As I understand it, if an Employer choses to utilize the Top Paid Group (TPG) for it's benefit plans, it must be used on all benefit plans, retirement and non-retirement plans.

So, this would include 401(k) and an HSA, right?  if an employer wants to use TPG for HSA, they have to use it for the 401(k) right?

But what happens if you have conflicting choices?  The HSA says TPG and the 401(k) plan says standard?

Anyone have a decent primer on this they could share? What needs to be in the election by the Plan Sponsor to opt into this method instead of the standard method? Is there a summary of the 24 month average rates? Is that a single rate or are they segmented, that is 3 separate 24 month rates. When you chose a specific look back month for the 24 month average does that same month have to be used for each of the next 4 years you are required to use the alternative method? The standard method is pretty straight forward and verifying rates seems easy on the PBGC site. The alternative method I feel should be somewhat straight forward too but for some reason it's eluding me

This feels like something I should know but I don't do a lot of PBGC plans and most of them are under 25 where it's simply cheaper and easier to pay the small plan cap.

I have a plan that's got for them a significant VRP this year due to the very low PBGC rates and trying to see if the alternative method can reduce that substantially even though I know it means using the alternate method for at least 5 years.

Terminating plan - The termination date is 09/21/2022 and the employee has contributed $27000 ( the 2022 max +Catch up) in deferral contribution.  

* Is the maximum deferral allowed for individuals if the 401K plan only operates for a shortened year, i.e., January 1 through September 21, 2022?

Thank You. 

I have a plan that traditionally gives a 16% ps contribution.  They would like to allow employees to be able to take a portion in cash.  For example: 10% would still be PS, but the other 6% could be cash or deferred.  So, I believe I have a CODA situation.  

That being said, for the 2022 plan year, they would like to start this arrangement.  They would make the PS in March 2023.  Would the CODA portion be a 2022 or 2023 contribution? I am thinking 2023 deferral?  For the amount that is taken as cash, I assume it would be 2023 income.

Question 1: One person CB plan. CB pay credit formula is a percent of compensation using only compensation greater than $150,000. If compensation is less than $150,000 is there a 401(a)(26) failure?

Question 2: Company has three employees, all family / HCE's. All employees have entered the plan, but only one of the participant is receiving an annual cash balance benefit, the others are in a $0 contribution credit group. Is there any way this plan can pass 401(a)(26)?

Have a potential new client that just came to me with a failed ADP Test.  However, the previous TPA did not make any type of correction to the test.  Now we are left trying to figure out how to proceed:

1) Is this correctable via the VCP program?
2) In order to correct the testing, can we refund one participant enough in order to pass the testing?
3) What liabilities, if any, are there to the company?
4) What penalties could the Plan face?

Generally we use 5% when setting the interest rate for Cash Balance Plans, but we have a prospective client that is looking to have it at 4%.

The question is, is there an acceptable rate to use as per the IRS? 

I tried to do a search, but couldn't find an answer.

Thanks!

This is a vanilla PSP plan.  Here is what I have:

• June 30 FYE
• Integrated
• 1,000 hours and last day requirement
• 4 participants

One participant is throwing a wrench:

• Hired 1/1/2020
• 1st year of service 1/1/20 ~ 12/31/2020, worked 1,000 hours
• Enters the plan on the next entry date (semi annual) - 1/1/2021
• Received a 6/30/2021 contribution based on his 1/2 year salary

Here is my problem:

• He terminated 2/17/2022
• For 6/30/2022 year end he has 1,000 hours but was not employed on the last day of the plan year

He is the reason for the 410b failure.  He does not meet the continuing eligibility requirement rule.  Why do I need to include him?

Thinking about working with Nationwide as a TPA for 401(k) plans.

Does anybody have comments on pros and cons of working with them versus other platforms. 

Is it a big deal to switch between cash and accrued basis?

New 1-person plan deposited $500 as a starter contribution after the end of the plan year.

As part of a controlled group, she would normally file a 5500.

We'd like to wait until the current plan year contribution is filed before starting to file, and then file as accrued, so the 2nd plan year contribution would show the contribution for both the first and second plan years.

I understand a new safe harbor 401(k) plan can be signed prior to 10/1 and effective 10/1.

However, does the notice for the new plan need to have been delivered to eligible employees by 9/1 (ie 30 days previously)?

Hi

PS plan, top heavy for 2021. Both key and non-key receive top heavy minimum. Plan also has 5% gateway requirement for non-HCEs.

Beginning of 2021, Joe owned 100% of the company

July 1 2021, Joe sold 20% to an employee, Mary.

As of 12/31/2021, ownership is 80/20.

When did Mary become a key employee?

What contribution does Mary need to get for 2021?

Thank you

DB plan sponsor is an insurance company, currently in receivership under its state insurance department.  This status has not altered the plan's requirement to do annual valuations, file 5500, etc.; the actuary prior to receivership is still in place.  The prospects for rehabilitation (and/or coming out of receivership) are virtually nil.  While there is no formal statement yet from the state DOI, it appears likely the DOI will seek to have the PBGC take over the plan.  (The plan actuary has not been part of discussion, if any, between the DOI and the PBGC.)  Most recent AFTAP is around 100%, but a termination ratio is estimated around 70-75%.  The plan has been frozen for several years.

The plan has an unlimited LS option.  The current question is whether any PBGC regs and/or practices would require the plan to suspend (ie, before any formal action by the PBGC) the use of the LS option for anyone currently reaching a benefit commencement date (retirement or otherwise)?   My review found nothing on point; checked all the Blue Books, did not see anything in the regs (although that might be easy to miss).  Any relevant experience?  Ideas/suggestions?

Is there any way to force out small balances of active employees who have never contributed to the Plan?  We have a plan where a number of employees have balances <$1,000 resulting from a one-time profit sharing contribution. The employer would like to cover recordkeeping expenses for participants with less than $1000 as a perk to newer employees who are just starting to save in the plan, but want to exclude those with just profit sharing money. The recordkeeper is unable to do this systematically. Is there any creative way the employer can get these small balances out of the plan if these participants are still active employees? 

We have a large client that funds safe harbor non-elective and profit sharing quarterly. So we make YTD calculations in Relius with pre-determined PS contribution rates for a couple classes and have the net cost determined by reducing for prior quarterly allocations.  Getting it then into Ascensus format is a feat for 250 participants.  Data entry routine I suppose could possibly work or just hand key, or cut and paste.  It will be trued-up for the last quarter after the end of the year since the HCE PS rate is estimated on the low side during the year for discrimination testing purposes.

As an alternative we will attempt to have the client code employees in Paycor for SH % and PS% for those eligible and have a file created by Paycor that can be uploaded to Ascensus automatically each pay period.  Sounds idealistic and likely to take an act of God for the plan sponsor and Paycor to get done. The plan sponsor wants to automate the contribution process and wants contributions to go in dollar cost averaging each pay period. (Did I say it is a large group of doctors?)

Anyone doing anything remotely like this?  

Thanks for any comments

We have a 85 participant pooled profit sharing plan with $17,000 in total assets.  Employer wants to amend the plan to 'charge' the accounts of terminated participants an annual administrative fee the year beginning after the year after termination (Term 2020, fees start 2022 if account not fully paid out.)  Since this is a pooled account would these expenses to the terminated participants accounts become additional earnings to the other participants or forfeitures to be re-allocated to active participants OR something else altogether?

I know the plan can be amended to allow for the expenses to be charged (must also send a notice to each participant regarding the change). Just not sure how to handle the recognition of the expense charges.

Thanks for any input.  Really struggling with this.

Kathy Nichols

I think the answer to my question is that this cannot be done but I just want to be sure!  I have a fairly new NQP plan (started in 2022) that allows both participant (limited to only the CEO) and employer contributions (open to other select employees).  No participant contributions were elected in 2022 but employer contributions were made.  At the time the plan was established, the plan sponsor elected to pay benefits only at separation from service (with the allowed limited acceleration exceptions) with a lump sum payment option as the default.  The plan document did also allow for a 5-year installment option.  The plan sponsor failed to collect payment option elections on the employer contributions made in 2022 thinking that none were necessary so I believe these deferrals have all technically "defaulted" to the lump-sum payment default at separation from service. 

In order to avoid having to get any elections on the employer contributions and to have the plan operate more closely like an older NQP they had in place several years ago, the plan sponsor would now like to only provide for a 5-year installment at separation from service for all contributions - including those made in 2022.  Because no participant contributions were made in 2022, I think this may be an allowable amendment and would not serve to delay anything as no benefit currently exists for this contribution source.  I don't think, however, that this would probably be able to apply to the 2022 employer contributions already made as the change from a lump sum payment to an installment payment would seem to be a delay under the 409A rules.

I am looking to see if anyone has any thoughts on (1) if my beliefs are correct or incorrect; and (2) any possible ideas for structuring this to accommodate the plan sponsor's wishes.

Has anyone had a state unemployment agency ask whether a past employee has taken a distribution? Are we required to disclose? 

PS Plan has owner and one employee. During the plan year,  the employee was paid out.  At year end the only participant is the owner. I recall that since at beg of yr there was an emotes in the plan the 5500 EZ cannot be used. Is there any other opinions? Thank you

Say I have 5 companies that all adopted a plan: A, B, C, D, E, F

The CG's are:

A B & C are one CG

D & E are another

A B & D also

C & E too

F is not part of any CG or ASG, so I have a MEP.

Do I need to do 5 separate tests?