I have a plan sponsor that wants to amend the eligibility requirements and entry dates to allow a specific employee to enter the plan.  After that employee enters the plan, the plan sponsor wants to amend the eligibility requirements and entry dates back to what they were.

Is this allowed? If not, why?

We have a client (A) that purchased a division of another company (B) and wants the employees of that division to "merge" into A's existing 401(k) plan. B's TPA told our client (A) that they could do a spin-off. 

Our general understanding of a spin-off is that it results in a new company and a new 401(k) plan. Neither of those things are happening.

Additionally, company (B) currently sponsors a 401(k) plan and since only one division was sold to our client they will not be terminating their plan. 

We don't see how this could be treated as a spin-off or a merger. Can anyone give insight as to when a spin-off is an appropriate measure and if there is anyway that this would not be a distributable event for the participants of Company (B)?

Thank you!

One of the accounts has inquired about a QACA SHNE 401(K) for a huge home health care agency, composed of office staff, home health care workers, and nurses.

From what I'm reading from ERISA Outline Book, but possibly incorrectly, each group can either be in  one plan or 3 separate plans - as long as each class has a uniform percentage, with a minimum of 3%.  All requirements for safe harbor status will be met. Each plan would need to pass 410(b)?

I do not believe the plan could be effective mid-year as the 30 day notice was not met, but to be effective for 2022, as long as the plan is set-up, doc prepared and signed by 9/30.

No profit sharing.

Have a client who is a physician who is paid as an independent contractor by a hospital and two medical clinics. He has his own corporation that sponsors a defined benefit pension plan and he is the only participant.

He just got hired as an employee at a VA Hospital. They have their own 401(k) plan. However, he will continue to do work for the two non-related medical clinics that pay his corporation. Since he has no ownership in the VA Hospital, no ownership in the medical clinics I would think no controlled group or affiliated service group exists and there should be no required aggregation for testing purposes.

Does anyone disagree?

Thank you.

Sole proprietors with an existing plan can make 2021 401(k) as well as profit sharing contributions up to their extended tax filing date in 2022.

Sole proprietors can adopt a new 401(k) plan in 2022 for 2021 (up to extended tax filing date in 2022).

Can they make both 401(k) and profit sharing contributions to the new plan in 2022?

This statement was recently made by a TPA. related to PCORI fees in 2022: 

Generally, health care Flexible Spending Accounts (FSAs) are not required to file a Form 720 unless the employer (and not just the employee) makes contributions to it that exceed the lesser of $500 annually or a dollar-for-dollar match of the employee's contribution. 

I did look as the IRS Chart chart summary. and FAQs Related Item: Patient-Centered Outcomes Research Trust Fund Fee: Questions and Answer and  the final regulations , but do not see the above exception.  Does anyone have insight to the above bold exception??

I did see the follow exceptions for FSAs:

Special rule for coverage under multiple applicable self-insured health plans:

• Generally, separate fees apply for lives covered by each specified health insurance policy or applicable self-insured health plan.
• However, two or more applicable self-insured health plans may be combined and treated as a single applicable self-insured health plan for purposes of calculating the PCORI fee but only if the plans have:
  • The same plan sponsor; and
  • The same plan year.

Special counting rule for HRAs and FSAs: 

• Plan sponsors are permitted to assume one covered life for each employee with an HRA.
• Plan sponsors are permitted to assume one covered life for each employee with an FSA.

Q5. Which individuals are taken into account for determining the lives covered under a specified health insurance policy or applicable self-insured health plan?

A5. Generally, all individuals who are covered during the policy year or plan year must be counted in computing the average number of lives covered for that year. Thus, for example, an applicable self-insured health plan must count an employee and his dependent child as two separate covered lives unless the plan is a health reimbursement arrangement (HRA) or flexible spending arrangement (FSA).

Thanks for you review and reply in advance!

Plan terminates effective 5/2022.  After testing is completed it is determined that there are 415 excess amounts.  The plan removed them  from the pretax source.  How does this impact the 402g limit for 2022?

Participant deferred $8000. 

415 excess is $3000.  ($2500 is distributed due to losses).

What can the participant contributed on a pretax basis for the remainder of 2022 (assume not catchup eligible)?

I administer a plan that provides employer contributions for employees working less than 1000 hours but more than 500.  When do the vesting provisions of the Secure act take effect?  I have two participants that would be 100% vested under the new law.

My understanding is that in years past HR departments would not ask for Marriage Certificates.

When Marriage Equality became legal, some departments started to ask only same-sex couples for their Marriage Certificates, which ultimately was determined to be discriminatory and not a recommended practice.

Any thoughts if HR departments are now asking for Marriage Certificates from all new hires these days?  This would be mostly related to setting up their medical benefits with spouse coverage included.

A plan that we administer has 2 trustees and has a major mutual fund company as its recordkeeper. Both trustees have left the company (acrimoniously) for reasons that are not relevant here, but both of them have put in online requests for distributions from the plan. At this point, the company has not yet named new trustees, and the old trustees remain on the recordkeeper contract, and would be the ones responsible for "approving" the withdrawals on the recordkeeper website.

Trying to figure out whether, as the TPA, to approve the withdrawals, and let the now terminated trustees approve them. Would there be some legal recourse from the plan sponsor as to why we allowed these funds to be distributed, even though they cannot be assigned?

Thanks for any replies.

We have a group of employers that are somewhat related, but definitely not considered the same "Service Recipient" under the 409A Regs.  But, they all have identical Nonqualified Plans.  We would like to combine the plans into a single plan.  We would take pains under the Plan to make sure the definition of "Employer" was a reference to the individual Employer the Service Provider works for, including that the Employer is responsible for benefit payments out of their own general funds, and the Employer's creditors have access to those funds in the event of bankruptcy/insolvency, etc.  Does this work?

Some concerns I have are:

• Say one Employer goes bankrupt and their creditors wipe them out so they can't pay benefits under the Plan -- is there any risk the other Employers are on the hook for benefit payments for the bankrupt employer?
• Say one Employer goes bankrupt, would their creditors have any claim over accrued benefits owed to the Service Providers of other Employers under the Plan?
• Are there any other rules that would prevent a combined Plan just as a matter of statute or regulation?

Thanks in advance!

We're a small 401k platform (a startup) and we're looking to bring on a TPA to either act as a consultant, or to work with us on a per plan or monthly basis. I'm not exactly sure where to start looking, so any guidance would be appreciated! Thanks!

A plan being restated for Post-PPA will update fees for individual participant expenses. This restated plan is effective on 1/1/2022. Since the SPD reflects the updated fees, is that sufficient to satisfy notice requirements for fee changes, or is it necessary to issue a notice notifying participants of this change to be effective 30 days after the notice is given?

Considering gross compensation for plan purposes is Box1 on the W2 + deferrals + section 125 + bonus + commission.  What about spousal travel and group term life? Are those also included in gross compensation? 

I got a DRO today for a participant in Louisiana.  The DRO says there is no divorce and that in LA, a community property state, the DRO can be a mechanism by which a participant can "donate" to the spouse "of his undivided interest in a thing forming part of the community."

Anybody ever come across anything like that?  Everything else in the Order lines up nicely to form a QDRO.

What is the most efficent way to withhold Federal taxes and remit the withholding to the gov't?

I have never had to do this before because my plans are typically with John Hancock or Charles Schwab who take care of the withholding on distributions. The plan I need to start withholding and remitting taxes on is a 1 (80 yr. old) participant profit sharing plan with all investments in a Charles Schwab account which I have access to as the Advisor. But Schwab is not the TPA, I am.

I just want to do this the easiest way possible.

Thanks all.

I have never heard of this situation.  A full time employee old enough to need an RMD but not required to take one because she isn't an owner (just an employee) died in December 2021.  Technically she wasn't employed as of her date of death.  That wouldn't kick in that she needed to take an RMD for 2021 based on her 2020 balance, would it?

Maybe the short question to ask is, do deceased plan participants (who have not been paid out yet) need to take RMDs?  I guess technically they still aren't owners so no?

I just read that "once a participant starts taking an RMD they must continue taking one, even after death".  The twist is that this participant was never required to take one due to the fact that they were an employee and not an owner.  Would that mean that her account is not required to distribute an RMD for 2021 because she was just an employee? Am I answering my own question?

I have a calendar year ESOP that normally pays over 5 years of installments except for participants with large balances that may be stretched to up to 10 installment payments.

For a participant with a large balance, if the first installment is paid in 2022 based on the 12/31/2021 share valuation; do you use the 2021 or 2022 409(o) limit to calculate how many years in excess of 5 are used?

2 letters were sent from plan administrator stating the funds could be dispersed per ERISA 18 month rule in full to the participate if the QDRO that was approved by the plan and sent back for signature from the court is not returned to the plan. Not in exact words but meaning was they needed the signature of the court and sent back to them. These letters were a year apart of them being sent. Wife takes the full amount of the account and rolls it over out of the plan since the last letter stated the same and has been waiting over 6 years and this is first time the 18 month rule was mentioned. Now the attorney who did not file the QDRO until 5 days after funds were rolled over leaving a account balance of $0 with the plan files a contempt charge on wife stating that Wife did not pay spouse what was owed per the divorce decree and QDRO. Should the wife return the funds to the plan that has been discharged per the letters?

How are others interpreting a plan sponsor's obligations related to the delayed deadline for payment of COBRA premiums during the PHE?  

i.e., If an individual is currently receiving COBRA and not paying monthly premiums, does the plan sponsor have to keep the coverage active until the delayed payment deadline is passed?  Or can the plan sponsor cancel COBRA and reinstate it retroactively if payment is received by the delayed deadline? 

My interpretation has been that COBRA should not be cancelled for nonpayment of premiums until the delayed deadline has passed, but I am hearing chatter that others are interpreting it differently.