Plan funds a fixed match each pay period and also has last-day rule for profit share. 

A participant terminates before year end.  

1) Are Participant wages included in eligible 404 compensation with respect to the deduction limit test?  And would it matter if they actually fund the profit share?

2) If a plan does not have a last-day rule on the match in the AA, and does not fund a discretionary match, but they have a last-day rule only on profit share, would this participant compensation be in the test?

Our plan document states a 3/31 cutoff for claims submission on DCFSA.  We have an employee that has submitted $5000 in 2022 claims after the deadline.  If we authorize the TPA to process the claims, how much liability are we creating for the organization?  I hate creating policy exceptions, but also don't like seeing an employee lost out of $5000.

making sure I grasp the ability to give 0% missed deferral opportunity for a plan with auto enrollment.

Employee rehired in 2022, and therefore eligible per plan doc to reenter plan on rehire date.

EE deferrals not started until after completing new hire requirement of 3 months worked, in early 2023.

I believe then that because deferrals were started w/in 9.5 months of failure, due to the auto-enrollment feature, no MDO required (ie 0% MDO).

We have a small balance forward 401k plan.  One of the employees died at age 49 and his wife is the beneficiary.  She is also 49.  She wants to leave the money in the plan.  Should we/must we change the name on the account to her name, rather than using her deceased husband's name?  Any other issues we should be aware of?  Thanks!!

Cross-posting from the IRA forums. 

A client has a 401k account and historically has funded a Backdoor Roth IRA (no other IRA balances). This year, he works for another company providing him a SEP IRA contribution. 

May this individual immediately rollover his SEP IRA to his 401k and still be eligible for Backdoor Roth IRAs for 2023 & 2024? He would have no IRA balances at the end/beginning of either year, but I do not know if the SEP contribution eliminates the Backdoor Roth option. 

2023’s autumn might bring at least two possibilities for disruptions and delays in some activities of some Federal agencies, including the US Labor and Treasury departments.

Not increasing the debt Congress authorizes the United States to incur might indirectly disrupt or delay the Labor and Treasury departments’ rulemaking and other guidance activities.

Not continuing appropriations after September 30 and a resulting government shutdown would make it unlawful for the Labor and Treasury departments’ employees to work on rulemaking and other guidance activities.

(If history is some guide about what could happen next: After November 1995, US government shutdowns have averaged about 19 days. The most recent was 35 days.)

If 2023’s autumn brings a slowdown or shutdown, would a delay in rulemaking and other guidance activities matter for retirement plans and service providers?

If I have a controlled group where one entity maintains a fully insured plan and another entity maintains a self-insured plan. For 105(h) testing purposes for the self-insured plan, it will consider those benefitting under the fully insured plan as "not benefitting" under the self-insured plan, correct?  

Hypothetical scenario:

Employee properly elects to contribute $1,200 ($100 per month) to to her dependent care reimbursement plan (DCAP) account for 2023.  Employee incurs $400 of qualified expenses in January and February of which she obtains reimbursement of $200 (because that's all she had contributed at that time).  On March 1, 2023, she goes on leave (FMLA or non-FMLA leave; I don't think it matters) and elects to cease DCAP contributions at that time.  On July 1, 2023, she returns from leave and elects to restart the DCAP.  Can she use the $200 that she contributed in January and February (but was unable to use then) to reimburse expenses incurred in July through the end of the year or is that $200 forfeited?

The cafeteria plan regulations discuss this for health FSA contributions (yes, she would be able to) but I have not been able to find anything discussing DCAP contributions.

Any help or thoughts is appreciated.

If an employer has recently bundled multiple H&W benefits under one mega wrap plan, do participants have to be supplied with all plan materials that constitute the bundled plan's SPD? Or can the plan administrator provide plan materials that describe only the benefits for which a participant is currently enrolled? For example, if the wrap plan includes M, D, and V, and an employee is only enrolled in the dental benefit, can only the dental materials (e.g., certificate/benefit summary) be supplied along with the wrap's SPD?

Recently took over a non safe harbor plan and am looking at making two changes to improve the ADP test results.  First, the plan has an ACA (not EACA or QACA) and the plan sponsor has agreed to increase the default percentage from 2% to 3% effective immediately. It's a minor change but I figure every little bit helps. Second, the plan uses compensation for the full year and I want to amend to exclude comp before date of entry.  Eligibility is no minimum age, 1 YOS, monthly entry.  The employer will not be making contributions of any kind this year.  Given these circumstances, can the compensation definition be amended mid year, effective for participants entering on or after June 1?  There will be no cutbacks with no ER contribution.

DB plan expected to terminate in 2024.  All remaining participants are VTs and all payments/lump sums are expected in 2024.  Excess assets are anticipated.  There is no possible Qualified Replacement Plan since there are no "overlapping participants".  Plan sponsor want to maintain the plan's trust into 2025 so that such assets can be applied to anticipated 2025 audit expenses (PBGC audit or other agency).  Review of DOL Advisory Opinion 97-03A indicates that reasonable such expenses can be covered by plan assets (at least that is my read of the AO).

Since 12/31/24 assets are not zero, a 5500 will be required for 2025 plan year, but little or no other administrative tasks.

If, after such audits, any remaining excess assets will be taken as a sponsor reversion, per the plan document. 

1. Is it reasonable for the sponsor to maintain the trust in anticipation of expenses?
2. What if (for example), there is no 2025 audit, but the sponsor anticipates a PBGC audit will eventually occur in 2026; is there a time limit over which maintenance of the trust becomes unreasonable or in violation of some other rule?
3. What other concerns have I overlooked?

It's been a long time, but I'm being asked to conduct mandatory distributions for a few termed participants with balances over $1,000.  In the past I've used Penchecks, but I'm wondering who else might be out there to take custody of the funds.  Tried to contact Millennium Trust but can't get a call back.  Anyone out there have ideas for other service providers?

Based on what I'm reading from the IRS website, missed deferral and SHMAT contributions over 2 years old have to do the following:

1. Deposit 50% of missed deferral + 100% of missed SHMAT contributions

2. Missed deferral is deposited into QNEC source, missed SHMAT is deposited into QMAC source

3. Lost earnings are based on the missed deposit going into QNEC and QMAC sources 

4. Prepare 5330

Can someone point me to how ROTH payouts are taxed?  I know the 5 year rule but here is where I am unclear:

Situation:

Susan has been making ROTH deferrals since 2015.  She makes ROTH deferrals every year.
The last 7 years she has amassed $100K+ (deferrals and earnings)
Susan is over 59-1/2 and would like to take a distribution. 

Key Points:

•  Susan opened the ROTH account over 5 years ago ...  ✔️
•  Susan is older than 59-1/2... ✔️

So - 

1. Is the only rule that the ROTH begin date of the account be 5 years or older?
2. Does it matter that some of her ROTH deferrals are less than 5 years old?  
3. Would Susan's distribution (which includes contributions and earnings) be tax free?

As you know, a client comes to you telling you how it will be taxed.  I just want to be sure.

When she dies, with the Roth account non-zero, what is the taxation to her beneficiary?

Thanks

To help me sort out how to interpret and apply ASPPA’s Code of Conduct, I ask for BenefitsLink neighbors’ thoughts about who is an ASPPA Member’s Principal when the Member is a nonowner employee of a service provider and does not control its relations with its customers.

The Code’s definition for Principal is “any present or prospective client of a Member or the employer of a Member where the Member provides retirement plan services for their employer’s plan.”

Imagine an ASPPA Member (under ASPPA’s Code, “[a]n individual”) who is an employee of a big recordkeeper. This employee never works on any employee-benefit plan the recordkeeper maintains for the recordkeeper’s employees. Rather, the recordkeeper uses the employee’s work to provide the recordkeeper’s services to the recordkeeper’s customers. Assume the work is, if provided to a Principal, “Professional Services” as ASPPA’s Code defines this.

https://www.asppa.org/member/code-conduct

1.    Is each of the recordkeeper’s customers the employee works on a Principal? Why or why not?

       Would whether the employee works on a dozen plans, a few hundred plans, or a few thousand plans affect your reasoning?

       Does it matter whether the employee knows some identity or information of a particular customer? What if the employee works on a process the recordkeeper uses in performing its services for many, most, or almost all its customers, but the employer seldom sees information on a particular customer?

2.    Is the recordkeeper its employee’s only Principal? Why or why not?

3.    Does this employee have no Principal, because she does no work on her employer’s plan and the recordkeeper’s customer is not the employee’s client?

4.    Do you have some different way to interpret who is or isn’t the employee’s Principal?

(As always, I own complete responsibility for whatever guidance or information I provide.)

What are your thoughts?

Bumping this forward again...too easy or too hard?????

Hello All - I'm sure this is a very easy question but I need clarification for my elderly brain. 

[Calendar Basic 401(k) safe harbor match plan. - 1 YOS, age21, quarterly entry.]

Large portion of client's work force is seasonal (work, term, rehire) so of course we are tracking them for LTPT eligibility.  Here is my question:  Employee works over 500 hours in 2021.  Terms in 2021.  Rehired in 2022 and works over 500.  This person has 2 years of eligibility credits toward LTPT service, correct? 

Different employee works over 500 in 2021, terms, rehires in 2022 but not over 500.  This person's LTPT service counting can start over since the consecutive PY cycle is broken, is that right?

I'm getting myself confused on those who term as well as the whole "consecutive" idea.

Thanks in advance for any comments. 

We have a plan that we took over as part of a business acquisition some years ago; it is profit sharing only with pooled/trustee directed investment accounts. They went from SF reporting to full 5500 with Schedule H and an audit in the year we took over. They have 4 different investment accounts, 3 are with mutual funds and ETFs with 15 to 20 positions, and 1 with 100+ individual securities (fortunately not a lot of trading in that account). We never really charged enough for the more detailed trust accounting required to prepare the Schedule H, but then in 2022 they moved money (not just cash but fund transfers in kind) and it became a full blown nightmare. We're charging them extra, and are bumping the fees going forward, and getting static.

I explained the nuances (if you can call it that) of plan trust accounting, and it didn't really sink in. Then I made the (big) mistake of saying "well why don't you ask your investment people if they can provide reports specific to plan trust accounting" and now I'm spending more time explaining to them what we need (gains and losses from the beginning of the year) and basically having to prove that what they can provide doesn't work. Setting aside the business decision-making issues, if you are still with me...

...how common would you say it is to have a 100+ life plan that is not on a platform? Any anecdotal comments like "we have a bunch of these" or "we wouldn't touch this with a 10 foot pole" are appreciated. This is mostly to satisfy my curiosity. We run a small shop and don't know how others approach things. I know if we had 100 plans like this we wouldn't make any money.

Corp A sponsors Plan A. Corporation B, while partially owned by Corp. A, is not part of a Controlled Group/Affiliated Service Group. Corp. B is a participating employer in Corp A's plan, so it is a Multiple Employer Plan.

Corp B. is buying out the ownership that Corp A currently has in Corp B, and is withdrawing from the Corp A plan. Suppose Corp B does NOT want to maintain a plan. Is there any alternative to Corp A invoking the involuntary spinoff provisions (establishing a new plan in Corp B's name, which Corp B can then terminate)? I'm confused as to the alternatives in terms of the accounts of the Corp B employees who have been participating. They haven't terminated employment with Corp B. I feel like I'm missing something obvious.

Hi

Someone I work with where I provided a combo plan proposal forwarded the following they received from the 401k recordkeeper (no name will be mentioned).

Background, brand new plan, effective 1/1/2023, signed 3/31/2023 with the following:

401k deferral and NESH (3%), eligibility - age 21 and 6 months service with entry 1st day of the month after completion of 6 months - no hour requirement

PS, eligibility - age 21 and 1 year service (1000 hours service required) with entry 1st day of month after completion of 12 months

Additionally, as special provision, all employed on or before 1/1/2023 enter the plan without regards to the above eligibility

This is what they received from the recordkeeper as forwarded by the client:

"I received the feedback below from Compliance: This is a Safe Harbor plan, so we cannot make this plan more restrictive by adding 1000 hours service requirement for PS in the middle of the plan year.* Please let us know if you want to make these changes effective 1/1/2024"

What am I missing here?

Thanks