Hi

Not a 401k expert

401k plan with 3% NESH+PS

An employee erroneously was allowed to defer in 2021 as never met eligibility.

Got the refund timely, I am told

Totally excluded for 2021, correct?

Thank you

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Does this follow the same rules as qualified plans, or is there a whole separate regulatory scheme?

If enacted as it passed the House of Representatives, the “SECURE 2.0” bill [H.R. 2954] would require a new § 401(k) or § 403(b) salary-reduction agreement to include an automatic-contribution arrangement.

What do BenefitsLink neighbors think about this? Would you like the new requirement? Would you dislike it? And for either view, why would you like or dislike an automatic-contribution requirement?

A participant was working while they attained age 70.5 back in 1998.  They continued to work through 2008.  Each year, through 2004, the benefit was increased to reflect additional accruals.  After 2004, there were no increases. 

We're trying to figure out if the benefit should have been increased after 2004 through termination.  I seem to recall a test or rules of some sort for people working past 70.5 and receiving their benefit, something like comparing the present value of the benefit as if it was always being made to the accumulated value of benefits already paid, and if the difference was greater than you increase, otherwise you don't.  But, I can't seem to find this anywhere.

Does anyone recall this?
Thanks,

A plan sponsor wants to make profit-sharing contributions for the 2021 plan year to employees who did not meet the plan's eligibility criteria in 2021. There is no testing failure if they remain excluded.

Is it possible to amend the plan now to make the eligibility terms less restrictive? It seems like an -11(g) amendment would not work because it wouldn't be correcting a failure. Likewise, we're beyond the timeline for adopting a discretionary amendment.

If they received allocations anyway, despite the plan terms, how would everyone view a retroactive corrective amendment under SCP to conform to the plan's actual operations (i.e., retroactively loosen the eligibility terms for the profit-sharing component only)? Only non-HCEs are in the potentially expanded group. The expansion would not cover the deferral components so there wouldn't be an issue with their inability to defer in 2021.

Is there any other way to accomplish?

Appreciate any insights.

Client selling the assets of his company, effective 6/5/2022; all employees will be terminated, employee contributions cease as of that date.

Employer has yet to make the 3% safe harbor (always made after the end of the plan year), so the plan must stay open to receive those contributions. 

The buyer maintains a 401(k) to which all participants in seller plan will rollover, but the plan has a 60 day eligibility requirement,

Can't the seller's plan remain open for those 60 days??

One participant has an outstanding loan, to which no further payments can be made after the participant terminates.  The outstanding loan balance is a QPLO which can be rolled over, can't it just sit in the seller's plan until expiration of the 60 days?

The solution would be for buyer and seller to agree to waive the 60 day eligibility for employees of the seller's plan, but that has yet to be decided.

This isn't specific to IRAs, etc. but is an estate close-out issue.  Filing form 5495 to request an estate trustee's discharge of any personal liability after 9 months, I need to list and attach the returns for which this is requested, in this case forms 1040 and 1041.  The returns are filed, the 5495 asks for the IRS service center where they were filed.  1041 was mailed to Ogden, but the 1040 was filed electronically.  So in the service center box, should I put "filed electronically", or list the service center where the paper return would have otherwise been mailed?   IRS instructions are very brief and don't address this. 

Thanks. 

If a 401k PS Plan holds an Exchange-Traded Fund (ETF) that is registered with the SEC, should those assets be reported on line 1c(13)?

Is there a rule that says that an IRA including nondeductible contributions cannot be rolled over to a 401(k) plan?  Ordinarily  I would say forget it but in this case it is the owner who wants to consolidate.

If the answer was no, wouldn't that be indicated on this chart?  I don't see any mention of any such restriction.

https://www.irs.gov/pub/irs-tege/rollover_chart.pdf

Hoping to be able to import this existing document from Sungard into FT William. Any ideas are appreciated!

Hi --

Census:

HCE1 & HCE2

NHCE1, NHCE2 & NHCE3

CB plan covers HCE1 and NHCE1

401k/PS covers all

In general, I managed to pass annual but due client's request for the HCE2, things got complicated.

410b is not an issue, passing both ratio and ABPT.

Is there a way to test HCE1, NHCE1 & NHCE2 under annual method and HCE2 and NHCE3 under component rule?

The reason I am asking is because neither HCE2 nor NHCE3 are covered under the CB plan.

Thank you

Employer contributed $10,000 in January, 2022 as a 12/31/2021 elective deferral to the account of the business owner's wife, who is a Participant, but had no compensation in 2021.  Should/can the contribution, adjusted for earnings/losses be returned to the employer?  Is there any way the funds can stay in the Plan, if not in the Participant's account?      

I don't generally use healthcare.  If something breaks or stops working, I get assistance via the emergency room.  My wife is deceased.  My youngest child is about to get his own healthcare.  This year I decided to switch to a High Deductible Healthcare Plan and open a Healthcare Savings Account.  HDHP went into effect the first of the year.  On March 14th, I fully funded the HSA ($8300).  I expect to use the account to pay my deductible and other expenses like dental.  I found Publication 502 which I believe lists covered expenses for the HSA.  I have just a few expenses this year...

• OPTUMRX, April 05, 2022, $883.01

• OPTUMRX, March 18, 2022, $2.62

• DENTALCARE, March 15, 2022, $50.00 (date of 2/5/22)

• MASS GENERAL, February 04, 2022, $798.94 (date of service 12/23/21 and 12/28/21)

Does date of service or date of billing determine whether cost of a service can be reimbursed from my HSA?  Can charges incurred prior to the creation of the HSA be reimbursed?  What kind of documentation do I need to keep as evidence of eligibility?

Also, my company's HDHP is not 'creditable'.  My understanding is that people who delay Medicare past 65 who do not have creditable coverage face penalties when they enroll in Medicare.  Should I switch to a creditable plan the year before enrolling or enroll on the first day of eligibility?

Topic has been used as a continuation of a previous discussion

The IRS states that the Audit CAP correction penalties will not be excessive and will bear a reasonable relationship to the nature, extent and severity of the plan failures. However, Rev Proc. Section 5.01 states that the Maximum Payment Amount would be the tax imposed due to plan disqualification including tax on trust income, failure to file form 1041, income tax due to loss of employer deductions, etc., Has anyone experienced this type of an Audit CAP penalty or a similar severe penalty imposed on a client plan. Typically given my experience with Audit CAP I've seen penalties in the $15,000 range due to multiple plan qualification failure issues. Has anyone had a client that experienced the Maximum Payment Amount penalty, or severe high $  penalties, and if so, what amounts? 

What is the right basis for correcting an MDO for automatic enrollment?  50% of the ADP, or the pct of the auto enrollment?

Here it looks like it would be 50% of the auto enrollment pct:

https://www.irs.gov/retirement-plans/fixing-common-plan-mistakes-correcting-a-failure-to-effect-employee-deferral-elections

Our situation: elections are made on our recordkeeper site, and transfer over to our payroll system.  Due to human error, some elections were not transferred.  These non-transferred errors include automatic enrollments as well as positive elections.  

It seems to me that all these participants were given the option to defer, as they received info from the recordkeeper and were directed to the site.  As they were given the opportunity, this 401k plan fix would not apply:

https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide-eligible-employees-were-not-given-the-opportunity-to-make-an-elective-deferral-election-excluding-eligible-employees

Thanks in advance for any comments!

When an asset sale occurs between two entities both having 401k plans and the seller's plan terminates, what happens to the outstanding loans in the seller's plan?  Since it is being terminated rather than merged, is there any way to "transfer" the outstanding loans to the Buyer's plan in order to avoid the loans being defaulted and taxed to the participant?

Thanks for your help with this...I can't seem to find a definitive answer...Yes, I know it will depend on the plan documents of both plans, but wondering if the plan's could be amended to allow for the transfers of the outstanding loans.  

Thanks again!

Maybe a dumb question, but I haven't found anything concrete on the IRS website that shows how one proceeds with freezing a plan in the case of a merger, only that it's an option. Does freezing it require an amendment to the plan, or will a notice to current participants suffice (similar to a black-out period)?

A plan sponsor was sold 100% to an ESOP for its employees.  So the plan sponsor is now the ESOP.  I'm told there are no corporate officers but I am checking with their CPA firm.   The ESOP has a Board of Directors who are also plan participants.  I'd think of them as officers.  But if none of them have wages over the key employee limit, then it seems there are no key employees.  I thought I read at one time there had to be a minimum number of officers, or at least one.  All I can find now is there is a defined maximum number but I don't see anything about minimum number.

Thank you in advance for comments.