What is everyone doing for SECURE 2.0?  I realize the amendment is not yet due and we are tracking the very few optional provisions elected by clients.

I don't believe I've seen an interim amendment from FIS other than for a terminating plan.  We've notified clients of the LTPT rule for 2024 and then again for the 2025 change.  I'd like to get a SMM out with that, along with the higher cash-out limit.

Thank you

Tom

I ran across what I think is an issue with a recordkeeper. I have several plans as a TPA that submitt payroll deducted 401k loan repayments. The employees model loans from the recordkeeper custodian site. Loans are granted by filling out a paper form that is submitted to the recordkeeper along with a loan amoritization schedule generated from their site.  

Employees in one plan receive bonuses and pay off loans early or increase their weekly 401k loan payment deductions to pay off the loan earlier.

The recordkeeping company has new software for applying loan payments. It applies the current payment on the schedule and if there is an amount in excess of that payment the exess is applied to the next full interest and principal payment, if less than a full payment the excess is applied to future interest on the schedule only rather than principal. 

It has been so long since I have done a deep dive into participant loan repayment details but it seems to me that violates some type of rule. It appears to me that you can't pay interest on a loan that is not due or has not accrued. I think you would run into a situation where the actual interest rate on the loan,  based on loan interest payments,  was greater than the schedule if you then paid it off early. 

I also think this would cause an issue administrating accrued loan interest if a loan defaulted, what interest would accure if you already made future interest payments. 

There also might be a potential for some type of discrimination if someone paid a loan off early about the same time frame on the schedule another employee paid larger payments on than shown on the schedule then paid off the remaining balance early specifically if in these 2 examples one employee was HC and another NHC. 

I may be off base or confusing some other regulation, but it would be logical to assume, even in a simple lending agreement,  you cannot apply a payment to interest in excess of the normal payment that is not acrued or in the future and not due as shown on the schedule that was used to establish the loan and the note. 

Scott 

First time for everything, but our TPA firm just had a 401k plan sponsor non-profit "disappear"; It appears the organization is shutdown.  Website no longer valid, emails bounced back as undeliverable, and phone calls disconnected. 

We would like to have a QTA involved but am not sure how to go about reaching one.  Is there a government approved list to use or other procedure to follow to move this forward?

Plan assets are held in individual accounts and are with Voya.

Thanks for any ideas.

Can an ESOP plan allocate shares uniformly to all eligible participants?  So for example, 1000 shares will be allocated and there are 20 employees, each gets 50 shares.  Thanks 

I've been working for a TPA/Recordkeeper for a good 6 months now and I'm absolutely loving it. I'm definitely learning a lot as I go from my boss & coworkers, and I'm quite knowledgeable about the plans we work on, but we have a fairly narrow scope. Currently we only ever have done DC 401k & PS plans, most of them safe harbor, all of them quite similar in the grand scheme of things. That said we're running into more and more instances where it would be nice to have a good understanding of other types of plans and various fundamentals outside our usual operations, and I'm also someone who likes to really invest in what I do and become an expert. Are there any good books out there that break down the ins and outs of anything related to the retirement planning industry or DB/DC plans, or otherwise good resources written in human-readable language?

We have a 401(k) plan converting to us from a different TPA/Recordkeeper right now. In their plan, they have some money purchase pension plan assets that were rolled over into the 401k plan at some point. Do these assets need to be included in top heavy testing? What should we make sure we do to classify these correctly?

At this time, we have not hired a lawyer.  Not saying that we may need to do so in the future.  We were able to use the Disney Fidelity QDRO format to create a QDRO.  We cannot submit this QDRO back to Disney Fidelity until it is signed by a Judge.   The other party involved has a lawyer.  I realize we have to submit to the Judge for signing; however, by law, do we also need to send a copy to the other side.   Or do we wait until the QDRO is signed by the Judge, then send them a copy?  We are in Florida.   Thanks for any insight. 

Company A has a SIMPLE IRA and is purchased in a stock sale by Company B that has a 403b plan. Can the SIMPLE IRA be terminated mid year due to the acquisition so the employees can participate in the 403b plan of the buyer? Thanks!

I have an interesting situation. A non-governmental university has an ERISA 403b plan, where they allow the adjunct professors to defer but exclude them from the match, and from automatic enrollment. As of the last couple years the number of these part time adjuncts are exceeding the number of full-time employees resulting in 410(b) ratio percentage test failure. They are still passing coverage on the basis of the ABT but not by a large margin. Thus, we are trying to help find solutions so the testing does not get worse. Some years the adjuncts are on call and they receive no W2 pay, but it appears they still have to be included in the coverage test. Some adjuncts do on line courses now and some teach very highly specialized subject so that they cannot give more classes to each adjunct and reduce the number of adjuncts. They also cannot turn them into independent contractors. Trying to find ways to help them pass coverage without including them in the match - do we have to include individuals with no W2? I think so if the employment relationship has not been terminated; what if the plan auto enrolls the adjuncts? This will help with the ABT test. Another solution - remove some HCE's, maybe set up a non-qualified 457b plan if they are key employees. Any other thoughts? Maybe some of you have seen this before. Thanks!

I have an unresponsive client who sponsors a 401(k) plan with prevailing wage.  They have not deposited the owed prevailing wage into the plan for months, and are now potentially shuttering their doors and just walking away.  What do I give them to impress upon them how they need to fund the contributions?  I haven't been able to find anything concrete here, on the IRS website, DOL website, or ASPPA book, but maybe I am just searching incorrectly?

We virtually never get a plan that has union employees, so I'm a bit rusty on this. I can look it all up, but thought perhaps someone who works with it would know in a snap right off the top of the head.

As I recall, for a plan where there are both union and non-union employees, even if all have identical coverage or not, mandatory disaggregation of union employees for coverage and nondiscrimination testing, and the union employees' "plan" is deemed to pass both. Top heavy treatment does not disregard the union employees. And if there is more than one collective bargaining unit with employees participating in the plan, each unit is considered a different "plan."

Is my recollection correct? Thanks!

Very slow brain activity day

Plan fails 401a26 and need 4 additional participants.

Want to keep the cheapest options, surprise!

Bringing in 3 eligible but categorically excluded. There are a few others in this category but they would be costly to bring in for 401a26.

4th one is a not yet eligible employee i.e. not yet completed 21/1 requirement but really cheap solution.

Any problem bringing in the 4th candidate by 11-g rather than utilizing other already eligible and categorically excluded employees?

ASG has 3 plans.

1 plan never had a key employee and not top heavy - Plan X

The other 2 plans are top heavy and provide top heavy allocation.

Is Plan X required to be part of the aggregation and receive top heavy allocation?

Let's say an employee turns age 55 in 2025. The plan is terminated in 2025, but the employee is still working for the company.

If he chooses to take a direct distribution, would he get age 55 exception from the 10% penalty?

Thanks.

If a Plan is giving a 3% Safe Harbor to everyone, could they also augment that with an aggressive discretionary match?  Something to the effect of:

425% of the first 6% of compensation deferred

I've seen someone doing this and it just looks odd to me, so I wanted to confirm it was alright.

Thank you!

Hi,

Thank you as always for all the insights. If a DB plan has 2 trustees (the two owners of the company and the sponsors) are they allowed to act independently of each other? Thank you.

Can profits interests be granted to non-service providers?  If so, how do those work?  

Alternatively, can unit appreciation rights be granted to non-service providers?

President Trump’s Executive Order Modernizing Payments To and From America’s Bank Account calls for payments to the US government to be made only by electronic-funds-transfer. https://www.govinfo.gov/content/pkg/FR-2025-03-28/pdf/2025-05522.pdf

Is there a situation in which lacking an opportunity to pay—one’s own payment, or a client’s payment—by a paper check would be a hardship for a retirement, health, or other employee-benefits practitioner?

Flexible Discretionary Match, per the document definition the Employer has full discretion over the formula or formulas for allocating (with the exception of the allocation conditions noted in the document). Can the formula exclude a compensation type that is not excluded in the document?  For example, the plan only excludes Pre-Entry and Post-Severance leave cashouts Compensation.  Can the Employer's discretionary match formula exclude Bonuses?  Found several spots that indicated they could exclude Bonuses in the formula, if the match was definitely determinable and that the Administrator and Trustees were aware.   Just doesn't feel quite right.

I’ve seen some big recordkeepers ask for information on a participant’s or employee’s gender, with system fields and drop-downs for female, male, nonbinary, or unspecified.

An employment-based individual-account (defined-contribution) retirement plan often has no provision that determines a benefit according to the participant’s sex or gender.

Yet, I imagine a service provider has other service-related reasons for collecting the information.

What are a service provider’s uses for which it’s helpful to know whether a participant is female, male, or nonbinary?