I've got a 403b plan that tried to move from recordkeeper A to recordkeeper B several years ago.  Despite numerous plan documents saying it is an ERISA plan, RKA is insisting that the accounts they hold are non-ERISA accounts and therefore the plan sponsor can't move the accounts.  The financial advisor did a bunch of presentations showing that RKB has lower fees and this convinced about 90% of the people to move, but there are ~15 who just haven't, for whatever reason.  They are all terminated, and all have $7K+ vested balances.

We're launching a new attempt to reason with RKA, but we are expecting it to fail.  One of the directors asked if they could incentivize the participants to either take a distribution or authorize the transfer to RKB.  $100 cash, say.  Since the financial advisor didn't immediately shoot it down, I said that I'd look into it.

How insane and/or illegal is this idea?  More importantly, are there any other good ideas?

Thanks.

New to the MEP world.  Can you have a SEP plan join a MEP plan as an adopting employer?  I have a financial advisor wanting to have a current SEP plan come over to a MEP plan and I just don't think that is possible in my thought process.  Any language/proof that you can provide that I can provide to the financial advisor would be great.  Thank you.

May a business fund a defined benefit plan with any source of income?  Specifically schedule E income?

Of the Labor department’s, the Treasury department’s, and the Pension Benefit Guaranty Corporation’s rules and regulations published as final on or after January 20, 2021, which of them—even with an effective date before 2025—do not become applicable before January 20, 2025?

(In a convention used by Republican and Democrat Presidents over the past 44 years, a newly inaugurated President’s chief of staff directs executive agency heads to review rules that, even if final and effective, have not yet become applicable.)

Has anyone yet written that list?

If not, can you help us crowdsource which rulemakings won’t be applicable before January 20, 2025?
 

Employer was a governmental entity exempt from ERISA until 7/1/23 when it's structure was changed to a non-governmental, non-profit entity.  The employer has sponsored various welfare and retirement plans for years but we were not filing 5500s due to the governmental status of the employer.  Now that the employer is subject to ERISA we are working on the 2023 Form 5500s (yes - we know they are late😊).  For the 2023 Form 5500s, do we need to indicate a short plan year from 7/1/23 to 12/31/23?  By checking the box for a short plan year are we saying the plans did not come into existence until 7/1/23 or that the plans were not subject to ERISA reporting requirements until 7/1/23?   Any guidance is appreciated! 

I have a client with an ESOP who left their job 5 years ago. They just received the option to take a disbursement, and the disbursement will now be split up over an additional 5 years. Rather than try to interpret the rules myself, I thought I would ask here. Is that allowed? They are under 59 years old, if that is relevant. 

In the past, we have allowed employees to start contributing to our SIMPLE IRA as soon as they (1) completed 12 months of continuous service; (2) earned $5,000 in that 12 month period; and (3) were reasonably expected to earn $5,000 in the next 12 month period. As a result, employees were entering the plan at all dates during the year based on their hire date. I don't think this is correct. It appears that SIMPLE IRAs all have a January 1 entry date and only compensation can be used to determine eligibility.  For example, an employee hired in August 2024 could enter the plan January 1 2025 as long as they earned $5,000 in 2024 and are reasonably expected to earn $5,000 in 2025. Is that correct? Thank you!

I am divorced for 22 years. My QDRO had me paying life long alimony, however my ex recently dropped the alimony as she is living with someone. On the QDRO it has ex named as my death beneficiary. I am remarried for 5 years and would like to change the death beneficiary to my current wife. I belive that the reason ex was named this designation was in the event I should pass away and she would be paid her alimony. 

I would like to modify my QDRO and I was advised that I would need to ask her if she agree's first?? I am perplexed as this is my money...

Should I ask ex first or just have lawyer send her a letter and make it matter of fact of my intent.

Do I have a good change of the judge agreeing to modification. She dropped the alimony and legally my obligation has been satisfied.  She is entitled to a share of my pension in QDRO which I am not disputing, I just want to add my current wife as my death beneficiary. I live in New Jersey.

Kindly advise.

Hi all,

We had a plan merge (transfer) their assets from a 401(k) plan to a 457 plan.  They were not distributions.  The 457 plan does not have a Plan Number so we are receiving an error on the SF about the missing Plan Number when trying to report the transfer under the financial section.  Any suggestions on how to handle?

I'm hoping someone can help set me straight here.

An employer offers two medical plans. Plan 1's self-only coverage is $500/month. Plan 2's self-only coverage is $1,200/month. In order to use the ACA FPL safe harbor, the employer offers a $400/month employer contribution toward either Plan 1 or Plan 2. After the employer contribution, Plan 1's coverage is $100/month and Plan 2's is $800/month. Assume that neither $500/month for Plan 1 nor $800 or $1,200/month for Plan 2 meets any ACA safe harbor (i.e., without the employer contribution, no coverage is affordable). 

The employer's policy is to stop the $400/month employer contribution if an employee is out on unpaid non-protected leave (e.g., not yet FMLA eligible, not ADA, no state law, etc.). The medical insurance policy allows active coverage to continue for up to six months. 

An employee is going out on a three-month non-protected leave during a stability period in which they are full-time. Active coverage will be offered for the full three months.

• If the employee is on Plan 1 and the employer stops the $400/month credit, the employee will not have affordable coverage ($500/month). I assume this will be a problem as the employee still needs access to affordable coverage while in a stability period.
• If the employee is on Plan 2 and the employer stops the $400/month credit, the employee will not have affordable coverage ($1,200/month) but is not enrolled in the "affordable" coverage (Plan 1) to begin with, i.e., it was already not affordable but they had access to an affordable plan during open enrollment. Is this a problem?
• What if the employer only continued the $400/month credit during non-protected leaves for employees who were already enrolled in Plan 1 (but not any other plan)?
• If the employer's plan terms or policies say as much, is it permissible to continue/stop the employer credit only for employees enrolled in certain plans?
• If so, might the cost increase allow them to switch from Plan 2 to Plan 1?

Appreciate any input. 

A U.S. based tax-exempt organization 457(b) plan sponsor wants its new CFO, an Australian citizen who does not have a social security number, to participate in the plan.  I'm only guessing, but I would think that a non-U.S. citizen earning compensation within the U.S. from a U.S. employer would need a social security number unless the individual is exempt from U.S. taxes, most likely pursuant to a tax treaty between the two countries, although I'm no subject matter expert.  If so exempt, then presumably there is no advantage to the CFO participating in the plan (other than perhaps receiving an employer match if the employer decides to make one).

Anyone with other thoughts concerning this situation?  Absent a social security number, I'm not sure our systems will even allow us to establish a plan account for this individual.

Is there a grace period before an employer has to start withholding from an eligible employee's paycheck?  For example, employee is eligible on 1/1/2025.  The employee was given the required notices 30 days prior to 1/1/2025.  If the employee does not make an election to contribute (or not contribute) is the employer required to start withholding from the 1st paycheck after 1/1/2025?  Or can the employer say that they'll start automatically withholding with the first paycheck 30 days after 1/1/2025?   

Which Federal website are other TPA's using to see what the current "prime" interest rate is when processing participant loans when the document says the interest rate to be used is "prime plus ___%"?

Moody's, Wall Street and Bloomberg are all showing different prime rates...

Are TPA's just trusting the pre-populated rate that comes through from the recordkeeper instead of checking on it themselves?

Thanks.

Hi, 

Our client contacted us to let us know that a participant completed a deferral election form November 2023 and they've been making deposits into her brokerage account.  However, the deductions were never set up with payroll.  She just noticed a year later.  

The client spoke with their payroll company and their labor lawyer and both said as long as they don't tell her it's required, she can sign something and can have deductions for the next 3 payrolls to make up for it.  The payroll person even mentioned her writing the company a check (I explained that the money shouldn't be from her, if would need to come from her SDBA if she were to pay it back).  

I explained to her they have two issues going on: 1. failure to implement and because of that 2. excess deposits.  I calculated a QNEC, g/l and the full safe harbor match and then figured out the difference between that and what was deposited. 

I guess I'm just looking for guidance because even with the deposits being made erroneously, I feel like this is still a MDO that needs to be corrected.  

Does a safe harbor plan with less than 100 employees need to give the safe harbor match (or non-elective) contribution to these Part Time employees now eligible to participate?

I've got two 403b plans where there is definitely no controlled group and no ASG.  However, they do operate closely together, to the point where employees are shared.  Over the years I've made the plans identical, but now I'm thinking about a 403b MEP.

The main consideration is that the want to continue to not have automatic enrollment.  Both plans are pre-2022, so they are currently not required to offer it, but the way I'm reading the IRS clarifications, if Plan A becomes a MEP by Plan B merging into it, they will be subject to the SECURE auto enrollment rules.  Is that correct?

Thanks.

403b Guru's of benefitslink, please help me out with this one.

Client is a 501c3 and Im looking at what I was told was a pretty simple 403b (plan 001).  Nothing exceptional stands out in the plan document, participants get a 3% non-elective on top of a 50% match up to 4% of comp.  The plan files a Form 5500 every year.

After speaking to the accountant, what happens in practice is throwing me off a bit.  

• Elective deferrals in excess of 4% of comp are actually deposited to a second 403b plan (lets call it plan 002).  I havent seen a plan document for this plan, and no 5500s have been filed.  It sounds like its a deferral only non-ERISA 403b.
• Both plans are with the same provider
• Plan 001 does not mention anything about deferrals in excess of 4% of comp being funded to a different plan

This doesn't seem right to me, I would expect that plan 001 would have to spell out that it will only accept elective deferrals up to 4%.  Am I missing something?

What is the point of splitting elective deferrals into two plans?

any insight would be greatly appreciated.

If a new plan with more than 10 people elect to have a QACA instead of the EACA with safe harbor basic matching, would this satisfy the auto-enroll requirement under SECURE 2.0?

An owner is selling his business.  He will be paid in equal annual installments over the next 10 years, well over 6 figures each year.  He will not be working for the new owners and will likely be retired.

Would the income he receives from the sale over the next 10 years be considered passive income?  He is asking whether he can set up a solo 401k for himself, create a sole prop business entity for himself and use the annual payment to him as a basis for funding a solo 401k plan.  Is proceeds from a business sale considered passive income and prohibit him from using it for retirement plan purposes?

Thank you

Is it possible for a Plan to use different subsequent eligibility computation periods for different money sources?

For example, a Plan would like to do 1 year of service, with 1,000 hours, for the deferrals and safe harbor match, but do 2 years of service with 1,000 hours for profit sharing. They would like to "switch to plan year" to calculate subsequent eligibility computation periods for deferrals and safe harbor match, but use anniversary of hire to calculate subsequent eligibility computation periods for profit sharing. Is this possible? What additional testing would the Plan be subject to?