A defined benefit plan existed for over 10 years. The only participants were the two shareholders. Each owned 50%.

An amendment was executed that froze all benefit accruals and terminated the plan effective December 31, 2023. It is now past December 31, 2024. I know that unless there were reasons for the delay, all assets needed to be distributed by December 31, 2024. In this case, there were no reasons and it is now after December 31, 2024.

Question:  I would think that as of now (January 15, 2025) we would have an active plan with benefits frozen as of December 31, 2023.

Does anyone disagree? agree?

Thanks.

I have a plan that is a 6/30 year end. For this plan, there is 1 participant that always has 401k reclassed as catch-up to avoid refunds.

This has not been an issue in prior year, because he never actually contributed catch-up - his 401k for the plan year and calendar year was less than the maximum 401k.

For the period 1/1/24 - 6/30/24, he contributed $15,000 and we had to reclass $2,500 as catch-up to avoid refunds.

Does this necessarily limit how much we should have limited his 7/1/24-12/31/24 contributions? 

Is he limited to $12,500 for 7/1/24-12/31/24? If he contributed $15,000, is a refund fo excess deferrals required?

Preparing a plan to be submitted to the IRS for approval.  One of the requirements is that the cover letter summarize how the provisions of the plan are affected by each amendment (related to changes in the law listed in the cumulative list).  Any guidance or examples of how this is addressed in a cover letter?  Is it a matter of simply attaching the model amendment prepare to address the changes? 

https://www.dol.gov/agencies/ebsa/employers-and-advisers/guidance/field-assistance-bulletins/2025-01

Now maybe it is just me, but how is this preferable to using, for example, Penchecks, or Millenium Trust, or whoever? Seems MORE difficult to me, but maybe I'm missing something.

I'm used to contribution deposits reflecting the type of contribution (ie 401k vs employer)

This one cpa is depositing the sum of 401k and safe harbor into the plan's brokerage accounts with the sole label of "payroll deduction" (as I learned when questioning the 402g limit excess).

I'm curious how serious that is?

The IRS extended several filing deadlines to 10/15/2025 due to the LA wildfires.  Does this automatically extend the restatement deadline for DB plans as Rev Proc. 2018-58 seems to indicate?  Thanks.

Participant's divorce decree from a decade ago granted his ex-spouse 50% of the pension benefit accrued during the term of the marriage. No QDRO was ever filed and the participant passed away a few months ago. The ex-spouse has retained an attorney to draft and file a posthumous QDRO. The draft DRO itself is well-written, but the original divorce decree submitted with the draft DRO is a problem. It lists an incorrect plan name and awards the ex-spouse benefits from that plan. There is nothing to indicate the parties ever intended for the ex-spouse to share in the benefits from this plan.

In some cases, a court will grant nunc pro tunc (retroactive) orders to correct clerical errors, etc. However, there are cases stating a retroactive order cannot be used to create new substantive rights that didn't previously exist. In this case its not clear whether the local family law court would modify the original decree, or whether the plan could accept that modified order. (The participant had remarried and there is a viable argument that 100% of the survivorship rights vested in the new spouse at the time of the participant's death.)

Any thoughts or ideas are appreciated. The posthumous QDRO rules from the DOL are not instructive and the cases are all over the board, even after PPA.

I own 100% of my company

My dad and his wife (my step mother) are both employees.

My dad is HCE/key. How about my step mother?

20 years ago I opened an account with Smith Barney. At the time we filled in me as a sole proprietor and used my social security. Over the years I update the plan with new addresses.  The business of operating under my own name continues to today. During that time I opened a pass through LLC and made contributions via my accountant. At some point I stopped contributions and over the years the account grew to $250k. I paid him to do the first form 5500 which he used my business name and EIN. Thereafter I continued to file using that template. I closed the LLC in Nov.  Since the 401k is in an active business name and SS, I want to keep it open. Form 5500 requires an EIN for which I don't have for the sole prop. Also, the indivdual 401k is in a SS number.  How do you rectify having a new "sponsor" as myself and I assume get an EIN number? 

If filing for a client 5 years of 5500s for a DB plan with the DFVCP, can you charge for this service. What is reasonable?  Hourly rate for the time spent on this?  Thank you for any thoughts.

My plan year end is 12/31/2024 and having Safe Harbor match.

One employee is deferred and received the SH Match on pay roll basis. He is terminated in between on 6/25/2024 and withdrawn all the account balance.

My doubt is, whether the employee's deferral and SH Match contribution should be included in testing or not for 2024 plan year?. 

If it is included in the testing and that employee is HCE and having refund, how to proceed with the distribution of excess amount? Already the employee is doesn't have any account balance, then how to proceed the distribution?

I went through the forum and thanks for the good information.

Here is the situation: Company A has NQDC (non-qualified deferred compensation) plan, and was acquired by company B. Company B has no such plan and wants to terminate the plan and do a lump sum distribution to plan participants. Are there alternatives to the lump sum option to reduce the tax liabilities for the participants?

Thank you for comments.

Was married to CPD officer for 15 years.  Divorced, he got a percentage of my marital portion because I retired also from CPD and he also gets a monthly payment from my pension.  He is still active.  He is retiring this Summer but remarried last summer, will I still get a percentage of his marital portion(lump sum)  AND a monthly amount once he retires?

I am looking to gather data to compare plan enrollment statistics between Safe Harbor Match and Safe Harbor Nonelective contributions. The assumption is that offering a SHNE may not provide employees with an incentive to enroll for elective deferrals, as they would receive the contribution regardless of their participation.

IRS guidance for Catch-Up contributions is scheduled to be published on Monday.  See https://public-inspection.federalregister.gov/2025-00350.pdf for 57 pages of weekend reading.

Guidance for Auto Enrollment is scheduled to be published on Tuesday.  See https://public-inspection.federalregister.gov/2025-00501.pdf for 62 pages of additional reading.

This is only 2 weeks after the effective date of the respective SECURE 2.0 provisions, so we will at least have some feedback on how accurate our guesses have been about the details.

I have a plan that was amended to exclude HCEs from SHNE contributions. None of my current plans have this exclusion, so I want to ensure I understand it correctly. If HCEs are excluded, does this mean that all HCEs would not receive any SH Employer contributions, or does it mean they have the option to be excluded? I assume they would not participate in the allocation since this exclusion is written into the document, but I need clarification on the logic, as the Financial Advisor is questioning this.

Hi

A Happy New Year to all of you. Thank you in advance for any insights on this.

1. Is a veba plan ,  with only $76,000 IN ASSETS. that has not had a contribution for at least 15 years , and all participants in the plan were terminated 10 years ago at least, still required to file a 990 (EZ)? As assets for all plans for this entity are under 250K? Also, in general is a 990 still required to be filed for Veba plans or a 5500 SF is sufficient? 

2.IF YES, must the 990 be e-filed, and mailing it in is not allowed anymore?

3. Can this Veba plsn merged with a mp plan of the same entity...(with of course properly allocating, ie prorating, the assets for each of the 2 plans annually)?

Thank you, as always.  for any insights

A small employer (non-profit) has two employees...the executive director (an HCE) and the president (a NHCE because he only works part-time).  The HCE'a employment contract stipulates that she will receive a $40,000 annual contribution to the SEP in addition to her salary. The NHCE's employment contract stipulates that his annual compensation amount is inclusive of any contribution required to be made to the SEP. 

While the NHCE's salary and SEP contribution total the annual 2024 compensation package, because of miscalculations the NHCE's contribution is a larger percentage of his salary than the HCE's.  The usual self-correction under EPCRS would be for an additional contribution to be made to the participant receiving the lower percentage contribution.  That would mean giving the HCE a larger contribution, which is in contravention of her employment contract.  The NHCE (president) is okay with withdrawing the excess percentage contribution from his IRA by 4/15 and taking it into income.  I'm hesitant to go that route as it seems to be against EPCRS.

Since the operational error is in favor of the NHCE (i.e., receiving a larger contribution than the HCE) can it be left alone?  Or does the simple violation of a nonuniform allocation dictate that a correction is necessary?  And if a correction is needed, must the HCE receive an additional contribution (and perhaps adjust compensation or contribution in 2025)?

Thanks for all comments.

Can a 403b make each participant their own allocation group for non-elective contributions like for 401k plans?

A client mentioned they were considering including the new 60-63 catch-up provision.  I was under the assumption that if a plan included the regular catch-up provision the new higher amount was automatically available.  Is it even possible to have a plan that allows for regular catch-up deferrals but not the new 60-53 catch-up amount?  Will this be in an amendment or is it just effective via IRS regulation automatically?

Thank you,

Tom