Any advice for an employer/plan sponsor that says they don’t have records for certain rehires of a company they acquired a few years ago. So for example they hire an employee who says I used to work here - but employer cannot find records of prior work history to determine if they completed service for vesting - they have a 5 year schedule.The HR contact did mention there are boxes of hard copy data that I guess would be very hard to sort through. Employee does not have a current account balance in the plan. Can the employer be required to provide W2 or information of prior employment or any plan benefit information? Thanks!

We have a new 1 person plan who failed to file a Form 5500 despite crossing the $250k threshold that requires it.  I was looking at the DFVCP program, but one-person plans don't qualify for it.  Is there a correction program for plans that file Form 5500-EZ?  Trying to figure out how to get them back in compliance.

Thanks in advance!

When a participant seeks one’s spouse’s consent to name a primary beneficiary other than the spouse (or to elect against a survivor annuity), a consent has no effect unless “the spouse’s consent is witnessed by a plan representative or a notary public[.]” ERISA § 205(c)(2)(A)(iii).

Although ERISA does not preclude a notary from using electronic means to furnish the notary’s certificate of a notarial act, a notary must witness the spouse signing the consent. 26 C.F.R. § 1.401(a)-21(d)(6). Until recently, most service providers advised plan administrators that this calls for a spouse to sign a consent in the notary’s physical presence.

Under a proposed interpretation of the statute, a notary may witness the spouse’s signing with physical presence, or by using live audio-video technology and meeting all requirements and conditions under the proposed rule and the State law that applies to the notary. Use of an Electronic Medium to Make Participant Elections and Spousal Consents [notice of proposed rulemaking], 87 Federal Register 80501–80509 (Dec. 30, 2022).

That notice states: “Prior to the applicability date of the final regulation, taxpayers may rely on the rules set forth in this notice of proposed rulemaking.” Id., at 80506.

BenefitsLink neighbors, in your experience:

Are plans’ fiduciaries accepting a notary’s certificate if the certificate shows the notary did the witnessing not by physical presence but rather by audio-video technology?

Can one of you fine folks tell me how to DM someone who posts a message that I cannot respond to online? 

I assume DM means direct message? 

Thanks, 

David

A customer has had a defined contribution plan for a while, participation is open to all employees if they work the threshold 1000 hours. Now, the customer wants to cut back on who can participate based on their job types. The customer understands it can't change the rules for present employees. But for John Doe who is hired next year in a job classification that will be cut, I'm not sure how the plan can be revised to maintain the present participants and prospectively cut job classes. I've drafted a web of the 1,000 Hour Rule and its implications if not followed; I've looked at non-discrimination rules; I've looked at the general plan amendment rules. 

I'm stumped. What other rules should I read to figure out this goal? So far it looks like the plan cannot be amended to prohibit future participants based on their job classification, but I have to imagine there is some mechanism that allows it. 

Hello! A tax manager just came to me with some questions for a 401a plan - which I know nothing about. He spent a good amount of time looking things up and seemed to have gotten conflicting answers:

- Do employees contribute to these?

- Is participation mandatory? How would it be mandatory? 

- Is there an employee contribution limit? Are there catch-up contributions?

- Is there some kind of employer match on these? 

Thanks for your help!

Monday brain cramp (although the cramp is likely permanent...)

A lot of angst here over a small amount of money, but the question has come up if the death benefit can be directly rolled over to a trust for the benefit of the minor, or can it be designated as a beneficiary IRA? I'm really not sure on this one, due to the fact that there was no "designated beneficiary" by the participant. I believe it has to be under the control of a guardian/Trustee until age of majority regardless of rollover status. Thoughts? Thanks!  

Update - after having done some additional research, this seems to get complicated even further. It seems like it will be ultimately governed by state law, since ERISA doesn't appear to specify specific handling. So we'll need to tell the Plan Administrator and client to consult legal counsel. Seems like the legal guardian (and there is one) can make it easy (on the advice of counsel) by either setting up a UGMA trust/custodial account, or direct a rollover to an inherited IRA set up for the minor beneficiary?

hiya! I'm wondering if anyone knows of good certificate or other online courses that would be good for non-attorneys working in the ERISA legal world. I've gone through ASPPA and CEBS already - so i'm looking towards more legal-centric options (like estates, legal writing, etc). Not interested in a full masters program or anything of that sort. Thank you!

A small Non-profit entity has a 401k Profit Sharing Plan with Safe Harbor Non-elective contributions. The Discretionary contribution is set up as each participant is in their own allocation group. There are no highly compensated employees.

All eligible received a 3% Safe Harbor Non Elective. They want to give one particular employee a Discretionary contribution to reach the 415 Limit. This exceeds 25% of that participants W-2 income. Are they in violation of Section 404 since that employee is the only one benefitting from the Discretionary and should be limited to 25% of Benefiting Employee compensation? Since the other employees received the 3% Non-Elective are all compensations considered for purpose of determining Plan compensation for Section 404? Because this is a non-profit does Section 404 even matter?

Hi

Here is a new one for me.

Client just informed me that the RK (no name) returned the 2023 PS contribution to him in January (he just informed me a few days ago).

He sent them the check back in September.

As this is a combo plan, there are 2 issues:

• Deduction was taken for 2023 but deposit was not made
• Gateway/top heavy is not satisfied

Anyone came across a situation like this and what is the correction?

Thanks

I had 3 employees terminate during 2024 in this dentist practice.  As a result the 410(b) average benefits percentage test has failed.  The solution is to overide the test and add back into the mix one of the terminated employees.  Does it matter which employee I override and provide a PS contriution to in order to pass the test?  Of course the obvious choice would be the one who earned the least because that the contribution amount would be smaller. 

I know a Safe Harbor Match is a discretionary true-up, if it is done on a payroll-by-payroll basis.  I just wanted to confirm that a document can allow a QACA match to be handled the same way?

Thanks in advance!

And the Nerds Cheer?

Secant, tangent, cosine, sine. Three point one four one five nine!

401k plan with 3% NESH and integrated PS allocation provisions (last day+1000 hours requirement)

The only NHCE terminates during the year with less than 500 hours.

3% NESH is allocated.

Plan fails ABPT but passes ratio testing under 410b.

As the participant got 3% NESH, cannot be excluded from PS, correct?

Gateway is 4.5% i.e. would require 1.5% additional PS allocation, or more to pass 401a4.

Anything I am missing here or misrepresenting?

For 2023, I owned over 10% of the company and my daughter was an HCE in the pension plan.

Effective 1/1/2024, my son became 100% owner who is also in the plan.

For 2024, is my daughter an HCE as I have no longer an ownership?

Looking at a CB/DC combo.

Can the LTPT employees be excluded from SH/PS with the following provisions as well as testing/gateway/top heavy?

Amend the 401k plan so deferral is 1 year & 500 hours - currently 1000 hours

Safe harbor, profit sharing at 1 year and 1000 hours.

I would just like to thanks everyone for the advice and for those that can't give advice, "non-advice".  There has been so much help and guidance this board provides.  I'm not sure what I would have done without it!!  Appreciative is not descriptive enough.

It's time to switch professions.

Again, thanks to all of you.

Company A and unrelated Company B are participating employers in a multiple employer plan.  

If a terminated participant who worked for Company A is hired by Company B, prior to a 1-year break in service, must the participant be immediately eligible to participate again?

Thank you for your replies.  Please let me know if additional information is needed to address the question.

Has anyone heard whether or not payroll companies will issue 1099rs for Roth employer contributions? My guess is they are just not set up for this since the Recordkeepers are doing it.

Hi everyone, 

I did research, and it does not find much guidance on how to handle a repay fund when it is a ROTH 401K. Below are the scenarios and questions that I am trying to resolve. 

Scenario: An employee separates and takes a total distribution of his 401(k) account balance. His total distribution consisted of $7,000 in employee Roth contributions and $1,500 in matching contributions and $1,500 in profit-sharing contributions, totaling $10,000. The employee rolled over the $7,000 in employee Roth contributions into a Roth IRA and the remaining $3,000 into a traditional IRA. The employee was 60% vested at the time and forfeited 40% of the unvested employer contributions when he took his distribution. The employee was rehired before incurring a 5 year break in service. The plan allows for the restoration of forfeited employer contributions upon full repayment of the $10,000 distribution. To repay the employer contribution portion the employee plans to roll into the plan the $3,000 from his traditional IRA. Because the IRC and the plan do not allow rollovers from Roth IRA's into a 401(k), he is planning to repay the $7,000 using personal funds.

My original thought was to return all the funds to the original account as if they had never left the plan, but in this case, the participant would benefit from the tax on the ROTH account since he is using personal funds to repay it. He also has the ROTH IRA from the distribution. 

The questions now are:

                    Can we code the $7000 of personal funds as Rollover ROTH fund?   

                    Should it be coded as Rollover as Pre-tax? If the plan only allows rollover of Pre-tax or ROTH.

                    Are there any issues or concerns for this transaction?

Any input will be appreciated. Thank you.