, effective 1/1 of the last year, adopted the year before so 401(k) able to start on 1/1. It's not a safe harbor plan.

Took them awhile to get going with the admin of the 401(k) so they started 2/1 and only matched based on comp from 2/1. Match was done on a payroll basis.

The definition of comp is full year, so I believe the participants who contributed greater than the minimum required for the 3% match have been undermatched. Advisor disagrees. Curious of thoughts.

With the understanding that the entity sponsoring the plan is usually the employer, this question arose in connection with a transaction where we just found out the seller, and plan sponsor, is a trust.  Forgive me if there is an obvious answer, but wondering if, as a technical matter, a trust can be the plan sponsor of a 401(k) plan?  Thanks!

I'm having trouble determining whether commission payments constitute nonqualified deferred compensation ("NQDC").

Under the arrangement, employees build a book of business.  After they leave employment, they continue to receive commission payments for a set number of years based on the book of business they built.  Is this not NQDC?

From my view, the compensation is earned before employment ends.  A participant in the arrangement has a "legally binding right" to the compensation at the time the employee terminates employment.  It does not cease to be a "legally binding right" at the end of employment, since whether or not they get paid depends on the set terms of the arrangement (rather than discretion of the employer).  One might argue there is a substantial risk of forfeiture, but that seems tenuous here, since most customers will continue receiving services from the employer, so the risk of forfeiture is not substantial.

I know there are special rules for commission payments that allow you to treat the payment as "earned" when it is paid to the company by the customer.  But those special rules specifically apply with respect to when a payment is treated as "earned" for purposes of making deferral elections (not the case here).

So, give the above, aren't the post-termination commission payments NQDC?

Hi

I am only asking this for entertainment and second guessing myself in case something I missed/forgot.

Non PBGC covered CB plan. Terminated and ready to distribute assets

6 rank&file - very small lump sums (total 30k out of 2M)

1 former owner (terminated 2021) - nowhere near 415 (120k)

2 non-owner HCEs - nowhere near 415 (700k)

1 spouse of an owner - nowhere near 415 (150k)

2 owners - not at 415 limits (1.1M but only 1M remaining - split 50/50)

Plan is underfunded by 100k. One of the owners insist that the allocations have to be made prorata as if a terminating PS plan

Plan document states "Assets will be allocated in a manner which does not discriminate in favor of Highly Compensated Employees"

Checked with document provider and they agree that this is a language corresponding to 4044 or RR 80-229.

Other than paying first 3 on the above list and then allocating the rest between the 2 owner and spouse, how else would you allocate theoretically?

Thank you for your comments

I thought I was right on this, but I'm looking at what the prior TPA did last year and it doesn't match up, so now I'm questioning myself...

MEP has immediate entry for deferrals and statutory (1 YOS/ semi-annual) for SHNEC and PS.  This particular adopting employer is top heavy by percentage but is choosing to only do the safe harbor this year.  This makes them exempt from the TH minimum, correct?  As in, those who are eligible for the deferral only (like those hired in 2022) don't need to get any allocation.  Just like any single-employer plan.

I was pretty sure of this until it came back to me that the TPA who did this calc for 2021 gave the 2021 hires a top heavy minimum for 2021 because they are top heavy (and they also did not do any profit sharing in 2021).  To me, that's an error and I don't intend to repeat it, but I figure I'd better double-check, so... is there something MEP-specific that I'm overlooking?

Thanks.

A participant has an expense that is due immediately that would qualify under a safe harbor hardship distribution.

Since payment is due, like, right now and they pay it with a credit card, can they use a hardship distribution to reimburse themselves for that cost?

I did a VCP Submission for my client and submitted it June 10, 2022. I have dutifully been calling the VCP "check the status" line every couply months or so, and continue to get the message that "the case has been assigned to an agent, don't call us back for at least another 60 days." I knew the IRS was behind, but are they really a YEAR behind? Anybody else with recent experience using VCP?

Good afternoon.  I think this is a silly question, but I just wanted to make sure I'm not overthinking it.

I know the Gateway for a Cash Balance/DC Combo Plan is 7.5%.

An employer can give more than that, correct?  The owner actually isn't taking a Profit Sharing contribution for himself.  He'd like to give the employees a little bit extra (about 10% into the Profit Sharing).  I just wanted to make sure that wouldn't cause an issue (I don't think so, since he's being more generous, but maybe I'm overthinking it).

Yes, it was 26 years ago today that Austin (one of our message boards luminaries) burst upon the scene with the release of the first movie in the series.

I have a plan where the required distribution language reads "by January 1st of the calendar year following the calendar year in which he/she attains the age of [70 1/2]".  I suppose this qualifies as meeting the RMD requirements, but it struck me as odd and wanted to ask around and see if I was missing something. Can a plan sponsor select a slightly earlier date for the RMDs and not run afoul of the rules? (They must have gotten a determination letter at some point, so it passed muster in this form.) It's an ESOP if it matters. (And I'm putting aside the SECURE 2.0 Act's updates to the ages for now.) Thanks!

My thoughts are that the primary responsibility for determining an HPE and remitting Roth Catch-Up for Highly Paid Employees is mostly a payroll function.

The TPA/Recordkeeper may be able to add processes and tools and communications to facilitate the proper administration, but ultimately the payroll companies will have to enhance their systems to accommodate this SECURE 2.0 provision.

I am curious to know where the 401k community lands on this process?

I'm having a hard time finding what I would call "clear" guidance on this, so just looking for opinions. This NOT a plan termination.

Participants terminate employment, get their 402(f) notice, and notification that if they don't respond within 30 days, they will receive a lump sum cash payment. (This would be for accounts less than $1,000.) Some of these accounts could be Roth. 

Some amount of time passes. Let's say at least until the following calendar year. I'm not at all sure proper steps have been taken (internet search, etc., etc. as outlined in DOL FAB 2014-01) to determine if these people qualify as "missing participants." "Missing participants" where the amount is less than $1,000 have a specific procedure in the plan language - basically, roll to an IRA or treat as a forfeiture.

So, these are "unresponsive" participants - they just have never cashed the the checks. Now the Plan Administrator decides to have these amounts rolled to an IRA. My question is twofold - first, is this allowable? Second, if so, or at least defensible, how to report? The distribution has already been reported, and if taxable, has been taxed.

Interested in what people perceive as a "best solution" where it appears that no solution is perfect. Thanks.

Fact Pattern:

 403(b Plan EXCLUDES employees who normally work less than 20 hours a week.

 Employee was working full time for a few years and now is on an abbreviated schedule of 15 hours a week.

 Question:

 Does this person continue as a participant in the plan?  Or are they now no longer a participant because they are in an excluded class?