If a corporation (A) changes name, entity type, and gets a new EIN for the new corporation (B), is there any reason why (B) can't assume the assets/liabilities of the existing corporation (A) Section 125 plan, similar to what often occurs in the qualified plan world? I don't see why not, although Section 125 and the 125 regs don't appear to address this. But there is some info in RR 2002-32.  With all the mergers/transactions going on, I assume this happens all the time?

A non-spouse beneficiary has elected to leave her inherited funds in the 401(k) plan. The plan does not allow annuities. She is married but does not wish to name her spouse as sole beneficiary of her assets in the plan. Is spousal consent required?

We have a new client that just realized that a '21 Matching contribution was missed for a few participants.  The question is do they need to also add interest for the late contributions?  I believe that since the market is down, that no interest was needed since the participants have actually benefited from not being invested in the market.  I just wanted to confirm that the stance was accurate.

Thanks!

I'm not a DB person, but a question came up as to required amendments for the past "several" years. These are a couple of plans that are evidently frozen (at what year I don't know) and that haven't been updated, apparently, for 4 or 5(ish) years. They are not cash balance/hybrid plans, not union, not governmental, (but one is apparently a non-profit) and apparently HAVE received IRS approval letters at some point in the past. They want to terminate the plans. I do not know if they are pre-approved plans or not - I'm speculating "not" but I don't know.

Looking at the IRS cumulative list, it doesn't appear that there is too much required in the way of DB amendments going back to 2016. Do you agree that this would generally be the case, or am I missing something obvious? Of course, if they are terminating, they would have to also be updated for CARES/SECURE as applicable, but that's a separate question.

Just looking for general thoughts. Thanks.

We're interested in working with an actuary who is an independent contractor and can provide all of the actuarial support electronically for the couple dozen or so DB plans that we have.  While we would do all of the administration on the plans, we would just rely on him/her to certify the schedule SB and AFTAP calculations, calculate RMD amounts, do cross-testing when DC plans are involved, and any other actuarial tasks that may come up in the normal course of a plan's life.  Please PM me if you are interested or know of someone who would be.  Thank you.    

Plan permits Hardship Distributions as per safe harbor rules. Limited to 401k and Rollover sources. Terminated Participants are permitted to request (plan delays termination distribution to close of plan year in which termination occurs). No limit to Hardship requests per year. Self Certification regarding other financial sources is accepted; documentation requested to substantiate need.  "Participant must provide supporting documentation or information, which may include bills, contracts, estimates, and other information that will support the request for a hardship distribution."

Former Terminated Participant has submitted a Hardship Request indicating it is "to pay tuition, related educational fees, and room and board expenses for the next twelve (12) months of post-secondary education for me, my spouse." The substantiation provided shows two multi-day programs offered by two prestigious universities (UPenn and Harvard) and a flight/hotel accommodations quote but none are actual bills or registrations with balances due. One program is live online for 5 days (4.5 hrs per day) in December 2022 and the other is 4 days on-site June 2023. Neither reflect whether a certificate or continuing ed of some kind is provided at the conclusion of attending.

Do the above multi-day presentations qualify for "post-secondary education" hardship purposes? And, must the substantiation reflect more than just what appears to be promotional materials for upcoming programs hosted by Universities? If there is no Participant specific registration how can the Plan be certain the request is for expenses that will be paid on behalf of the Participant as documented? Finally, does it matter that one of the events is next year, albeit within "the next twelve (12)months..."?

Thank you.

I have a city that is considered a second-class city in Nebraska (doesn’t have a population of more than 5k). They currently have a City Employee plan, Police Officers plan and a Firefighters plan. 

In Nebraska second-class Cities are not required to have separate plans for these different types of employees. That being the case, they would like to combined these three plans into one plan, having all current and future employees in the City employee plan. 

For the Fire plan, there’s no longer full-time firefighters, it’s a voluntary department now so no new contributions in that one - only balance is for one retired firefighter. There are police officers employed but they are getting the same contributions and vesting as the City employee plan.

I am newer to govenmental plans - are there any issues with merging these three plans I should be aware of?  A provisional comparison shows very few differences and they have already determined they would go with all the most lenient of the differing provisions.  What other issues should I be aware of, if any?  Thanks!

If I have a safe harbor plan either with non elective or match and I add in the new comparability profit sharing, do I have to run the ADP/ACP and top heavy tests on the entire plan or just the profit sharing portion? I know that the gateway requirement will need to be met, and that the non elective match can help offset this, but wanted to understand the testing requirements when adding profit sharing to safe harbor plans. 

I have a client who allows its employees to make a choice about cashing out their PTO bank or accruing additional time.  This no doubt triggers the constructive receipt doctrine.  Is it possible to use a haircut provision of 10% as a "substantial limitation" to work around the constructive receipt issue?  I know that these provisions were common in deferred compensation arrangements pre-409A.  However, I don't believe the IRS ever explicitly accepted the haircut approach but after losing several court battles opted for a non-enforcement approach.  As such, I am inclined to advise them against using a haircut provision.  Any input would be appreciated.    

We have a new comparability plan and I wanted to see if we can offset the cost of the gateway requirement with the 3% safe harbor non elective or if we have to give an addition 5% on top of that? Can we also offset it by a safe harbor match or no? 

Obviously this is all assuming that the 5% is lower then the 1/3 of the highest contribution to HCE's. 

Client restated for Cycle 3 in 2022 and after much discussion decided on the Flexible Discretionary Match primarily because they wanted 2 different match allocation groups.  They are matching 100% of 2.5% for NHCEs and 100% of 1% for HCEs on a pay period basis.   My understanding is the first notice is required for the 2023 plan year and within 60 days of making the final match contribution so likely in March 2024.

First question - is the allocation groups they chose - HCE and NHCE, not job related necessarily.   We can change that to define positions that are HCE if we have to such as CEO, COO, CFO, HR Director, etc.  Do you think HCE and NHCE is ok?   There are no working owners and so it is just prior year comp based.

Secondly - under flexible match, must the match allocation groups be mentioned in the plan adoption agreement?  Or can that be left unmentioned since this is a discretionary match and the notice isn't due until after the end of the year?

This is the only flexible discretionary match client we have - fortunately.

Thank you 

Tom

I understand Simple IRA plans.  Setup is an IRS form 5304 or 5305 depending on where the money is invested.  Contributions are put in an IRA in the participant's name.  I don't handle them.

So what is a Simple 401(k)?  Basically a 401(k) with only a 3% match or a 2% NEC? 

• For setup I see on the ftWilliam system there is a toggle to designate the 401(k) as a Simple
• A 5500 is required.  A 5500-SF?  Same filing deadline?
• You have to pull together all the financial info to prepare the 5500, Is an annual report prepared, participant statements?

Is it really just a "vanilla" as it can get 401(k) with Simple IRA eligibility requirements, no testing, no PS contribution?  

How do we determine who is an HCE if the company did not exist in the "look back" year? 

If a company may need to make a non elective to pass non discrimination testing at the end of the year does it matter in the plan docs if the non elective contributions are determined at the end of plan year or each pay period? I suppose per pay period would give them the option to do it earlier then end of plan year but wanted to make sure there are not other drawbacks to doing per pay period instead of end of plan year? 

Dr. Acula had a practice with several full time employees.  Dr. Acula leases a small space in the offices of Dr. Van Helsing. 

At some point Dr. Van Helsing takes over as the employer of Dr. Acula's employees.  As part of this agreement, the two parties agree that Dr. Van Helsing will make his staff available to Dr. Acula for up to 30 hours per month at a set rate.  The staff that will help Dr. Acula could be one of his old employees or a staff member who has always worked for Dr. Van Helsing, or any combination thereof.

Question

Does the prior service to Dr. Acula satisfy the leased employee condition that he or she has performed such services for the recipient (or the recipient and related persons) on a substantially full-time basis for at least one year?

Thanks!

Anyone work with Civil Service Retirement System (Postal worker)?  I am looking at a QDRO for a friend and wondering how something might be interpreted.

This is an older QDRO (2003) and is very short.  It splits the benefit according to the Majauskas formula, then is says, "The alternate payee shall be treated as a surviving spouse for the purposes of a joint and survivor annuity and pre-retirement survivor annuity purposes".  Thats about it - it is only 4 paragraphs long.

The participant has retired and the AP is getting benefits, but the question is, what happens if the participant dies.  There was nothing in the QDRO about required form of payment, but I am wondering if the Normal Form in the Civil Service Plan is a J&S and therefore, saying that that the AP is treated as the spouse for the J&S annuity means they will continue to receive a survivor's portion if the participant predeceases the AP.

Any thoughts?  I assume the only way to know for sure would be to ask the PA, but I wondered if anyone had any thoughts before we did that.

Are distributions from a 457 Plan processed through payroll?  That's what someone is telling me, I just wanted to be sure

an advisor called me today and asked about how catch-up contributions are treated when an ADP failure occurs. Teh participant in question always has deferrals returned due to failed testing.  However, since Catch-up is not included in the ADP test, how is it treated when there is an excess deferral due to a failed test? My guess is that they would not be able to use the catch-up, so all  of the catch-up would come out along with whatever excess was determined.  Am I correct in this?

The accompanying instructions to the Form 6088 seem to indicate collectively bargained defined benefit plans must file a Form 6088 along with a Form 5310 submission. While clearly collectively bargained defined contribution plans seem less expected to file a Form 6088, collectively bargained defined benefit plans seem to lack only the expectation to input information into g. Revenue Procedure 2021-4 seems to present confusion, as at a particular section, this guidance seems to waive the expectation to file a Form 6088 for all collectively bargained plans. 
 

Please provide further salient, affecting guidance.