Greetings, all. 

Recordkeeper for employer-sponsored retirement plans here.  I'm spinning my wheels, so I thought I'd consult the wisdom of the crowd. Here's my question:   Would it be feasible under ERISA/the Code for service provider to design a process to allow qualified plan participants to elect distributions over the phone without completing a form of any kind?  In other words, call center reps would orally guide participants through the election process, complete the online payment distribution form on behalf of the participant while they're on the call, and enter their choices in to our system. Totally verbal.   It's the call center rep that's completing/submitting the election, and the participant is doing everything over the phone.

Assume, for the sake of argument, that (1) we could authenticate the caller (2) the call would be on a recorded line and would be scripted, (3) the plan document doesn't say anything specifically requiring a written election, and (4) we would have a separate process to obtain spousal consents or other documents that required a notarized signature.

Personally, I don't expect this would be allowed.  I can think of about a half dozen reasons why this is a bad idea, (miscommunications, risk of offering "investment advice," etc.)  However, the business folks are convinced that "other companies do this" and that somehow it would easier/more efficient than just helping the participants go to the website and complete the online form on their own.  So if someone could tell me to find a definitive reason to shut this down it, I'd greatly appreciate it.

I have researched it and I cannot find much DOL/IRS guidance about it -- nothing forbidding it but nothing to suggest they would allow it either. The best guidance I can find seems to be 26 CFR 1.401(a)-21 - Rules relating to the use of an electronic medium to provide applicable notices and to make participant elections.  Maybe there's an argument that the call itself would be an "electronic medium" for making elections?  FWIW, it appears that the E-Sign act says that consumers could conceivably use an oral or voice signature to sign a document.

Has anyone had any experience with service providers allowing something like this?  'Please' and 'Thank You' for any insights you care to share! 

I have a 401(k) plan with an plan participant who retired from the plan and needs to take an RMD for Plan Year 2022. She has not taken any of her account balance out of the plan to date. My question is who is responsible (liable) to make sure she received her distribuition in a timely manner:

1. The Plan Sponsor or

2. the Plan Participant

In other words, if she does not get paid out, who was responsible for getting her paid out?

Rick

I am a bit confused on the W-4P and W-4R usage. 

Lets assume a lump-sum distribution, rollover eligible.  If a participant requests a distribution from a plan and completes a distribution form that includes a section where he/she can elect the withholding that they want to apply, is it also necessary that the participant complete  a W-4R? 

Along the same lines, I have seen some TPAs use a distribution form that has an election to pay the participant "In a single payment of my entire account balance, less required 20% withholding".  If the person chooses that election, do they also need to complete a W-4R form?

Thanks!

We have an owner-only 401k/PS plan.  He has the after-tax employee contributions and will be converting to Roth for 2022.  Is it recommended that he keep the converted $$$ in an plan account, or after the conversion move the $$$ to a Roth-IRA outside of the plan (plan allows for withdrawal of after-tax at any time)?  

Thank you

I am a benefit consultant who has been approached by two colleges who are currently participating in a self insured captive with other colleges for Health & Welfare benefits.  They would like to leave the health insurance captive, continuing to operate independently, but wish to create a new organization for shared services (finance, HR, IT, etc) that would service both colleges as well as potentially be a product they could offer (sell) to other colleges.  This new, shared services organization will have less than 100 employees (100 FTEs required in NYS for stop loss).  Does anyone have any ideas for the best path that would enable these two colleges to continue to operate independently, but for their to be common control (i.e. a parent organization) that is set up over both colleges and the new shared services organization so that from an employee count perspective, all 3 groups could be considered as one and the new shared services organization also be permitted to be self insured with stop loss?  

Are there any other paths that reach this same end that don't involve common control?

Thanks in advance for any help you can provide!

We have a plan that we took over recently.  its a small plan with little distribution activity.

It does not appear that they have applied for a Trust id.  They can not locate if they did.

Is there any way to find out if they have one? 

If i try to apply for a new one the plan was effective in 1994, more than 25 years ago.  The system only allows 1 year in the future or 25 years in the past.  Would you just enter 1997 to apply for it?

Thanks!

Can an employer offer an "Open Enrollment" option to allow ALL employees, even if they have NOT met eligibility requirements, to enter the plan?

Imagine this situation: An employer sponsors and administers a § 401(a) plan that allows § 401(k) elective deferrals, provides matching contributions, and provides nonelective contributions. None of this is a safe-harbor arrangement. All plan, limitation, accounting, and tax years are the calendar year.

When 2022 begins, the plan did not exclude union-represented employees; they were participants under the same conditions as all employees. In the spring, the employer and the union negotiate a collective-bargaining agreement. The CBA, effective June 1, provides for the union-represented employees to be covered only by the union’s multiemployer individual-account (defined-contribution) plan, including for § 401(k) elective deferrals, matching contributions, and nonelective contributions (which all are set to no less than what was provided under the single-employer plan).

Promptly after signing the collective-bargaining agreement, the employer amended its single-employer plan to exclude, from June 1, the union-represented employees. The amendment also specifies that the 2022 nonelective contribution allocated to a union-represented participant is counted only on her January-through-May compensation.

How does a plan’s administrator (and, more practically, its recordkeeper or third-party administrator) run coverage and nondiscrimination tests for this year?

Are there two sets of tests—one for the year’s first five months, and another for the year’s last seven months?

Or are there other ways the measures or tests (or both) adjust for the fact that classifications of participants changed during the year?

As noted in the title, I am dealing with a multiemployer 401k plan.  We are going through a situation where the employer contract holder is changing and we are being asked whether this should be treated as a severance event for impacted participants making them eligible for a distribution.

Our plan document notes that if a participant is deemed to be separated from covered employment, defined as quitting, discharge, or layoff, the participant is entitled to a distribution.  The plan document notes that there is no separation benefit if at the time of application for payment the participant is employed by his employer.

Any assistance appreciated.  My initial thought is that the answer is no, but it would be great to have some statute/regulation/case law to use to support the provided answer.

Plan is terminating. There are a few participants that terminated and have a 5 year break in service but were never paid out. Do these people also become 100% vested due to the plan terminating? Or are we able to pay them out based on their vested amount at the time they left the company.

Thank you!

Plan has been around for four or 5 years and have been SH match all the long.

What happens if they give their SH notice on Dec 20 this year?  Or January 12, 2023?

what are the consequences?

I have a solo 401(k) that has already been fully funded for the 2022 plan year ($61,000) and they recently decided they want to open a cash balance plan for greater tax benefits. If they open a cash balance plan, their solo 401(k) will be over funded $22,500 in employer contributions. They would like to remove the overfunding from the 401(k) plan to open and maximize their cash balance plan for 2022. What type of correction would this be (excess annual additions, mistake of fact)? What is the best way to go about correcting this?

Owners of an ALE purchase a non-ALE 10/1/2022, making the non-ALE a member of an Aggregated ALE group as of what date?

Applying the normal 2022 look back monthly-average-FTEs to the prior non-ALE falls below 50 (even after including the ALE employee numbers for Oct-Dec).

Does the non-ALE become a member of the Aggregated ALE group on 1/1/2023 or not until 1/1/2024?

Thanks

I was just wondering, since I never seem to find formulas like that in any documents I review. 

Seems like it would be a great idea for a sole proprietor, where income could fluctuate widely, and that way they don't really have to accrue a more-than-significant benefit until after the net earnings clear some amount the person would need for living expenses.  Like, a contribution credit of "5% of compensation plus 75% of compensation above $100,000" where that could eliminate the need to worry about a big obligation in a "bad year".  (Okay, maybe throw in a 401a26 failsafe, too.)

Plus it's been a decade-plus since I even saw a super-integrated DC plan, and always liked the term.

Hi

An interesting situation that I never encountered.

Calendar plan with 3 provisions

401k deferrals

3% non-elective SH

PS with integrated allocation. 1000 hours+last day rule. Owner is younger than the employees so worked out great.

5 participants, 2 HCE and 3 non-HCE. 2 additional HCE's are excluded categorically

All 3 non-HCEs terminated during 2022 before the last day, 2 with under 1000 hours and 1 with over 1000 hours.

Plan passes both ratio and ABPT.

Since all non-HCEs are getting no PS allocation but only 3% SH, I do not think the plan can rely on PS allocation to be safe harbor anymore and needs to be tested for 401a4, do you agree?

Anything else I am thinking of?

As a bonus question, all 3 employees left - 2 got new jobs and 1 for difficult maternity and applied for some kind of disability. Would that constitute partial termination? They hired additional employees during 2022 of which only one remains employed.

Any comments are appreciated.

We have a new plan where the trustee wants to take an in-service distribution of $300k. He is 43 years old. He wants to pay all the taxes on the distribution. I have never administered where it was allowed for anything other than 59.5 or early retirement.  Can a plan allow in-service prior to 59.5 or early retirement?  

We have a client who opened a new plan in August 2022.  The plan effective date is 1/1/2022.  Deferrals did not begin until Oct 1, 2022.  It is a basic safe harbor match plan allocated on a plan year basis.  The match will be calculated after the end of the year. 

My question is must the match be based on compensation only from Oct 1 through Dec 31 or the entire year?  Example: Employee has $10,000 in wages each of 4 quarters.  Oct - Dec defers $2,000.  Would this person get a $400 Match (4% just on 4th qtr wages), or a $1600 match (4% on full year wages)?

Nothing in the plan limits the compensation or match period.

Appreciate your comments.

DC Plan - employee terminated last month.  To prevent her from suing the company (no details on that) they will be giving her $8,000 severance pay that will show on her W2.  I don't think they give her the guaranteed 3% safe harbor on that amount because it was not given for services rendered and she would not have gotten it had she stayed with the company.  True or not?   The document discusses post-severance pay (bonus, commission, etc.) but not this.   TYIA. 

Prior to acquisition, target company is correcting the Release timing language in Executives' Change in Control ("CIC") Agreements that pay a lump sum within a set time period after involuntary termination within 6 months after a CIC, (subject to delivery of a Release, with no time limit for delivery of the Release, and no language that the payment for such termination won't be made if the Release is not delivered within a set time) by having the Executives sign, before Closing, an Amendment stating that the Release has to be delivered, and irrevocable, within a set number of days after involuntary termination within six months after CIC, and if it is, lump sum will be paid on last day of the time period, and if it is not, lump sum is forfeited. 

For an Amendment like that, which seems to fit Section VI of IRS Notice 2010-06, for 409A corrections, is everyone (or anyone) still sending the Notice to the taxpayer/service provider/Executive the following January, and still attaching the Notice to the service recipient's tax return, as Section XII of Notice 2010-06 requires for Section VI corrections? So difficult to explain to client (employer) and taxpayer (Executive) that putting this Release language in an Amendment means we need to send these lengthy, nearly incomprehensible Notices next year. Just wondering if anyone else is actually doing this? 

We administer a 401K Plan that has owner and spouse as participants as well as rank-and-file. Husband died 5 years ago, and his account is still open.

Fund-holder will not permit rollover of deceased participant's account into spouse's.

I do not see why not; when I asked the fund-holder (in this case Voya), all they could tell me is "no..we can't do that."

I see no reason why not.

Am I missing something or is just that Voya will be losing out on a fee?