A 401(k) plan for the first time has over 100 participants and unfortunately must meet the plan audit requirements. There are over 50 retirees  that have between $5000 and $10,000 in their account and if only a few of them withdraw their monies the plan would have less than 100 participants. The plan sponsor would like to force out or encourage these retirees to take a lump sum.  Are there any options available? It seems that the plan sponsor can contact these participants and remind them that they can take a lump sum or rollover to an IRA. I'm concerned that if the plan sponsor offers a cash or other incentive to take a lump and the retiree accepts it could be deemed self dealing with plan assets. Further if the employer recommends a lump sum or a specific rollover it could be deemed fiduciary investment advice Any suggestions? 

What is the Payment Event under 409A when a Transaction Bonus (calculated as a % of net proceeds) is payable 12 months following a CIC, but the bonus will be forfeited if the employee voluntarily terminates employment prior to the payment date. 

Is the Payment Event the CIC or a fixed date (the date 12 months after the CIC)? I believe it's a fixed date. 

But what if the plan language says the bonus is payable "within 12 months" after the CIC, and is still subject to forfeiture if employee voluntarily terminates employment prior to the payment date? I believe it is a drafting error as the actual language is "60% shall be paid within 12 months after the CIC and 40% 18 months after the CIC" and it appears to be intended to retain the employee past the transaction. I initially looked into correction methods for a payment period longer than 90 days following a Payment Event, interpreting the CIC as the Payment Event, but with the possible forfeiture I'm now leaning toward the Payment Event really being the date of payment.  And possibly correcting under IRS Notice 2010-6 Section VII(E), "Service Recipient Impermissible Discretion to Accelerate Payment Events." The argument would be that the Payment Event is a fixed date which is 12 months after the CIC and the "within 12 months" language is giving the Service Recipient the (impermissible) discretion to accelerate that payment event. Any thoughts?  

I have just been asked to set up 3-year cliff vesting but interestingly don't seem to have other plans with such a schedule.

I feel like I recall a recent law that 3-year cliff was no longer allowed?  Was that for DB plans only?

I understand it doesn't work for top heavy plans but plan in question is not top heavy.

Sponsor has a 401k and an ESOP; two separate plans with two separate third party recordkeepers.  Compliance for the 401k reported ADP test fail.  Corrective distributions were calculated and returned prior to March 15th 2021.  Compliance for the ESOP reported 415 limit fail that involved 1) limiting ESOP allocation to certain participants due to maximum annual contribution in the ESOP, and 2) additional excess contributions to be returned in the 401k, comprised of deferrals and match.  ESOP recordkeeper told sponsor to notify 401k recordkeeper with this information and indicated that the correction deadline is 12/31/2022.  Is this deadline correct for 12/31/2020 plan year end?  Where can I find the guidance that supports this?

Participant was supposed to have her first RMD in 2020, but that was suspended.  Had it not been suspended, her RBD would have been 4/1/21.

But since it was suspended, did she really have an RBD?

By when must her 2021 be taken?  21/31/21 or 4/1/22?

After the update, when I am in my personal view, there is a pane with recommended jobs.  Is there a way to get rid of that?  It takes up too much real estate on my screen.

Plan is failing 2020 ADP.  We were thinking of retroactively amending the plan for 2020 to be a 4% SHNEC, depending on the cost-benefit analysis.  (Plan is TH, too, so it'll probably be worth it.)  We can still exclude HCEs from that, right?

The main question is if we amend for 2020, will that automatically be in effect for 2021, too?  Or do we need to to another amendment for 2021 to be 4% SHNEC?

We will then amend the plan for 2022 to either be SHNEC or SHM, and talk to the owners to see if they want to exempt themselves from the SH.

ERISA is the Employee RETIREMENT Income Security Act.

What do Health Plans have to do with Retirement?

Just something I've always wondered about.  I don't deal with Health Plans, so I can't figure out why there is overlap.

I have a question about In-Plan Roth Conversions and the ability to take the conversions as In-Service Distributions prior to age 59 1/2.

Our plan document has a specific section for In-Service Distributions of In-Plan Roth Conversions. And, one of the Options is "any time", meaning that a participant can withdraw the In-Plan Roth Conversions at any time.

So, I have a hypothetical scenario. Employee A (who is, let's say 40 years of age) has been contributing Pre-Tax Deferrals to the plan. Normally, he would have to wait until age 59 1/2 to withdraw the deferrals as an in-service distribution. Instead, he chooses to do an in plan Roth Conversion (the plan document allows In-Plan Roth Conversions for all sources at any time). He then immediately (before there are any earnings) takes out an In-Service Distribution of these funds (because the plan document allows for In-Plan Roth Conversion amounts to be withdrawn in-service at any time). So, effectively, he avoided not only the 59 1/2 age restriction for in-service distributions, but also, the 10% penalty?

Is this scenario allowed under current regulations?

Thanks.

I have a client leaving a PEO and establishing single ER plan. Within the PEO, they had QACA design and are leaving 11/1. Plan year end is 12/31.

Can they continue the QACA in the Single Plan even though it was not adopted until mid year? Thanks

Got into a debate with a colleague and I'm 99% sure I'm correct but wanted to confirm (sorry if this is a dumb question, just want to make sure!)

Plan is Top Heavy for 2020.  The only contributions made into the Plan in '20 was the one Key employee making a 401(k) contribution (no other Employer money has been contributed).

Based on the 401(k) being made, they are therefore required to make the 3% Top Heavy to all non-Key employees, correct?

I'm in law school writing a paper on ERISA, and I'm trying to work this out in my head. I'm thinking about the fiduciary duties of a plan administrator and how that coincides with possible discrimination backpay awards that may affect the plan. Possible scenario: hundreds or thousands of employees are discriminated against and part of being made whole again involves backpaying them, not only for their actual wages lost due to the discrimination, but monies lost from a benefit plan that they would of had if they were being paid the correct wage. Of course, this scenario is predicated on a plan that is funded based on the employee's salary. So, now the plan is possibly subject to backpay to make these employees whole again.

Another possible scenario: what about a group of employees who've been working for years with a company only to find out they have been discriminated against. Not only have they not received their proper wage but they don't have as much money in their plan as they should because their contribution was based on their salary. Over the course of years, given interest, this adds up. How would a situation like this be handled when trying to make the employee whole again?

How are premiums calculated in a retirement plan? Do most plans already account for any possible retroactive relief or harm to the plan? 

Possible Thesis:

Under ERISA, a plan administrator should have a fiduciary duty to mitigate damages to the plan when an employee files an EEOC charge alleging discriminatory practices by the employer that could result in a retroactive relief being awarded to the employee.

I'm not sure if I have anything here, or if any of this is plausible or relevant. Any advice/comments are more than welcome to help me narrow this down. Thanks, everyone!

Hello, I am on H1B VISA , currently working for one of the company in United States. I am not a US citizen. I have to go back to my country next year, and planning to resign before leaving and I am 40 years old.  I have couple of questions related to my 401k Withdraw, 

1. Can I withdraw 401k money every year say, If I have $100K and withdraw $25000 instead of withdraw complete amount ?

2. If i withdraw partial amount($25k in this case) and if I don't have income in my country, does my tax bracket come down to 20% or below and tax is charged based on that ?

2. I need the money to buy a house back in my country, If I take a 401k loan, I don't have any income to payback, what are my options in this case? 

Any suggestions would be greatly appreciated.

Can a Plan's Tax ID be found on the internet? The 5500's only show the employer's.  Are Plan Tax ID's kept private?

We have a plan that will be terminating in 2021 at some point, date has not been determined.  However, the employer has been sold to new entity and employees are terminated as of 6/30/2021.

The plan is Top-Heavy as of 12/31/2020.  Non-key employee who is a participant and employed by the employer on the last day of the plan year gets a top heavy minimum. 

Is it too simple to say the the plan is terminating as of 11/1/2021 and therefore, no top heavy contribution is required?

I don't want to miss anything being this feels like such an easy question....

Thanks

A client has 3 small  businesses... 

1.  Lawn Service
2.  Professional power sweeping company
3.  Investment properties

While they sound like they would all be using each other's services I am told they do not at all.  

Businesses #1 and #2 each have 1 employee + himself.... #3 is just him.  

Can he open a solo 401(k) plan for business #3 and not worry about the other 2?  Or are we dealing with a control group?  I recall reading another thread where the situation was similar but the other businesses were owned by a spouse therefore there wasn't a control group.   He makes lots more money investing in real estate than the other 2 businesses combined.

Thank you

When filing the 5310 to terminate a plan, is there a requirement to submit and fill out the Procedural Requirement Checklist?  I previously used this checklist as a frame of reference and reminder as to what has to be filed with the 5310. I'm not aware of any requirement that this checklist  has to be completed and filed with the 5310. Any thoughts on this?

Anyone have a good recommendation out there for contribution projections for prospects?  The only one I can think of is Relius Proposal but it has been discontinued.  Any other good ones out there?

Plan sponsor has two groups of employees: "Exempt" and "Non-exempt"; both groups are eligible for the company 401(k) Plan

However, they wish to have two separate eligibility requirements for the plan: The "Exempt" group must complete 30 days of service, and they enter the plan on the 1st of the month following. The "Non-exempt" group must complete 60 days of service, and they enter the plan on the 1st of the month following.

Questions:

One, the prototype we utilize does not allow for a 30 (or 60) day requirement; it appears that it must be in months. Am I missing something?; and

Two, I don't believe you can have a dual eligibility requirement for the 401(k) feature of the plan.

Thanks for any replies.

Anybody see this from Paychex?

A Plan Transfer Fee of $1,500 will be applied to any client who transfers its plan recordkeeping to a new service provider and who is not currently/does not continue to process payroll with Paychex.
Select the Plan Transfer Fee payment method from the options below.
Note: If you do not select an option, Paychex will collect the fee from the Plan's assets.

I'd think that ceasing payroll services and tying that to taking fees from plan assets is problematic.