Employer wants to encourage longevity, is looking at offering benefits to certain retired employees that meet certain requirements.  

Example: A Cafeteria Plan is amended to allow only active group health insurance plan participants who are at least 60 years of age but younger than 65 (i.e. Medicare eligibility) AND have a minimum of 10 years of GSB service to participate in the Plan after retirement would that be allowed?  I'm looking at 1.125-7(b)(2), which requires any "employee" (and I believe, would also include former employees) with 3 years of employment to participate in the Plan.  Can any further service requirements for former employees be added?

Hi.  We mistakenly distributed a lot of 401k plan account balances to participants when there wasn't a distributable event.  Our correction plan is to seek return of the distributed amounts, and then use the DOL calculator to adjust for earnings.  We have been informed that 1 participant took their mistaken 401k distribution and rolled it into our 403b plan.  The 403b plan has the exact same fund lineup, and the participant selected the same age-appropriate target fund where she had had her 401k balance.

Our intention had been to use the DOL calculator for all affected participants as it will be impossible to learn of the actual earnings for all impacted (they all did various things with their improper 401k distribution).  My question is this: can we use actual earnings for the 1 participant described and the DOL calculator for the rest?  Or do we need to use the DOL calculator for everyone so that we treat them the same?  For the 1 participant described, if we forfeit her actual earnings in the 403b plan, the DOL calculator will result in less earnings applied to the principal when it is returned to the 401k plan.  

Thanks.

We have a client that is inquiring about the Mega Roth IRA conversions.  I have a pretty basic understanding, but have a few plan specific question.

The plan has 1 HCE and the maximum pretax/roth contribution he could make is 4.5% due to relative low NHCE average.  On the match/after tax side, he would be limited to 1.96%. (plan uses prior year testing)

If he maxes out his Roth contributions of $26,000 (Roth deferrals plus catchup) and then puts in an additional $21,000 in aftertax (plus $11,000 in match) to reach the 415 limits and then fails the (adp/acp) test, how does that impact the conversion?

Participant is savvy enough (which the plan we are talking about is very likely) and takes a distribution of full Roth and Aftertax money via rollover to an IRA account.  How is the ADP/ACP test then corrected?  Is the money associated with the ADP/ACP correction not available for rollover?  If not, is the 1099 need to be “updated”?  Or is there no impact on the rollover since it is all aftertax money?

Is there a rule regarding the distribution order, based on fund type, for hardship withdrawals?

In the case of hardship, the Plan allows for distribution of all employer contributions plus earnings, as well as pre-tax and Roth employee deferral contributions (no earnings).

So, if a member has a combination of employer contributions and  pre-tax and (non-qualified) Roth deferral contributions, is the Plan required to distribute the available fund types pro-rata, or can the Member choose from which contribution type(s) he/she wants distributed?

In this plan where all the assets are in self-directed brokerage accounts, the deferrals are sent in one check to the financial advisor, who deposits them to a holding account titled in the name of the plan.  A breakdown is sent with the check, and once the check clears (I assume that has to happen first?), the money is moved from the holding account to the participant accounts.

The checks often arrive in approximately five business days... so we're already getting close the the safe harbor timing.  While this may be outdated these days, we might be able to make the argument that this mailing time and waiting for the funds to clear and then +1 day for the split is "reasonable" for this set up.  Mmmmmaybe.  But what about the times where there is a delay at the financial institution?  The money has been segregated from the employer and is deposited to the plan - check.  So it's not really late to the plan.  Where's the exposure that it didn't get to the participant's account timely... because I assume there has to be some, right?  This happened a couple of times last year, so I want to warn them about this, and being able to hang my hat on something would be nice, but all I'm finding is "must be deposited to the plan", which it was.

I know, get them to a product platform.  Maybe one day. LOL Thanks.

Here is the situation... 

Company A & Company B are owned 100% by the same person.

Company A offers a 401k safe harbor plan

Company B offers a 401k plan with no matching at all. 

Due to the fact that the same person owns 100% of both companies would the two plans need to be identical in plan design?

Additionally, if both plans do have the same design is there any need to combine the plans as a control group with a participating employer?

Client with a participant requesting a hardship in a plan that is with one of the large national 401k vendors called the vendor with some questions.  (We are the TPA on the plan.)  Backup documentation came up during the conversation and the client was told by the vendor that "unless the TPA needs the backup documentation then it isn't necessary anymore to get such documentation on hardships from the participant."   Is this true?  Did I miss something? 

Thanks in advance for any guidance that can be offered on my questions. We have our first 403(b)(9) church plan with discretionary profit sharing that is allocated at a rate of 12% of comp per year.  Is there any type of testing required? I know that because it's a 403(b), there's no ADP test and that Section 403(b)'s maintained by churches are not subject to the coverage and nondiscrimination testing rules and that it also isn't subject to the universal availability rule. However, I'm a little uncomfortable saying that NO TESTING needs to be done and I'm wondering if we should be testing comp limits, employer contributions, and for minimum contributions or if we have to test the profit sharing contribution at all. 

A few other questions I'm getting stuck on: do forfeitures need to be separately accounted for by person? Can church plans utilize auto-rollovers or cash out provisions? 

Thank you again to anyone with input  

Hi

My first one ever. Need input from 401k gurus out there.

Scenario 1:

One deposit made 3 months late. Did the VCFP calculations. They made the deposit for lost earnings today. Correction under 4975(a).

Preparing 5330. Completing Sch C

Item 1 is discrete, correct?

Completed item 2-a-1-i - date of transaction is when they deposited the missing deferrals, correct?

Item 3 is fine

Item 4, checked yes

Do I need to complete item 5? It is the filer/sponsor listed on page 1, items A & D

-----------------------------------------

Scenario 2:

This time I have 20 late deposits, 4 participants, 5 different deposit dates. They will write one check i.e. all corrective amounts will be done in one day.

I think put in 5 "transaction dates" and put in the appropriate lost earnings for each transaction date, correct?

Again, do i need to complete item 5? If yes, do I need to put in 5 times?

Did I miss anything else or not asking correctly?

Thank you for helping out.

Have a prospect (existing plans) that may be in an ASG and may not be aware of the rules.   Does anyone know of a fairly simple questionnaire that can be sent to the prospect to start the screening for this?   Thanks for any help.

Hi, 

When a plan is terminating as per IRS all participants would require to be 100% vested, will this included both Terminated and active participants? one of the plan that is terminating has participants terminated back in 2020, client feels these participants should not be 100% vested and only active participants need to be 100% vested is that true? 

Thanks

ok - so along with the age change for the first rmd from 70 1/2 to 72, I see that there are new tables for the calculations.  Just want to be sure I'm understanding; it appears that the new table must be used in 2022 and going forward.  Therefore for 2021 I can use the "old" table?  That's what my software used as well but looking for confirmation...

Thx in advance

I have read some of the previous discussions on how to treat an employee of a US company with a US 401(k) plan that is a resident of Puerto Rico. 

I think I understand that if the employee is a bona-fide resident of Puerto Rico, and all service for the US company is performed in Puerto Rico, then the compensation earned is considered to be non-US source income?

If that is the case, and the plan document does not have dual provisions for US and Puerto Rico, is the employee treated as excludable for coverage, or are they non-excludable, non-benefitting?

Thank you very much.

Solo 401k sole Participant has died and has 2 beneficiaries - his wife and his sister. Can the plan continue to file EZ? Or must it file SF?

Three or four brand-new users are currently replying to old, in some cases years-old, threads adding just "Thanks" or other useless replies. My front page currently has dozens of these. What is going on? Is this some sort of automated spam attack (what would be the point)? Or are these legitimate new users? It seems suspicious that they all joined roughly Saturday at 2 pm.

Edit: So now it looks like they each made 12 posts and then stopped. I guess the board software has some rate limiting built in, which is great. Let's see if they manage to create any more new users and continue the attack.

Hi

Having a discussion with an agent about a category exclusion. I never use it this way but may need to for an illustration. Concerned about BRF issues.

Please consider the following 3 possible scenarios:

Any eligible employee who is a salesperson and hired on or after 1/1/2015 shall be excluded

or

Any eligible employee who is a salesperson and making $75,000 or more annually shall be excluded

or

Any eligible employee who is a salesperson making $75,000 or more annually and also employed on or after 1/1/2015 shall be excluded

Are any of the above an issue for BRF purposes?

Thank you

I have an plan that switch from a 9/30 PYE in 2016 to a 12/31 PYE.   This created a short plan year of 10/1/2016 to 12/31/2016.  

My system is counting Breaks In Service (BIS) wrong in my opinion.   It is counting the short plan year as one year.   So I have people who worked <500 in the 4th quarter who terminated in 2017 as showing as having 5 BIS.   It is counting the short plan year as 1 than 2017, 2018, 2019 and 2020 as the next 4.  I think the 2017 terms are forfeiting a year early.  

I am pretty sure that is wrong.

What I don't know is what is the right answer.   Do I have to figure out if the person worked 500 hours in the calendar year?   Do I ignore the short year?   

Any help or guidance is appreciated.

Thanks

Good morning!  I have a client that hires employees on a 3-month probationary period (though these employees are on payroll).  The current document states that an employee becomes eligible on the 1/1 or 7/1 after 1-year of service (1,000 hours).

The employer wants to have that 1 year start after the probationary period.  For example if someone was hired on 06/20, their probationary period runs from 06/20/21-09/20/21.  Can the 1-year wait then start from 09/20, meaning they don't become eligible until 01/01/23 (instead of 07/01/22 if the 1-year started from the original DOH, not the date the probationary period ends).

Is that allowed?

Thanks in advance!

Here's a fun one for a Friday morning.  A deferred vested 401(k) participant (from a job decades ago) was recently contacted by a service provider who told him that he is responsible for filing the 5500 for the plan.  The company no longer exists.  He was never in plan administration or an owner of the company, but the service provider says that because all of the owners are now dead and he is the only participant left with an account balance, he is somehow responsible for signing and filing annual returns.  It seems to me that that can't possibly be right, and that the responsibility for terminating the plan and filing the final returns more properly falls on the shoulders of the service provider.

Any thoughts on this one?

I'm being told that NOL's do NOT reduce SE income.  I just wanted to make sure that an NOL does not reduce my earned income amounts in any way.

Hopefully someone can confirm!