Under the EACA the participant has 90 days to request their funds if they do not want to enroll.  The account adjusted for income is paid to the participant

Question - the Recordkeeper wants to invest the Auto Enrolled deferrals into an "interim" fund until the end of the 90 days vs. the QDIA. Then if the participant did not request payment, the account is moved to the QDIA.

I can not find that the interim fund is a requirement.  Everything indicates the AE is funded to the QDIA and if the participant takes his payment during the 90 days, they get the value of the deferral account ( gain or loss).  Am I correct.  Is this just the  process for the recordkeeper vs regulation?

Thanks

The attached image is sample. I'm doing compliance Testing for xyz 401k plan and under safe harbor non elective, 3% SHNE is selected along with the comment mentioned under other plan that xyz ESOP plan name. However, I'm confused whether I have to allocate 3 percent SHNE for employees in my xyz 401k plan or else it denotes ESOP plan. 

Is there any IRS provision or regulations which is giving clear definition for this section in adoption agreement. What is the next to whether to allocate SHNE in 401k plan or ESOP plan.

ESOP in doing by another. Here by taking assumption I'm completing the plan that the plan is not top heavy and there is non of them exceeding the annual addition.

401(k) is a SHM plan.

Employer did not make enough of a matching contribution to cover the total contribution and the corporate tax return has been filed.

Can the owner waive a portion of the safe harbor he would have received, , such that he does not have to pay in the additional sum.

New guidance concerning QNEC corrections can be found in SECURE 2.0 which added Code Section 414(cc) and also in IRS issued Notice 2024-2. These new rules for self correction when there is an implementation error permit a $0 QNEC to both active and terminated participants for missed deferrals if the correction is made within the "correction period" as long as the deadline to correct is after 12/31/23.  Assuming the employee does not notify the sponsor earlier, if the error occurs on 12/1/24 the plan has until 10/15/25 to correct and start deferrals and pay no QNEC but fund any missed match, and give notice. Under 414(cc) this applies to terminated employees. What if the error is not discovered until after 10/15/25 - I believe the QNEC for active employees is 25% now under SECURE 2.0 but does this apply to terminated employees since we are beyond the 414(cc) deadline or do we use the 50% QNEC under the general rule of EPCRS? Thank You!

We have an overfunded DB the client needs to terminate.

There is plenty of room to raise projected and accrued.

There are 4-5 vested terms that terminated more than 5 years ago.

Question, although possible to recalculate on a new benefit (obviously to reduce the overfunding), since they terminated over 5 years ago and have NOT been paid out anything, is it necessary to recalculate these benefits???

okay, so...apparently, about 5 years ago, a participant was automatically cashed out, and a check for $40 written to him.

that check has never been cashed and the plan is moving recordkeepers.

we are assuming at the time, that distribution fees were already applied to his account, but we would like to just forfeit this remaining uncashed balance as in applying a new round of fees.

Curious of any thoughts on this?

A lot of 403(b) plans are governmental. Previously, they could have a discretionary match with almost no restrictions on who, when, how much, etc., since there isn't any nondiscrimination testing.

Now that it is more restrictive, for a governmental plan, is there anything wrong with using the nonelective contribution, with everyone in their own group, and "coincidentally" the only people who get a nonelective are those who deferred? Smells funny, but would be easy to do...

Per the obvious citation, when amendment of vesting schedules occurs, the emendations must allow for the apt extant participants to retain the vesting schedule as if unaffected by the amendment, at least perhaps for balances already accrued. The salient participants entail the participants who had provided suitable amounts of service, the excerpt herein lacks adjustment for subsequent amendments reducing the anticipated service favorably for the participants. 

URL https://www.ecfr.gov/current/title-26/part-1/section-1.411(a)-8#p-1.411(a)-8(b)(3)

Citation 26 CFR 1.411(a)-8(b)(3)

(b) Election of former schedule —

(1) In general.  Under section 411 (a)(10)(B), for plan years for which section 411 applies, if the vesting schedule of a plan is amended, the plan will not be treated as meeting the minimum vesting standards of section 411 (a)(2) unless the plan as amended, provides that each participant whose nonforfeitable percentage of his accrued benefit derived from employer contributions is determined under such schedule, and who has completed at least 5 years of service with the employer, may elect, during the election period, to have the nonforfeitable percentage of his accrued benefit derived from employer contributions determined without regard to such amendment. Notwithstanding the preceding sentence, no election need be provided for any participant whose nonforfeitable percentage under the plan, as amended, at any time cannot be less than such percentage determined without regard to such amendment.

(3) Service requirement.  For purposes of subparagraph (1) of this paragraph, a participant shall be considered to have completed 5 years of service if such participant has completed 5 years of service, whether or not consecutive, without regard to the exceptions of section 411(a)(4) prior to the expiration of the election period described in subparagraph (2) of this paragraph. For the meaning of the term “year of service”, see regulations prescribed by the Secretary of Labor under 29 CFR Part 2530, relating to minimum standards for employee pension benefit plans.

https://www.ecfr.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-D/part-2530

Seemingly periods of service remain barred for this situation. To describe the garbled jargon, while 29 CFR Part 2530 features the term "period of service", the illocution/intent therein seems inconsistent with the use of said term to indicate the reckoning of service lacking logging of provided hours, rather as long as the employment relationship remains intact, service accrues. This situation has disadvantages to individuals who provide 1K hours to the endorsing entity during a plan year while departing prior to the conclusion of the plan year.

URL https://www.ecfr.gov/current/title-26/part-1/section-1.410(a)-7#p-1.410(a)-7(a) 

Citation 26 CFR 1.410(a)-7(a)

Employer sponsors a QACA with discretionary match.

There will be some layoffs at the end of the month. The layoffs will NOT result in a partial termination.

Client wants to vest this group 100% regardless of their current vesting %.

Question:  Can the plan draft an amendment that will allow the participants in this layoff group to vest 100%?

Thanks

A client has been paying out employee deferrals from a NQDC Plan and reporting them on Form 1099 for years.

The client will correct this going forward and start reporting on W-2.  However, do we need to go back an correct for previous years when they used 1099?  If so, how far back do we need to go?

Unfortunately, I don't know at this time if FICA was ever accounted for.

Plan Type:  403(b)(9) Non-electing Church Plan

Background: Participant (under age 59.5) contacted the plan in May 2025 because his tax professional told him he did not have enough includible compensation to support the amount of Designated Roth 403(b) deferrals he made in 2024. For purposes of my question, he only made Roth deferrals to the plan and these excess deferrals totaled $5000, and there were $100 in earnings on that excess.

Questions: Since the distribution will occur after April 15, 2025, there is some confusion as to how it is to be reported on the 2025 1099R. IRC § 402A(d)(3) seems to instruct the payer to tax the participant on the full distribution, not just the earnings portion, when distributed after April 15 (which seems counter intuitive).

IRC § 402A(d)(3) states the following:
(3) Treatment of distributions of certain excess deferrals
Notwithstanding section 72, if any excess deferral under section 402(g)(2) attributable to a designated Roth contribution is not distributed on or before the 1st April 15 following the close of the taxable year in which such excess deferral is made, the amount of such excess deferral shall—
(A) not be treated as investment in the contract, and
(B) be included in gross income for the taxable year in which such excess is distributed.

Q1: Referring to the highlighted text, does this mean that the 1099R should be written as follows:

Box 1: $5100

Box 2a: $5100

Box 5: (blank)

Box 7:  1, 8  (assuming no known exception to early distribution)

Q2: Does withholding apply to this distribution? (I think not)

As always, thanks in advance for your responses!

for TH minimum benefit in DBPP:

year of service and avg compensation should be calculated starting from the year of participation right? or both should be counted from year of hire? try to find it on § 1.416-1 but it doesn't show the definition. thanks!

In a US Tax court case re ESOP disqualification the government filed its certification of the admin file. My question is how long does petitioner have to file an objection (if any) and file a motion to supplement record? 

I don't really understand the intricacies of "private equity platforms." 

Let's use the following description as an example.

Acme Capital Partners manages a middle-market private equity platform. The team has invested capital in a broad spectrum of industries for over two decades.

So, if Acme buys a company or companies, wouldn't this constitute a parent-subsidiary controlled group? Or, do they not actually OWN one or more companies, but just provide capital? Or maybe both? 

A plumbing & construction company currently has a plan.  They have set up another service company (same owners) with a different TIN.  Can the new company simply adopt the current plan, or do they need to set up their own plan since they have a different TIN?  Thanks for any help.

Any guidance will be appreciated w/re how a bank's RIA should respond when it is an investment manager to an ERISA plan and is asked at a participant's meeting (but asked privately) by a participant to review an individual's entire asset portfolio and provide financial advice and planning. The retirement account is, of course, a part of the individual's asset portfolio, but may also include brokerage accounts and non-IRA assets.

Can the investment advisor who provides training at the participant's meeting provide contact information to the individual and potentially take the person on as an individual client? 

If the investment advisor provides general contact information for the bank and is contacted by a participant in a plan to which the bank is a fiduciary for individual financial guidance, including the retirement assets, is that a conflict in interest? 

It seems as though that will be a conflict of interest.

Thank you!

I'm getting conflicting info on how discretionary the Enhanced Catch-ups for those age 60-83 is.

The Catch-up provision is already a discretionary provision in 401(k) and 403(b) plans.

And I understand the new enhanced catch-up rules (super catch-up?) are discretionary too.  But to what extent?

Can a plan have "regular" catch-ups but not the enhanced c/u?

Does the plan sponsor have discretion on both c/u's or just the regular one?

A 50-employee medical clinic is owned by four doctors' individual PAs. Each doctor's PA owns 25% of a medical clinic - the partnership. The medical clinic's 401(k) plan is funded by the partnership. Three of the four partners actively participate in the medical clinic's 401(k) plan, though as the doctors are not employees of the medical clinic, their individual benefits under the 401(k) plan are funded by their PAs. The fourth partner is new and wants to sponsor a solo 401(k) with the 1099 income he receives from the partnership rather than participating in the medical clinic's 401(k) plan.

In this scenario, is there anything wrong with the new doctor sponsoring a solo 401(k) rather than participating in the clinic's plan? Would it matter if two of the four partners wanted to sponsor solo plans?

We only administer a couple of non-governmental 457(b) Plans so i am far from an expert.

in one of them a participant will be terminating soon and will be taking a lump sum withdrawal.

Since the distribution is reflected on the company W2 should the funds be transferred to the company checking account and then run through payroll

OR

is it ok that the funds go directly to the participant and then the company just adjusts that person's W2  at the end of the year

thanks

I read in this week’s Pensions & Investments magazine that at least one recordkeeper “calculates Secure 2.0 tax credits for new plan sponsor clients, giving them worksheets that they can give to their CPAs to make sure they take advantage of the tax credits[.]”

TPAs, of recordkeepers you work with, is this a common service?

TPAs, do you offer this service? Routinely, or when asked? Within a base fee, or for an incremental fee?

What are the advantages and disadvantages of this service?