I have a plan that has a start date of 1/1/2022 with an effective date for deferrals of 11/1/2022, with an eligibility requirement of 6 months. If someone has been at the company for a year but has an "effective date" into the plan of 11/1/2022 does that mean they will have to work another 6 months before they are eligible to defer or since they have been at the company for a year they are eligible on the effective date? 

I have the same question for vesting. The company has a vesting schedule of 1 year, with a plan start date of 1/1/2022 and effective date of 11/1/2022. If an employee was hired on 1/1/2020 will they have to wait another 1 year to fully vest after the effective date? 

Is there a maximum percent of eligible pay that the NFP has to stay below?  In the for-profit world, they have to stay below 25% to keep the contribution deductible... but there's no deduction issue for a non-profit.  Whether or not a NFP should be spending 30% of payroll on a plan contribution is another question altogether, but if they had the cash, is there anything stopping it?  I'm sure there is, but I haven't found it yet.  Thanks.

If a § 401(k), § 403(b), or governmental § 457(b) plan’s sponsor or administrator removes from the plan’s investment alternatives a lifetime-income investment (which might include an annuity contract with guaranteed-lifetime-withdrawal-benefit provisions), an exception from the usual restrictions against a distribution before severance-from-employment or age 59½ allows a limited distribution to remove from the plan the annuity contracts. This could include delivering to a participant a qualified plan distribution annuity contract.

Internal Revenue Code §§ 401(a)(38), 401(k)(2)(B)(i)(VI), 403(b)(11)(D), 457(d)(1)(A)(iv).

Has anyone done this?

Did you have a good experience, or a bad time?

Did the insurance company cooperate?

What difficulties did you encounter?

What cautions and pointers would you suggest to someone now planning a project?

(Please don’t misunderstand my query as suggesting any view for or against any insurance or investment product. Rather, I seek help about how a practitioner might guide a plan sponsor that has already decided to remove lifetime-income investments.)

Plan was created in August 2022 with a 1/1/21 effective date so they could do a PS contribution for '21.

Was there supposed to be a 5500 filed?  If so, how do you go about it?  Plan wasn't in existence until August, well after the extensions were due.

is there a special 5500 rule for plan that are retroactively adopted?

I have a plan that sometimes runs into participants checks being lower than their 401k deductions. So for example the check is $50.00 but they have $75.00 as their deferral election. Are they supposed to then withhold the other $25.00 in a future check? We have two different opinions here and trying to find some back up.

Hi, 

One plan is moving to the "retail" and making the current RK as the custodian and not the record keeper.  The accounts can be used to hold 401k assets on the "retail" side of where the plan is record kept. 

In order to open these types of accounts, the Plan Sponsors must sign a new Retail Adoption Agreement and a new Retail Service Agreement, in order to do this the plan must terminate.  

My confusion is "Will this be even considered as a Plan termination"  as per my understanding Plan termination is a corporate action, participant have the right to choose they distribution option, they cannot simply be moved over to retail side.  

Can participants just be rolled over ( Active and Terminated) into the retail account?  I've never encountered something like this. 

Thanks 

Hi, 

one of the terminating plan have 5-6 participants who had forfeited the checks, the money was moved into the forfeiture account which was used to pay an invoice.  Since we are working with the DOL and the forfeited check needs to be re-issued and considering the fact that the balance in the forfeiture is less by $100 can we re-issue on a pro-rata base and also will this needs to be reported on the 1099-R?

Thanks

Hi all:

I have a client who we are taking over from a prior TPA.  They have a retirement plan as well as a SUB (supplemental unemployment benefit) plan.  The client is a prevailing wage client (long story short the fringe is what funds the SUB plan).  Because it is a SUB plan they file a 5500 for it, but they have not been able to get a copy of their plan document or SPD - instead their prior TPA keeps giving them a copy of their 125 plan.

My understanding was that a SUB plan needs to have a separate document.  Even if I was going to correct that for them with the IRS, I have no idea where to start in getting a SUB plan document - aka I have no idea which companies provide this specialized plan document that isn't a TPA.

So, my questions are, does a SUB Plan Document need to be separate from a traditional cafeteria plan document, and does anyone know of a document provider I could use to draft a SUB plan document?

Cash balance plan currently has immediate 100% vesting. Plan sponsor would like to change to 3 year cliff vesting effective for those hired 1/1/23 and later. Eligibility is 21 & 1, and entry is 1/1 & 7/1. What are the considerations in terms of whether or not this works? 

Got a call from a client.  He and his spouse are getting a divorce.  It is amicable so he intends to give 1/2 of his plan balance to her, no problem.  They don't want to pay for the attorney to draft a QDRO.  Couple of questions:

1.   Do they need to wait until the divorce is final to complete the distribution?  Probably, just in case they reconcile because then the payout would have been premature.
2.   Do they need a QDRO?
3.   The distribution election form is asking for the QDRO checklist.  Just maybe have them create a statement stating that the account is being split due to a divorce and have them both sign it in front of a notary?

Thanks

Are there any concerns that never use forfeiture account? big balance? some investments are volatile?

I was married for about 25 years after that we divorced In 2015 and the judge granted her 1/2 of my 401k (QDRO).   But then we married again and divorced in 2018 in which She failed to tell the judge or her lawyer that we had been married before And they granted her half of my 401K (QDRO).  In which I just found out that you could only be granted that 1 time.  Is that legal? And what can I do now?

Hi -- I have a client who has elected to exclude highly-compensated employees in order to avoid potential nondiscrimination or coverage issues due to some idiosyncrasies with their population. Due to one-time variation in bonuses, as well as the upcoming jump in the HCE threshold for 2023, we anticipate a few individuals may drop down into non-highly compensated employee pool. Would an exclusion for "employees previously designated as HCEs" or employees making over a certain dollar amount be permissible? Do you all think the former would violate the "definite written program" rule? Thank you for your thoughts!

Over the last two years we have experienced a spike in the IRS assessing late filing penalties on 5500s which were filed on a timely basis. The penalties have always been in the $1,000s and a few days ago a client received a late fee letter on a plan that was never installed and has never filed a 5500 on a tax ID that was obtained 15 years ago. The penalty is $25,000. We usually get the IRS to correct these and eliminate the penalty with our first letter to the IRS, but sometimes it takes two and three letters to get the IRS to relent. 

Is anyone else experiencing this problem?

a 50 participant 401(k) plan is sponsored by an LLP. There have been 4 individuals in the company who each have a 25% interest in the partnership for many years. It turns out in 2021 2 of the 4 partners incorporated and nothing was ever mentioned about it. Now the CPA is disallowing the contributions funded for the 2021 year for the two that incorporated because their corporations did not fund the contributions. Instead, the LLP did. Also, since nothing was mentioned about it, the two that incorporated have not adopted participating employer adoption pages to the plan document.

Is this something that could be fixed under EPCRS?

Thanks.

I've found a few posts related to this question but not a clear answer and it's nowhere to be found in the regs. Any advice would be helpful.

We are a TPA and have a small client that deposit payroll in a timely manner (within 7 business day). However, they are always late in providing the payroll file/breakdown. There has to be some type of ramification for not being able to invest the participant's deferral in a timely manner. We've researched and can't find anything to send to the client to let them know about penalties they would incur for not providing the payroll files timely.

If a non-owner participant terminates employment after age 72 (or 70-1/2, as the case may be), but is later rehired within the same calendar year, are RMDs triggered?  There doesn’t appear to be any guidance on this. 

Where the rehire occurs in a later calendar year, and RMDs have already started, there is at least informal guidance stating that they must continue.  (See ERISA Outline Book and 2010 ASPPA IRS Q&As.)  However, I've found nothing addressing termination and rehire in the same calendar year prior to starting RMDs.

Father is a trustee on a corporate 401(k) plan.  Son (over age 18) is an investment advisor and is interested in being the investment advisor for the plan.  As the son would be a party in interest, would this be a prohibited transaction?  Is there prohibited transaction exemption for this situation? Thanks for any help you can give.

My employer switched 401K providers. The new provider had the same funds I was in. Instead of using the ACATS  To transfer my shares they mapped my funds, sold them off and bought them back the next day. I ended up losing shares because the market went up while I was out.  I've lost about $6000 in the transaction. Do I have a claim to get my shares back?

If some one have all contribution calculation that can be done in a single template/Spreadsheet where you just input the formula based on plan and fill up comps & deferrals.

Can you share it?