I vaguely remember reading that you no longer needed to file a Form 5558 and that the extension was automatic.  Am I mis-remembering something?  Or is it that they can now be filed electronically for the 2024 Plan Year, as opposed to sending the paper filing?

With the deadline on July 31, I wanted to make sure I wasn't just imagining something.

Thanks in advance!

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A  client has proposed to limit reimbursement for advanced behavioral analysis therapy to individuals who are age 16 or older. This therapy is intended to benefit individuals with autism. This proposed action thereby prompts the following questions:

(1) Is advanced behavioral analysis considered a preventive type of therapy or procedure which is required to reimbursement in full under the ACA?

(2) Is this therapy considered a mental health procedure subject to protection under the mental health parity requirements?

(3) Is there any other reason that prohibits or precludes the client from adopting a minimum age requirement as a condition to being eligible for reimbursement for advanced behavioral analysis, whether or not required under the ACA?

Thanks in advance.

Can someone please confirm that employer contributions to a nonqualified plan are subject to FICA taxes at the time they vest?  

We recently found out our payroll isn't applying FICA taxes to our employer contributions to our NQDC Plan (in our plan employer contributions are always 100% vested).  They claim this is correct, so I'm second guessing myself.  My understanding is FICA taxes must be paid under the "special timing rule" when contributions to a NQDC Plan vest, even employer contributions.  If they aren't applying FICA upon contribution (or, if later, vesting) we'll have to apply FICA to the employer contribution part of the distribution later, correct?

With the passing of these laws, clients have many new options to consider and implement.  Does anyone know of the required employee communcations regarding these?  For example if a client wanted to implement the domestic abuse distributions would this need to be communicated to all staff?

A 403(b) plan received two rollover checks from a 401(k) on behalf of a participant age 74.

Check #1: Pre-tax deferrals ($4,915)

Check #2: Non-Qualified Roth basis ($10,447) with earnings ($590) [First Roth contribution = 2024]

The 403(b) was informed that the participant's 2025 RMD for the 401(k) was not distributed to him prior to the rollover.

The participant is not eligible to make regular contributions to the 403(b).

The 403(b) has not cashed the checks yet because it does not want to deposit ineligible amounts. It is wondering if it can return the checks to the 401(k). 

What is the cleanest way to correct this?

One of our client’s is a doctor who sponsors a DB Plan for his medical practice.  The plan is not terminating and is not covered by the PBGC.  We are in the process of cashing out several terminated participants.  One of these former employees has a benefit worth much more than $7,000.  She is married and has received her distribution election forms.  However, she is not cooperating and will not return her forms.  In accordance with statute and with the plan document, the default form of benefit is a joint and survivor annuity.  We have checked with several insurance companies, all of whom offer the desired annuity.  However, every insurance company wants a signature from the participant.  This is a catch 22 because this participant is not cooperating.

⦁    Does anyone know of an insurance company that will provide an annuity for the benefit of a terminated participant without the signature of that participant?

⦁    I have heard that the PBGC now permits limited use of their Missing Participant Program for plans that are not covered by the PBGC.  This plan is not covered by the PBGC and this participant is not missing.  Does anyone have information or experience using the PBGC Missing Participant Program for this type of situation?

Thank you.

Michael P. Burkow, EA

401k America, Inc.
(909) 591-1724 X. 418
michael@401kamerica.com

Company X sponsors a 401(k) plan. Participant A terminates employment in 2025 with an account balance of $6,985. X directs X's account balance to be cashed out. A couple months later, based on favorable investment performance,  a check is issued to A for $7,055. Has the 401(k) plan committed an operational failure by issuing a check to a former employee for more than the cashout threshold?

Participant is under age 59 1/2 and has less than 5 years in the Plan.

Participant took a hardship withdrawal and Plan Sponsor created 1099-R's splitting the h/s between both 401(k) and Roth.

Plan Sponsor did not realize earnings on the Roth portion are taxable and they didn't calculate a taxable amount on the earnings of the Roth that were allocated to the H/S.

They are asking now, after the fact, if the Roth portion of the H/S can be treated fully as basis. I looked in the Plan Doc but couldn't find that it specifies. It only says that a Plan Admin can choose how to order the money types.  They chose to go prorata, and yes they are informing the TPA just now about this from last year.

A client has a NQDC Plan that they wanted to be triggered by change in control.  The change in control they were expecting is occurring, but we reviewed it and they drafted the change in control definition poorly (it's 409A compliance, but too narrow and it doesn't cover this transaction).  So, the payment that was supposed to be triggered by this transaction isn't going to be triggered.  

They would like to do a corrective amendment to expand the definition of "change in control" to cover this transaction.  Note: the transaction falls within a 409A-compliant definition, so that is not an issue, it just doesn't fall within the plan definition.

I told them changing the definition would be an impermissible acceleration.  Do you all agree, or is there some wiggle room here?

We are using a Third party to prepare our 5500. They sent me a copy to review and I noticed in Part III 8b it shows a loss of 41,465 for 2024. Outside of the yearly contributions for 2024 I calculate a net gain for the year of $25,300. Being a newbie I want to make sure the information is accurate before we sign and file it. Am I looking at this wrong? Any help would be appreciated. thank you!

Brian  

Many of us have probably run into this scenario:

We administer a small defined benefit plan for an attorney. He has no employees and gets most (if not all of his paralegal work) done by a firm that provides contractors. The plan has been in place for 7 years and is currently frozen. The idea was that it will soon be terminated and distributed. The attorney is now selling his law practice through a stock sale. Each year the buyer will receive 20% of the corporation's stock until 100% is owned after the fifth year.

The seller wants to unfreeze the plan and make substantial contributions for one year of about $300,000 then terminate the plan. 

Question: when this sale is taking place, does an affiliated service group exist? And if so, I would think the buyer and his 3 employees and the seller (only him) would need to be aggregated for all testing in the now unfrozen defined benefit plan.

It turns out the seller does not want to cover anyone but him. If an affiliated service group exists I would think we would have 5 to consider. Just for 401(a)26 he would then need to cover (5 x 40% = 2).

Just out of curiosity, would an affiliated service group exist if this were an asset sale (for example a sale price of $1.5M with the buyer paying 20% of $1.5M each year for 5 years)?

Thanks.

Soon (unless Congress changes the law, or the IRS publishes another nonenforcement), for a participant whose FICA wages from the employer in the preceding calendar year was more than $145,000 (or the inflation-indexed amount), an age-based catch-up deferral must be made only as Roth deferrals. For those participants, non-Roth deferrals are allowed only up to the without-catchup elective-deferral limit (or the plan’s constraint, including a constraint that follows a nondiscrimination measure).

On January 13, 2025, the Treasury published a proposed rule stating interpretations of Internal Revenue Code § 414(v)(7) and related tax law.

That notice includes some ways an employer might treat an affected participant’s election to make non-Roth deferrals as, to the extent of what would be beyond the without-catchup elective-deferral limit, a deemed election to make Roth deferrals.

I’ve heard about (at least) two ways an employer and its recordkeeper might use such a deemed election:

1.     Starting with the first pay period of 2026, adjust a § 414(v)-affected participant’s per-pay amounts or percentages between non-Roth and Roth deferrals so they would result in fitting amounts for 2026 if one assumes a participant remains employed throughout the year and makes deferrals in every pay period of the year.

2.    During 2026, apply a participant’s election for non-Roth deferrals until the sum of those deferrals reaches the year’s without-catchup elective-deferral limit. Then, treat any further deferral as Roth deferrals, until the year ends.

Are both those ways logically consistent with the Treasury’s proposed rule?

If not, which way does not fall in with the proposed rule?

If there is a choice, which way would you suggest? And why?

If you like way 1 (starting with the first pay period), what adjustment would you allow if the participant’s employment ended before the year ended and this would result—without an adjustment or reclassification—in not filling-up with non-Roth deferrals all that may be done within the year’s without-catchup elective-deferral limit?

In thinking through your suggestion and reasoning, assume: your client is the employer; the plan has hundreds or thousands of § 414(v)-affected participants; the plan gets services from a big recordkeeper; and your advice is needed now because a half-year is a short time for software and systems changes. Also, assume the proposed rule, although it does not apply for 2026, is the available Treasury interpretation, which a plan may apply regarding a participant’s tax year after 2023.

Plan X, is a profit-sharing plan which provides that if a participant cannot be located after a diligent search has been made, his/her account balance shall be forfeited, subject to restoration upon the making of a claim. If a participant's beneficiary makes a claim for the participant's account balance, does the plan need to restore earnings that would have been credited to the account?

Merely to act as a valid cross-reference, this discussion in a different forum is QDRO-related.

A big thank you to Lois and the entire IT team (is that just Lois?) for cleaning up the site after the major spam attack over the weekend.  Every board was littered with messages.  These boards are very useful to many people and it doesn't happen without great support.

Thank you to the entire clean up crew. 

Hi everyone, I hope that I am posting this question in the correct forum.  Thanks in advance for any input you can give me.

I am 66. My job at a large company ended June 30, 2025.  I enrolled in Medicare so that everything except Part A would be effective July 1 (Part A is retroactive to August 1, 2024).  Specifically, I enrolled in Part B, Plan G, and Plan D and the coverage became effective July 1. 

The information that my employer provided me was confusing as to whether I'd be offered COBRA so it was not in my sights until I just got the COBRA paperwork.  The benefits administrator (a company they engaged to do the billing) confirmed when I inquired that I could be enrolled in both Medicare and COBRA since both started (or would start, for COBRA) on the same day. 

The cost of COBRA coverage, through Aetna, would be $800/month. I would not consider paying that amount since I am already taking a beating through IRMAA, but I have two mental health providers who do not take Medicare. Because of the shortage of good mental health providers, I do not want to switch to someone who does take Medicare just so it costs less.  Therefore, if COBRA would pay the benefits I have become accustomed to, I would at least break even if I did elect COBRA and have Aetna pay as the secondary insurer.

Before I commit to COBRA, I have a few questions that I have not been able to find clear answers for, even when calling Aetna and Medicare.

1. The Aetna representative was obviously not familiar with the complexities of Medicare since she just kept repeating "submit an EOB from the primary insurer" as if that insurer were not Medicare.  Does anyone know how I would get an EOB if the provider does not take Medicare (and therefore would not file a claim)? 
2. Another Aetna rep I spoke to said "if the provider opted out of Medicare, we will cover it."  However, the provider did not strictly opt out, they just don't take Medicare.
3. Do I have to submit the Medicare claim form before submitting to Aetna?  (Section 3 of the form asks about other insurance, so perhaps not?)
4. In terms of the claim form, does anyone know what the difference is between (a) "refused to file a claim," (b) "is unable to file a claim," or (c) "is not enrolled with Medicare."   If I don't go with COBRA and have to file this form, would I choose (c)?
5. If my Plan D coverage has a very high cost for a medication, can I file for reimbursement with Aetna to get my amount down to what I would pay with them?
6. Does anyone have any other cautions about embarking on this somewhat risky plan, since I could end up paying for COBRA and not getting those non-accepting Medicare providers' costs covered?

Thank you so much, and please let me know if any additional information is needed.
Lena

401k PS plan.  The Owner and his wife are going through a divorce which has been ongoing since last year.  It is a nasty divorce scenario and may go on for another year or so.  The Owner and his wife both have an account in the 401k plan.  The wife terminated employment last year and is requesting a partial distribution now to pay her Attorney's fees.  We received the request to approve her partial distribution.  Since we are aware of the impending divorce since last year, we informed all parties that a QDRO is be prepared for both the Owner and his wife's benefits.  The Attorneys on both sides indicated that the QDRO is not necessary as the Owner said it was okay for his soon to be ex-wife to take the distribution.  I am not in agreement with this.  There is nothing in the QDRO procedure in the plan document that addresses this issue.  Can this distribution be processed without a QDRO?

A client maintains, as part of its health plan, a healthy lifestyles program. This program provides reimbursements to participants and their dependents for vitamins, non-medical nutritional counseling, gym memberships, massage therapy and weight management, among others.  The program's administrative services provider was recently changed and it has been issuing reimbursements of expenses incurred by adult dependent children directly to the children rather than the participant. When questioned about their rationale for this practice, the provider claims that Affordable Care Act regulations require that the reimbursements to such individuals must be made payable to adult dependents instead of to the member participant. 

My understanding is that the ACA mandate merely requires a group health plan to extend coverage to a child until s/he attains age 26. There is no requirement stated in the provisions of the Code, ERISA or the PHSA that was amended by ACA (or their underlying regulations) requiring that such reimbursements be paid directly to the adult dependent child. As an analogy, for a married couple, if the spouse of a participant incurs medical expenses, the reimbursements are paid to the participant and not to the spouse. Do you agree with my understanding?

Thanks in advance.

Hi,

I’m exploring project tracking software options commonly used in the 401(k) industry—specifically PensionPro and PensionPal—and would really appreciate some insights.

I have a few questions I’m hoping to get thoughts on:

1.     From your experience, which platform is more convenient and user-friendly for daily operations?

2.     What is the typical training curve for new users? How long might it take for a team to get fully comfortable using it?

3.     What are the estimated pricing models—ideally per user, per year?

4.     Are there any strong alternatives worth considering in this space?

5.     Are there any potential drawbacks or limitations I should be aware of before committing to one?

Any knowledge or experience sharing would be extremely helpful.

Thanks in advance!

Best regards!