This cash balance plan (half of a combo) had 6 eligible employees during the year.

One of them terminated with fewer than 500 hours.  And the plan requires 1000 hours for an accrual.

Seems easy....but, the plan has separate classes for the contribution credits, and her class always gets zero.

Did she fail to accrue solely based on the lack of hours?  She does get 415 participation credit for prior years even without an actual benefit, since she had the hours before 2021.

So I'm back to at least thinking "maybe".

(The two principal employees benefiting, out of either 5 or 6 employees, obviously are different outcomes for the test.)

Does the answer change if the plan is amended to provide any nonzero amount for a new class just for her, even though she won't accrue it?

Thanks!

--bri

Plan currently allows for in-service withdrawals at ag 59.5 for all sources.

They would now like to limit it to only accounts that are 100% vested.

Is there a cutback issue?

Does the Otherwise excludable employee provision consist of two options:

1. Otherwise Excludable Employees - where any employee HCE or NHCE is removed from testing - thus two tests - one for everyone meeting max age & service and one for those who are otherwise excludable under max age and service.

2. Early Participation rule - where you only exclude the NHCE's who have not me max age and service but would keep any HCE who has not met max age and service in the testing with everyone who met max age and service.

I have a client with both a cash balance and 401(k) that would like to invest part of each plan's assets in I bonds. Is this a permitted investment for a qualified plan?

Employer had IRS Plan Number 003 terminated in 2003 and started PN 004 in 2004.

I don't know what year they started filing the 5500-EZ, but I'm guessing it was a bunch of years ago.  I see letters in my files going back to 2018, but I only have the EZs going back to 2015.

The ones I have are all PN 001, so I'm assuming all the others are, too.

What's the fix?  Can I just fill out question 4 and change the PN there?  I'd rather not amend 15 years worth of forms.

A doctor has their own S-Corp that was part of an affiliated service group through 12/20/2021.  The ASG sponsored a 401(k) safe harbor match plan.

The doctor did not participate in the plan in 2021 and will not be receiving any employer contributions.

Question...

Is the doctor able to set up a SEP plan for their S-Corp for the portion of the year that they are no longer part of the ASG, and fund based on compensation earned for the short period of time they are not part of the ASG?

Thanks.

Client is buying a company in a stock deal. Buyer has a safe harbor plan (matching) plus a non-safe harbor profit sharing contribution. Seller has a 401(k) provides a match but is not safe harbor. Buyer wants to use 410(b)(6)(C) (which the plans meet the requirements of) to delay merging the plans at close. Buyer wants to just run both plans for some time within the transition period. 

QUESTION: During the 410(b)(6)(C) transition period, can you maintain the safe harbor status of Buyer's plan, as long as you separately test the Seller's plan? 

We have a participant who took a Covid loan in 2020.  The plan permits two loans only for the purpose of re-financing.  He does not have enough available with the (reduced) $50,000 limitation to re-finance and extend out for another five years.  He could re-finance and have it  paid off by the original due date.  So this is my question, since this was a Covid loan, the original due date was essentially 6 years (5+1).   With a refinance of a Covid loan, are we to use the original due date of 5 years out or the extended Covid due date? 

Maybe this is a simple question, but I'm having trouble wrapping my head around it and I've never had it asked before.

I have a potentially new client who wants a 401(k) plan. They have union employees covered by a collective bargaining agreement. So the premise would be to exclude union employees from the plan, right? Except they also pay these union employees non-union income to cover their travel expenses.  AND, one of the two owners works for the union as well.

Part of me says, well that part of the income isn't covered under the collective bargaining agreement (or able to be deferred, matched, etc), so that income would automatically be included, and they would be eligible for the non-union plan for the income not covered in the agreement. But the (prototype) language that any employee covered by a collective bargaining agreement is excluded has me wondering.  

Your thoughts?  (Thanks so much in advance!)

Quick question -

Plan has its own table to convert the normal form of "10 years certain + life" to other forms, including single life annuity.

For 417 purposes, do I do the lump sum first by:

a) Convert 10cc to life via the plan factors, and then convert the life amount to lump at 417 rates, or

b) Convert 10cc to lump with 417e factors, but convert 10cc to life separately with plan factors (even though the lump sum value of that life annuity would be different?)

Thanks in advance (and presume the plan's AE factors aren't going to override 417 minimums)

--Bri

Plan subject to J&S did not sign forms with J&S options, what is fix?

Be safe!

If a participant in a plan is not an owner, do they have to take an RMD?  Wasn't that the way it was in the beginning?  Only owners had to take an RMD, non-owners didn't have to take an  RMD from a qualified plan?  

Thanks

I hope BenefitsLink neighbors will help me provide without-fee legal advice to someone who would, without fee, provide her investment advice to a charitable organization’s ERISA-governed retirement plan.

The advisor would render advice about (but not decide) investment alternatives for an individual-account plan that provides participant-directed investment.  The advisor would have no authority, discretionary or even non-discretionary, to implement her advice.

The advisor is not registered with the Securities and Exchange Commission or any State’s regulator because she is not, “for compensation, engage[d] in the business of advising others[.]”  Investment Advisers Act of 1940 § 202(a)(11), 15 U.S.C. § 80b–2(a)(11) (emphasis added).

Under ERISA § 3(21)(A)(ii), “a person is a fiduciary with respect to a plan to the extent . . . (ii) he renders investment advice for a fee or other compensation, direct or indirect, with respect to any moneys or other property of such plan[.]”

The Labor department’s and courts’ interpretations have set up the idea that a commission or other compensation paid or provided, however indirectly, by a third person can be compensation that invokes ERISA § 3(21)(A)(ii).

But this advisor will get no fee, and cannot get a commission or other payment from a third person.  Also, this advisor will get no fee or other compensation for any service beyond investment advice.

How comfortable should I be in advising that the advisor is not the retirement plan’s fiduciary?  Is there any gap or flaw in reasoning that, absent a fee, the advisor is not the plan’s fiduciary?

I recognize that whichever fiduciary decides the retirement plan’s menu of investment alternatives must evaluate, according to ERISA § 404(a)’s duties, whether it is prudent to consider the advisor’s advice.

I’ll appreciate any ideas from BenefitsLink neighbors.

Good morning everyone!  I have a client that applied to they EFTPS, but never received their PIN in the mail.  I know generally you can only do a check if under $2,500, but under these circumstances would it be an issue to have the check sent?

Thanks in advance!

The code section in the topic is with regard to a corrective amendment for 401(a)(26). It states that the retroactive amendment must be under the same conditions as 1.401(a)(4)-11(g)(3) thru (g)(5). I am puzzled what if any meaning 1.401(a)(4)-11(g)(3)(v)(A) should be given. It is titled "Corrective amendment for coverage or amounts testing". Since the testing at hand is for minimum participation, can this (v)(A) paragraph be ignored? I would think so but I am wondering if anyone else has given this further thought. Generally, a group of ees that satisfies 401(a)(26) may well not also satisfy 410(b) or 401(a)(4). Alternatively, what sense would it make for the additional accruals themselves to satisfy 401(a)(26)? That would seem to be an overkill.

Got a new plan to us.

The plan document is written with 0% integration level on a 2 tier non-elective.

Why would some do this?  What is the logic?  I don't get it.

Years ago, three participants in this non-ERISA 403b plan opened up accounts at Equitable.  They all terminated in the early 2000's.  After that, the plan started making employer contributions and took more control of the plan (moving all employees to one RK), moving the plan firmly into ERISA 403b territory, which is when we got involved.  So only these accounts were still 'outside', and we've not been reporting them on the 5500 under the 2009 rules.

Now the NFP is terminating the plan.  We asked Equitable for options, and they told the plan sponsor that they have no authority over those accounts because they are individual tax-sheltered annuities.  The plan sponsor spoke to the participants who have agreed in theory to take the money from the plan... but haven't.

Does the 2020 IRS guidance apply here?  Can they just consider these accounts as not part of the plan any more and say the plan is done?

Thanks.

Hello,

Some background:

I had a sole-prop some time back and had a self-employed 401k plan with Fidelity with EIN of sole-prop

Then I created a s-corp and just used the same plan - changed EIN to S-corp, Name to a generic name - MKK-Plan. 

All good, no issues. I was thinking of shutting down the sole-prop but never did. 

Now, one of my clients (for whom I do most of my work) has changed their policy and want me to handle task based on my SSN (1099). Does not want to use EIN of Sole-Prop.

I'd asked earlier this question with the understanding that they could use EIN of Sole Prop and found that I could add the EIN of Sole-Prop to my current MKK-Plan. But client wants to pay under SSN only.

Can I do the same with my SSN?

Fidelity form asks for:

The term “Employer” includes the following Affiliated Employers covered by the Plan:, Should I add the following

MKK - SSN

Thanks,

Looking at a plan doc prepared by another. Calendar plan.

401k eligibility is 6 months (in which 1000 hours of service is required) with entry date first month following completion of 6 months. Can the plan require 1000 hours of service where eligibility is 6 months?

PS is 12 months with 1000 hours so this is fine. Entry date is dual entry, 1st and 7th months.

Thank you