Hi, I have a Plan that expected to terminate and pay out benefits prior to June 30, 2023.  However, my document vendor (Ft William) doesn't yet have its Cycle 3 document ready, and says it won't have the doc until July sometime.

All the benefits have been calculated for a June distribution. This is a small, non-PBGC-covered Plan and we are not submitting to IRS.  Would you distribute anyway, and then update the document in July?  Or?  If we wait to distribute until after the docs are completed, we will have to recalculate everything.

Thanks in advance.

Hello, 

My client just recieved a NMSN for an employee on May 30th and the date on the NMSN in the top right corner is May 22nd (the date for which the letter was produced and sent I believe). The recieving department sent the notice to Human Reources (Also the Plan Administrator) in early June at which time the HR team deemed it was a legitimate notice. The earliest enrollment date would then be the first of the following month from my understanding, making the effective date 7/1?

The Medical Carrier agreed that this effective date was properly determined, however the Dental & Vision carrier is saying that we have to make the benefits effective on 5/22 since that is the date on the NMSN. The Employer didn't even have the notice on 5/22 so this seems incorrect. Has anyone heard of a carrier doing this? Maybe it's an inexperienced employee at the carrier that we are dealing with or maybe I'm interpretting the NMSN instructions incorrectly.

Any insight is greatly appreciated. 

The client employees few salaried employees and a bunch of hourly-paid employees.  Many hourly employees are scheduled to work 1200 -1400 hours per year.  Is it a "reasonable classification" to define the "hourly employees who are scheduled to work less than 2,080 hours per annum" as an "Ineligible Class"?   I do not need them for testing as my plan would pass the ABPT with very comfortable margin.  What are the issues with my thinking?  Let's assume there won't be any employees who are scheduled to work part-time but later show up with a gazillion of hours.

We are running into a situation with our recordkeeper involving the valuation date for QDROs.  In the past a determination date was some date in the past chosen by the participant and alternate payee, and was usually the date the participant and spouse were separated or divorced.  The AP's account was then valued by taking the balance as of the determination date, adjusting for earnings, contributions, withdrawals or whatever, and then splitting the account.  The APs account could then be administered just like any other account; payment could be requested or deferred, investments chosen etc.

Now the recordkeeper has unilaterally decided that the valuation date is the date of transfer so there are no earnings calculations needed.  This is not what our QDRO procedures or models provide and we have a number of DROs in process which are expected to stipulate the prior method when they are submitted to us for approval.  We are getting pushback from participants who want to divide the account based on a specific past date and who are unequipped to calculate several year's worth of investment earnings on their own.

The recordkeeper is calling their new process "industry standard" but in my years in the industry as a TPA the majority of my cases have used the prior method.  Do agree this is industry standard?  I have not been a TPA in 10 years so perhaps the industry has moved on without me knowing?

401(k) plan sponsor (S) is being acquired in a stock purchase by Buyer (B), which has its own 401(k) plan.  S intends to terminate its plan before the stock purchase transaction closes.  S's employees will be hired by B upon closing, and will be immediately eligible to participate in B's plan.  S will continue to exist as a subsidiary of B, though without employees, and will retain the EIN it has now.  The TPA for B's plan contends that the successor plan rule is violated thereby and proposes merging the plans upon or after closing instead.  I believe that if S terminates its plan pre-closing, the successor plan rule is inapplicable, even if S survives under its own EIN as a subsidiary of B.  Any thoughts on who has the better argument?

I also believe that S can terminate this safe harbor match plan mid-year without advance notice to participants and still have safe harbor and top-heavy protection for the short plan year ending mid-2023 because S is being acquired in a Code Section 410(b)(6)(C) transaction.  B's TPA says I'm wrong about that, too.      

Company is establishing a new 401(k) safe harbor profit sharing plan with EACA features.  The plan will have an effective date of 1/1/23.  I'm told no one will start deferrals until 7/1/23, which will also be when the auto-enrollment would start.  Notices would not have been provided to participants until recently (middle of June).  I know you can start an EACA mid-year for new enrollees only, but in the case of this new plan would that still apply?  Or would everyone as of 1/1/23 that hasn't opted in also be auto-enrolled?

Due to clerical error we had several late deposits for an employee in 2022 and 2023. I'm trying to fill out the form 5330 but i'm extremely confused on how to handle Schedule C Line 2. If there were multiple late deposits do I do one line per late deposit/missed earning amount or can I do a total? For the deposits from 2022 that weren't paid until 2023 do I need to put those on the form twice, or do I need fill out the form and submit it twice with those numbers? 

I'm the one who made the errors and am trying to avoid the $1200 fee associated with our ERISA people filling out the form on our behalf. I appreciate any help I can get as our accountant nor our plan consultant has been any help. For what it's worth the excise tax amount on the missed earnings is $17.66.

Does anyone have a view on whether the reduction of the excise tax to 10% for a distribution made during the "correction window" is retroactive? In other words, would an unpaid RMD for 2022 be subject to the 10% excise tax if the distribution is made during the "correction window" or does the correction window apply only to RMDs beginning in 2023? 

I know 403(b) Plans do not have to file a 5330 for late deposits of deferrals/loan payments.

But does one need to be filed for late ACP refunds?

We have just found 402(g) violations in a plan for both 2021 and 2022 and wanted to make sure their corrections are handled properly.  The violation occurred to only one participant, the same HCE, for both years, in a 27-life plan (the excess now totals about $6,000).  The violation can be self corrected within three years if it's considered significant, and even longer if it's insignificant - no VCP application is needed.  Is this accurate?  Thanks in advance for any guidance.

Client wants to match his employees deferrals dollar for dollar.  He needs to entice people to work for him.  In addition we need to build into this formula a SH match as well.  Can this be done?   Say 4% SH match + what... 100% company match over 4%?   Is it that easy?  (that just came to me)

Hello Pension Gurus,  I have a 401k Plan that had a participant listed as PRN on the census data.  In the filing of Form 8955SSA for 2016, she did not get put on the form with a deferred vested benefit.  And subsequent years, was completely missed.  I was hoping to do a DFVCP filing and pay the fee for a late filing on only the 8955SSA.  But I cannot find where you can submit this form alone, without also filing for a late Form 5500SF.  Anybody have experience in correcting an oversight like this?  Thank you for any information you can give me!

A participant who terminated in 2017 applied for and was approved for a loan in March 2022.  The participant is making repayments on a quarterly basis outside of payroll.  The plan document states that loans are allowed to only active participants and repayments must be made through payroll deductions.  It turns out that the participant's termination date was not entered into the platform which was what enabled it to be initiated.  The Plan Sponsor discovered this during 2023 and wants to know how this gets corrected.  Thoughts?

Assume, for a retirement plan:

A beneficiary designation states that the participant has no spouse.

That statement is logically consistent with the employer/administrator’s records about the participant’s health coverage.

Nothing in the plan’s documents requires that a beneficiary designation (if it needs no spouse’s consent) be witnessed by, or acknowledged before, anyone.

The beneficiary designation is not made through the plan’s identity-controlled internet site.

For such a beneficiary designation, do you:

Require an original ink-on-paper form showing the maker’s signature?

-or-

Permit a fax, scan, or other copy as a possibly valid beneficiary designation?

For either answer, why do you require ink-on-paper, or permit a copy?

If you permit a copy, what controls do you use to guard against a writing that is not the participant’s act?

A plan has a trustee-directed profit sharing brokerage account and individually directed 401(k) accounts at a recordkeeper.  They allow for hardship withdrawals and immediate distributions upon termination of employment.  They are transferring the pooled PS into the individually directed accounts.  Do they need a blackout notice to make employees aware of period of time that they cannot take a distribution from pooled funds?  Or are pooled accounts entirely exempt from blackout notice requirements?  Thank you!

Am I correct in thinking that, since the determination for who is a high-earner for purposes of catch-up contributions is based on the calendar year, and catch-ups are generally determined based on the calendar year, then all plans with 2023 high-earners would need to have Roth available starting January 1, 2024 to allow catch-ups after January 1, 2024, even if the plan is an off-calendar year plan? 

Let's say I have a 401(k) plan with a 6/30 plan year end, and currently does not allow Roth.

I think I'm correct that the determination of the high-earners for purposes of determining whose catch-up must be Roth is still determined using the 2023 calendar year.  

So let's say I start the new plan year 7/1/2023 with no Roth provisions.  I come to 12/31/2023 and determine there are participants that earned more than $145,000 in 2023.  Some of those participants like to front-load their deferrals early in the year.  

Would I be correct that we could not allow any catch-up from 1/1/2024 to 6/30/2024 if we do not amend the plan before 6/30/2024, since we have high-earners in the prior calendar year, and no Roth option?

If we do amend the plan starting 7/1/2024, then everyone would then have the opportunity to make their 2024 catch-ups?

Thanks.

If an employer issued a forgivable loan to an employee (say, forgiven in three years if the employee continues working and if not, must be repaid), I had understood that the forgiveness would be included on a Form W-2 at the time of forgiveness and subject to withholding, FICA, etc. at that time.  I also understood that the alternative, if it was not considered a bona fide loan, is that the amount of the loan should have instead been included on a Form W-2 at the time of funding. 

Reading through some of the case law on this it seems like some employers are actually reporting the forgiveness on a Form 1099-C and not a W-2.  Any thoughts or guidance on this front?  I am concerned with the idea of an employer reporting through a 1099-C rather than a Form W-2 but haven't yet found the authorities on this.  Reporting at the time of forgiveness on a W-2 seems a safer approach.

Seeking opinions on this, and whether the Safe Harbor Notice (depending upon content) suffices.

The Notice must be furnished in connection with the annual open election period, or if there is no such special period, within a “reasonable time” before the beginning of each plan year; it notifies the Unenrolled Participant of their eligibility to participate in the plan, and the key benefits and rights under the plan, with a focus on employer contributions and vesting provisions, and provides such information in a prominent manner calculated to be understood by the average participant.

So, if your normal Safe Harbor Notice merely directs the employee to the Summary Plan Description for Employer contributions other than the safe harbor contributions, then absent further IRS guidance specifying otherwise, it appears that the safe harbor notice couldn't satisfy the requirement. On the other hand, if the safe harbor notice either includes the employer contribution already, or is modified to do so, then it would seem the safe harbor notice could qualify, perhaps with a few other alterations as well.

Any other thoughts/opinions? Are you planning to consolidate these two Notices, or keep them separate? I'm leaning toward separate as ultimately being cleaner and easier in the long run, not to mention that lots of plans aren't safe harbor, so would need a separate Notice anyway...

Does anyone have an opinion on whether the SECURE 2.0 one-time $50,000 QCD to a split-interest entity counts against the overall $100,000 annual limit?

Seems to me that the legislation doesn't clearly answer that question.

Does anyone have an opinion on whether the SECURE 2.0 one-time $50,000 QCD to a split-interest entity counts against the overall $100,000 annual limit?

Seems to me that the legislation doesn't clearly answer that question.

Thanks.