During divorce participant was supposed to roll over a portion of retirement into the ex-spouse's designated account.  The participant filled out a QDRO from the third-party administrator for a 457 (b) non-government account.  The participant did not let the ex-spouse or the court know that this was a non-qualified account.  The court processed the QDRO only to later find out that the funds could not be rolled over into the ex-spouse's designated account.  The court then ordered another QDRO to return the money to the participant's account.  The employer then refused to return the funds to the participant because the ex-spouse was not a high-earning employee of the company or any employee of the company.  The third party should not have approved the original QDRO to begin with because the participant was not transparent with the order of the court stating the funds need to be rolled over into a designated account.  Should the court rescind the original order for the funds to be placed back into the participant's account? To complicate things, the participant terminated employment shortly after the funds were placed in a parallel account, not the ex-spouse's designated account, her IRA. 

Question from Schedule MEP

2e Does the plan include any individuals not participating through an employer or who are individual working owners?  Yes or No

Does anyone have information on the working owner questions on Part II of the Schedule MEP? 

I have read the instructions to the schedule, as well as the referenced CFR. 

Assuming a small 'closed' MEP of business entities, where each entity is a participating employer on the legal plan documents. 

Entity A - S-Corp has two owners who are part of the plan, along with a number of employees. 

Entity B - LLC, no S-corp election, one member owner, no other employees, self employment earnings, also participates in the plan

Entity C - sole proprietor, no other employees, self employment earnings, also participates in the plan. 

Entity D - LLC, no S-corp election, one member owner, several other employees that are part of the plan, owner has self employment earnings and also participates in the plan

I would think the answer would be yes for all. The definition of working owner doesn't preclude the business from having other employees, so even Entity A has a "working owner" two in fact. Am I understanding this correctly? 

If there is a MEP and the owners are NOT part of the plan (do not have earned income, no contributions etc) then I would guess the answer to the question on the schedule would be No. 

I appreciate any light someone can shed. Thanks! 

Are there any regulations limiting the amount of compensation used in a fixed match formula? We have a client wanting to do a match of 100% on the first 6% of deferrals, then 50% on the next 2% of deferrals. Thus allowing for a 7% match on 8% of compensation. 

Hi, 

Plan that is terminating the re-allocation of the forfeiture balance occurred after 180 days of the participants initial distribution, is it mandatory the participants should receive a second communication along with the special tax notice since the participants are receiving the additional money post 180 days of their initial distribution? 

Is there any resource of information can be shared in reference to the special tax notice? 

Terminating DB plan has excess assets to be transferred to an QRP (which is the sponsors existing 401k PSP).   In the first year of the transfer,  can the sponsor use part (greater than 1/7) of the excess to fund the previous years accrued profit sharing contribution?       For example, transfer happens in 2025, want to use excess assets to fund 2024 profit sharing contribution in 2025. 

Hi

Sorry if this was discussed before. Not a 401k person.

I want to make sure I understand this correctly.

Client is 75 years old. Because not between ages 60-63, cannot have enhanced catch up, correct?

A National TPA firm, which has a lot of turnover, is handling a Combo Plan for a Law Firm handling criminal law.  The Law Firm thought they were going to implement a Cash Balance Plan in 2021 (yes, 2021) and apparently the message didn't get across, but they signed paperwork to start it.  

TPA firm is talking to them about penalties and have sent them an email on this.  The plan has never been funded.

Can they just pretend that it never happened?  They don't want it opened. What are their options?  

I previously worked for a TPA firm and we set up a Safe Harbor 401(k) Plan for a 20 person construction company in November 2022 to start on 1/1/23.  They never sent out notices about the Plan being started and no contributions ever came in.  We checked with them and they decided they didn't want to do it, so we just allowed them to get out of it as though the Plan never existed.

Can the Law Firm treat this the same way?  Apparently, the TPA has set up a meeting and bringing their ERISA Attorney in.

Hard to find some definite details on this concern and really only have 2 plans that are profit sharing only. 

Plan Sponsor has a Profit Sharing only plan for 20+ years.

Now wants to add a 401k with a Safe Harbor design feature.

1.) Does the start of the 401k safe harbor have to be the 1st of the plan year?  or can it be anypoint in the year to start the 401k?

2.) Is it mandatory when adding a 401k that that it have an automatic enrollment  since it is not a "New Plan" 

Thank you in advance.

Hello all,

Due to an administrative mix-up a client did not file Forms 1095-C for 2023, but their insurer did file 1095-Bs. Client has not received a 5699. Do we just go ahead and file the delinquent 1095-Cs? What to do with the 1095-Bs? Any grace given there?

Thanks!

What amendments, if any, in the current remedial amendment period are needed before terminating a plan?

          I have a client with a 401(k) Plan. A prior plan participant is removing their account balance and is taking the money directly. They will receive 80% of their vested balance with the remaining 20% being transferred to the IRS electronically through the EFTPS program. What is the latest date that the plan can transmit the 20% to the IRS? I would assume that the plan has until the date the plan's annual filings, plus extensions, are filed. I just want to make sure of this.

Of recently enacted early-out distributions limited to an amount (for example, $1,000, $5,000, $10,000, or $22,000), am I right in recalling that an eligible distribution to a victim of domestic abuse is inflation-adjusted (to $10,300) for 2025 but others are not yet adjusted?

And is there any early-out distribution limited by a Code-specified amount but with no inflation adjustment?
 

A 401k plan has a year of service requirement to enter the plan.  However, employees can roll money into the plan before they hit that year of service.

Can an individual who does that, rolls money into the plan before their YOS, take a loan from that rollover?  

I would think they could not since they are "participant" loans and the individual is not a participant yet.    Or is s/he?

Thank you

My apologies I know this information is floating around somewhere, I just haven't been able to easily locate it. 

Does anyone know the fee for a VCP pre-submission conference?

Is the IRS doing them? I know it is only as time and resources permit. 

On the IRS website I couldn't see the information about fees specifically for a pre-submission conference, just the regular VCP submission fees, which I'm familiar with. Or are they $0 since the intention is that there will be a VCP immediately forthcoming with the regular full VCP fee? 

Thank you all!

A 401k plan sponsor was changing investments and recordkeepers and overlooked distributing the blackout notice.  The plan is now out of the blackout period.  Is there a correction vehicle in EPCRS for this?  Is self-correction an option?

At least one of the participants lost significant $$$ due to not knowing about the blackout as well as the mapping of his investments from old to new not aligning the way he wanted.  If the Plan Sponsor makes the individual(s) whole and documents everything from start to finish, would that be a sufficient fix?  

Do you think this is something that would be covered by the plan sponsor's E&O policy?

Thank you

Hello,

I'm currently working in PEP plan. My company A and another participating Employer Company is B. In the mid of the plan year (i.e., 12/31) employee transfer from company B to Company A on 6/20/2023.

In the company B for the period of 01/01/2023 to 06/20/2023, he had $90,000 and in company A, he earned $ 100,000 for the period of 06/21/2023 to 12/31/2023.

To determine HCE for 2024 plan year, which compensation  I have to take to determine HCE? Total compensation ($190,000) or company A compensation?

Hi

Question for 401k gurus out there.

Not a 401k person.

Existing plan with 401k/SH/PS provisions.

Called the "no name disclosed" payroll/RK company on behalf of a prospective client that I am designing a CB plan. Let's call them ZZZ

Asked ZZZ to amend the plan's SH provision from basic safe harbor to 3% non-elective effective 1/1/2025.

I was told by ZZZ that there is a 45 day rule prior to year end to change the SH, is this true?

If true, can you please provide a cite?

As a signed note, ZZZ told me that the same 45 day rule may apply to amend the PS provisions as the plan has SH in it (PS has last day rule) which I said, I do not think so.

Am I missing something here?

Thanks

Under SECURE, sole-prop can adopt a 401k plan after year end and prior to 4/15 (as far as I know, no extension in filing allowed)

How about changing deferrals for an existing plan? Do they need to be done by 12/31 or can be done by 4/15 following?

Thanks

Multi-employer, government-sponsored (technically non-EIRSA) cafeteria plan that provides pre-Medicare retiree coverage.  Question concerning a recent pre-65 retiree who has a NMSO in effect for dependent coverage.  Retiree wants to drop coverage in favor of HRA-only waiver because other coverage is available through spouse.

I believe we are still considered an "employer" for purposes of the NMSO and cannot allow the retiree to drop coverage without an amendment to the NMSO, but have been unable to find guidance on this question anywhere.  Anybody else dealt with such a situation?

Record keeping platform sends approval notification to the TPA for review an approval.  Does anyone attempt to confirm that it is truly the participant who is initiating the distribution request?  If so, what do you do?  A TPA review/confirmation certainly opens the TPA to some liability.

I'd like to get some specific control ideas from the group.  We've never had a fraud incident in 30 years but just a few days ago, someone tried.

Thank you!