I've been in this business for 25 years and I starting to read about and experience clients being stonewalled trying to rollout or take distributions from some major 401k players. I hesitate to name names but I'd like to know who else is seeing this or having trouble helping with or seeing participants struggle with getting their money out when there aren't any significant complicated reasons. 

Fidelity can do it over the phone in 5 minutes and people are taking more than 6 months to get a rollout (rollover/distribution) with other companies. 

Anyone having this issue with a record keeper or custodian or any other financial institution?

My client (company A) acquired a company (company B) in 2021.  2022 was the final year of B's 401(k).  Since it was a SH plan with a generous plan design, ERISA counsel told us we could not merge the plan until end of year, 2022.  Totally fine.  Blackout started for participants on 12/28/2022 and the final asset transfer happened on 01/05/2023.  

Are we able to file the 2022 5500 as the final 5500 and mark that all assets have been transferred?

I have a client who has a 401(k) in a PEP plan.  They want to leave the PEP and transfer their existing employee balances to their new 401(k).  Can they do this without triggering a distributable event?  In short...they just want to escape the PEP and have their own standalone plan without allowing their employees to withdraw their existing funds.  I was assuming they can...but wanted some thoughts on this.  Thanks!

I'm taking over a client and they are looking to terminate their existing, traditional Defined Benefit Plan to instead utilize a Cash Balance Plan moving forward.  I know the limits are lifetime limits, etc.

The question is, are they allowed to terminate one and open the new CB Plan within the same year?  Someone is telling them that they can't, so I wanted to double-check.

Thanks!

Background

403(b)(9) non-electing church plan

The employer did not send in May and June (2023) employee deferral contributions timely. 

The deferrals were deposited to the plan in mid-August 2023.

Question

I was looking through RP-2021-30, .05(9) that states: 

Safe harbor correction methods for Employee Elective Deferral Failures in §401(k) plans or § 403(b) Plans. (a) Safe harbor correction method for Employee Elective Deferral Failures that do not exceed three months. Under this safe harbor correction method, an Employee Elective Deferral Failure (as defined in section .05(10)) can be corrected without a QNEC for missed elective deferrals... [if the stated conditions are satisfied]

Are late deferrals that were deducted but not sent timely to the plan included in .05(10)? I did not notice them explicitly mentioned so I thought I would tap into the wisdom abound on this site! : D

It will be a sizeable correction if there is a need to adjust for earnings, so I want to be sure there is not a safe harbor "out" before the process is started.  TIA

Can an ESOP contain a provision allowing the plan sponsor to elect in its sole discretion to diversify a portion of participants' accounts (as long as the diversification is nondiscriminatory and applies equally to HCEs and NHCEs) and buy back the shares? 

I have been unable to find any legal authority on this either way. Maybe I'm overthinking it? I'm aware of the authority on rebalancing participant accounts, but don't believe that would apply here, and most information on buy backs speaks to buying shares from terminated participant accounts only. 

Thanks in advance.

So I have a plan sponsor come back to tell me that their plan excludes interns (which it does) and she is asking if the interns they have would be considered Long Term Part Time Employees.

So this is a good question.  These interns are W-2 employees.

I would think that we cannot exclude interns, unless they work less than 500 hours per year in the look back years?  I have no clue who they are or what hours they have worked, she only said "we do exclude interns and our interns stay on forever..."

Would interns fall under the "long term part time employee" category, or can they still be excluded?

Administer a small defined benefit pension plan that is sponsored by a corporation. The first plan year was from 10/1/2022 - 9/30/2023. The first plan year valuation was done on end of year basis.

Their CPA changed the corporation year to December 31, 2023 from September 30, 2023.

It makes sense to keep the September 30 plan year. However, we would need to change to a beginning of year.

Is there automatic approval when switching from end of year to beginning of year? 

Thanks.

Can a plan have a younger RMD age than the age required by law? The RMD is age is the latest age at which a participant must begin taking distributions, but is there a reason a 401(k) plan couldn't use a younger age than required? 

Put another way, can a 401(k) plan require a participant that turns age 72 during 2023 to begin RMDs by 4/1/2024? 

Suppose you take the approach that the 5,000 cash out limit will increase to 7,000 for 2024, unless the employer informs you otherwise.

Is there any dispensation on the timing of including this in the safe harbor notice? Or, realistically, issue an updated one once it is truly "known" as to whether or not, and exactly when, it is effective? I presume the latter...

Does anyone know when the Cost of Living Adjustments will be officially announced? I have seen many projections but nothing from the IRS.

Thank you.

I recently took over a plan for 2023.  Each participant has his own account, which the trustee directs (?) with MS

I convinced him the participants should be directing their own investments, the accounts will remain at MS.

Is there a blackout period, or will a notice to each participant that, effective x date, they can have the option to direct the account.

Dentists are know for having "prn" employees.  These people fill in vacations, etc.  Often they've worked in the past but left.  So on one hand they terminated some time in the past but they are still getting paid now and then and getting a plan contribution since they were previously eligible.  So if the person is 73, I supposed best to do an RMD to be safe.

Tom

I used to have a great chart of what the maximum allocation was in a cash balance plan. Rows were ages, and columns were different income levels. But the company who did that stopped doing it.  Anyone know of a good website?  I would figure there would be someone out there who would even have a little calculator (enter age, comp, etc and it spits out a funding range, etc).  Anyway, that chart was so handy  becaue you could give clients on a call a quick idea of the numbers being discussed without having to go to the actuary.  Obviously you follow up with the actuary for the real numbers but again the chart was just really handy.

I'm assisting in a plan merger of 2 DB plans (same sponsor), and preparing the IRS Form 5310-A.  Line 5a requests an actuarial statement showing compliance with IRC 401(a)(12) and 414(L).  Anyone willing to share information about the form and substance of such attachment?

With this effective 1/1/24 and I think limited guidelines on how to enact this, I'm thinking that it can be administered as follows for a plan that deposits match on a payroll basis:

• Participant provides a recent statement of the loan showing payment amount, and amortization schedule, or length of payment plan
• Payroll then treats equivalent payment per payroll (loan pmt x 12 / (24 or 26) ) for standard payroll schedules.
• Payroll then sums up 401(k) + equivalent loan payment and applies match formula on payroll basis.

Note these are just initial thoughts.

The Form 5500 preparer will not net new forfeitures collected in the year with the distributions, but is showing them as "other income".  Is this correct?

What are the best options for someone who wants to offer their 1 employee a retirement plan? 

This would only be for the employee, not an owner. 

Hello,

We just got our statements and I realized I did not get any contribution in 2022 due to having a baby. We require 1000 hours and I had 802. I took a look at our contract and looks like they should be crediting me for those hours. I brought this to their attention and they said I am wrong because I was not paid by my employer I was paid by the state. I’ve attached the pages of our contract with the information regarding leaves. Microsoft Word - 2020 New Plan SPD - 3155.pdfesop contract.pdf

Microsoft Word - 2020 New Plan SPD - 3155.pdf esop contract.pdf

So, employer (A) is purchased in a stock sale by Employer (B), let's say on April 1 (yes, humor intended). Employer A has a 401(k) plan, Employer (B) has a 401(k) plan. Both are calendar year corporations. (A)and (B) become a controlled group as of the date of the purchase. Most of the employees of (A) transfer to (B) as of the date of purchase

Employer A does a plan termination as of November 30 of that same year, and DISTRIBUTES all assets, except to the now employees of (B) who ELECTED to have their funds transferred to (B)'s plan. Others chose to receive a distribution. (I'm going on incomplete information here - all details not yet known).

So when there is an impermissible distribution of deferrals under the Successor plan rule, what's the correction? Anyone gone through VCP and gotten an approval for a correction that doesn't require heroic and "unreasonable" results?

P.S. - I know we've discussed this before - and in a VCP filing where participants rolled to the new plan, we'd probably ask to consider these as "transfers." Or something like that. It's more the participants who rolled it out to an IRA, or took in cash that I'm not sure of.