Question for small, "boutique" TPA firms.  Would anyone know or be willing to share the name of a Cyber auditing firm that they used and had a good experience, especially price-wise?

Thank you.

Fiscal cash balance plan. 6/30 year end.

Plan terminated 6/30/2023.

Spouse of owner participant is required to get first RMD due to becoming 100% vested as of 6/30/2023+attaining age 73. He has only 3 YOP so was vested in year 3 which ended on 6/30/2023.

There is a possibility that the distribution will be postponed to 2024 as there is a contribution due.

1. When in the first RMD due 12/31/2023 or 4/1/2024 (or prior if distribution done earlier)

2. If due 12/31/2023, because the plan is in termination status, can the RMD be calculated based on account balance?

Thanks

The Secure Act requires annuity illustrations each year for DC plans. There is a calculator on the DOL website for pre-Secure Act but it is worthless for Secure act Assumptions. Specifically, it shows joint and 50% assumptions, but the DOL requires Joint and 100% assumptions for the Secure Act statements.

This is the out of date DOL Link: https://www.askebsa.dol.gov/lia/home?_ga=2.36006498.358269527.1690289872-1185248543.1690289872

Any ideas on where to get a free calculator that will produce the Secure Act assumptions? 

Thanks.

We have a takeover client that has 90-day wait for deferrals and 1 year wait for non-safe harbor match and PS with entry on the first day of the plan year.  That is fine.  But they want to change to a 1 year of service for deferrals too.  I will tell them they have to change to semi-annual entry dates for deferrals.  I want to tell them semi-annual for all contributions which is very standard with our clients.  I suppose they could still have only one entry date, first day of plan year, for match and PS only since they could require 2 years to enter for those sources, right?  I will strongly recommend against one entry date since I believe they or their payroll company will mess up the pay-period match.

Comments are appreciated. Tom

I have a client we just took over that has a 457 Plan.  The document I was given doesn't tell me much, unfortunately.

I just got the following question, so I wanted to see if anyone had any insight:

"They have an employee that has reduced their hours and are no longer making $120,000 a year. They have been eligible for the 457 in the past – are they still eligible? Or do they have to meet eligibility each year?"

Thanks in advance!

This is in relation to a DC plan, deferral and match sources. The HR individual inadvertently entered a termination date for an active participant. Participant receives a notice from the recordkeeper stating you are eligible for a distribution and participant cashes out 100% of the balance. Participant was 100% vested, age 35, not an owner, not a Key, not an HCE, all funds in the account were correctly calculated.  

Do you think the SECURE 2.0 overpayment rules are cut and dry to let this distribution go without any action by the administrator? Or do you think we are waiting for guidance and should consider following the prior rule? Or maybe would you say this is not the definition of "overpayment" as defined by EPCRS?

Thank you

We have a plan that was adopted in 2022, but we have elected to treat it as adopted in 2021. We have already file the 2021 Form 5500-SF, including the SB.

Now we are working on the 2022 Form 5500-SF, and the instructions for Box D in the 5500-SF instructions and the instructions for the SB both say that we need to check that box and attach the signed 2021 signed SB, with no mention of whether or not the 2021 form 5500 has already been filed. 

Has anyone here seen any guidance on this? Do we just check it and attach the 2021 SB here per instructions? Or is this only in place for if this is the first filing for the plan?

I'll probably play it safe and check the box/attach a copy of the 2021 SB, but this seems counter to the point of the box.

Thanks!

Doug Fresh

Plan's been frozen so no new benefits after June 30.

Plan's staff contribution credits tend to suck so bad that they always have to do an -11g amendment to pass 401(a)(26).  (Annual $500 bucks each, allocated formally as $125 for each quarter they're active during, and then the -11g stuffs more into Q4 as necessary for folks.)

Well now they're only going to be getting $250 for the most part. 

But is there any "accepted practice" for whether it's appropriate to measure the 0.5% benefit level relative only to the compensation through the freeze date?  Otherwise everyone's going to be at HALF their typical accrual rate, if it's expected to be measured on full year's pay.

--bri

For those planning software changes and service changes following law changes from the SECURE 2.0 Act of 2022:

“The federal government could shut down in October. Here’s how and why.” https://www.washingtonpost.com/business/2023/government-shutdown/?utm_campaign=wp_the_5_minute_fix&utm_medium=email&utm_source=newsletter&wpisrc=nl_fix

An Anti-Deficiency Act government shutdown does not stop every function. But if Labor or Treasury has an appropriations lapse, its work on rulemakings and interpretive guidance would pause until the shutdown ends.

The most recent shutdown lasted 34 days.

Even if we set aside optional changes, what happens if an absence of guidance results in no software for provisions required as a condition of continued tax qualification?

Trying to learn about this type of business entity and I'm having trouble finding something definitive regarding their abilities to sponsor a 401k plan.  I found a lot of info regarding their involvement with MEPs, PEPs, unions, and vebas but not anything discussing whether a single employer PA can sponsor a plan.  Specifically, can a realtor who, although associated with a large real estate firm, is individually a PA, sponsor a 401k?

I've also read that PAs are a type of corporation that can be treated as LLCs - does this mean owners can either be paid via W-2 wages, schedule c income or K-1 income depending on how the PA  chooses to be taxed?

Plan has the principal residence safe harbor provision. A participant is actively looking to purchase a multiplex building (4 units). He wants to live in 1 unit as his principal residence and lease the other 3 units. He is requesting a hardship distribution to purchase the building. Does this fall under the principal residence safe harbor for hardships? My concern is that the participant is technically purchasing more than his own residence. 

Any thoughts? 

Currently working on putting together a good listing to locator services in finding missing or deceased terminated vested employees under a plan to keep a more revised and updated copy at my disposal. Some clients currently working with have participants that left and may not have been able to keep in contact with. Using PeoplesFinder.com, EmployeeLocator.com and Legacy.com but want to see if there are others out there that someone might recommend and would be deemed compliant with the DOL/IRS? 

So, 401(k) plan with a recordkeeper (XYZ) charges a fund fee/Advisory fee/charge/whatever you want to call it - of (x basis points - already determined by the Plan Fiduciary to be "reasonable"). This fee is billed to the EMPLOYER, who pays it, so that participants' accounts are not charged this fee.

Employer now wants this fee to be charged directly to the accounts of terminated participants only.

Assuming this fee is "reasonable" - and some procedure can be worked out between the recordkeeper and the Employer as to the mechanics of how it is processed - I'm not sure it is necessarily a problem, but it certainly makes me squeamish. Would probably pass BRF testing - I'm more concerned about possible PT problems.

Do any of you have plans utilizing such an arrangement? We have a few plans that charge a nominal administrative fee to terminated participants only, but nothing like the above arrangement.

We have a CB plan terminating with excess assets. The CB benefits are offset by a DC plan. Upon plan termination, excess assets will be allocated in a non=discriminatory manner. The question is how we properly account for DC balances in computing the allocation of the excess assets.

I would think, that so long as the allocation of the excess could be reflected in a formula that would still pass 401(a)(4), taking into account the offset, it should pass. The alternative would be to allocate assets to all participants, even those who never had a positive benefit in the CB plan due to the offset.

Guidance on this seems sparse or non-existent. Thoughts?

We did a proposal for a CB plan for a sole prop, effective for 2015.  Since few if any brokers understand cash balance plans, I insisted on going on the call.  Broker refused to have us as TPA attend initial sales call sold plan to a physician 2 NHCEs who have been terminated for years and are fully vested.

Physician was told by broker that he could contribute $250k per year.  Small wonder why he did not want me on the sales call. The contribution was close to the max in the range, but still short of the max PVAB for plan years prior to 2021.

For 2021, plan definitely overfunded.  Client on extension for 2022, I quote a $0 as plan definitely overfunded, with a -11% ROR.

Client over 70, not sure, but can he rollover a portion of the overfunded to an IRA and possibly make a contribution?  Would just kick the can, I realize.

Alternatively, freeze the plan and establish a PSP for 2022 as long as the contribution made and the plan dated prior to the due-date of the extension?

Of course another alternative is to drop the client entirely, as a waste of my time.

Secure 2.0 Roth Catchup contributions.  The information indicates that it applies to taxable years beginning after December 31, 2023.  Since catchup is a participant contribution and they used the word Taxable years, does it impact the catchup do to plan limit, 415 or ADP Catchup in early 2024?  

Example:  Plan year is 2/1/23-1/31/24.  Plan fails the ADP test.  It is my understanding that any catchup due to and ADP failure become catchup as of the last day of the plan year.    With secure 2.0 does that mean, anyone over the $145k threshold, their ADP catch up must be Roth?  If so what do you do if they did not make enough contributions in 2024 to cover the ADP catch up amount.  

Deleted 

Plan is a 401(k) Safe Harbor Plan that includes a New Comparability Profit Sharing Allocation.  The Key Employees only "participate" in Deferrals and Safe Harbor Matching.  Due to the inclusion of a life policy which has premium paid by Profit Sharing Contributions, there is one Non-Key who get a Profit Sharing Allocation.  Does the inclusion of this Nonelective Contribution to one Non-Key Employee (which does provide Minimum to this person) require that a Top Heavy Minimum be provided to other Non-Key Employees?  I suspect the answer is "yes" since the Plan is doing a contribution above the "Safe Harbor Contributions", even though that contribution only goes to Non-Key Employees.

If I do an in-plan rollover of my 401k account to a designated rollover account in the same plan, is it taxable in the year I do the direct rollover since I am converting pretax money into after tax money?  

Good morning everyone.  I know someone can have primary and secondary insurance, but we have a participant in a self-insured Plan asking if they can take out a second policy from our Plan to help diffuse some of the costs.  The argument is that you are allowed to have two plans, but I can't seem to find anything that says the primary and secondary can't come from the same Plan.

Does anyone have any guidance?

Thanks in advance!