So, if compensation for qualifying tips or overtime isn't taxable, does that have any effect for qualified plan contribution purposes? These aren't "fringe benefits" so a plan that excludes taxable fringe benefits wouldn't exclude these on that basis. It seems to me that it shouldn't have any effect, but I'm trying to think situations where it might? Any thoughts on this? 

An employer wants to have 2 separate 401(k) plans to exclude a certain class of people from receiving a profit sharing contribution. So let's say Plan A and Plan B. Plan A will exclude participants that will be in Plan B, Plan A will have the owners maxing out their 415 limit as well as paying some staff 10% PS and the rest enough to meet minimum gateway. Plan B will have only a specific class of employees with identical eligibility, but the employees that have met the service requirement will get a 3% SH contribution only. 

Will the plans need to be tested aggregately for gateway? Or will just passing 410(b) suffice? I'm seeing if it's worth it for the company to have 2 plans or just have 1 plan.

Hot and humid, not thinking straight.

Checking a proposal for a DC/CB combo

DC is 401k+SH Match+PS

A previously employee claimed to be an HCE turns out to be a NHCE. Let's call him Joe

Joe is excluded from CB plan and also gets on no PS under DC plan. 401k deferral generated enough SH match to exceed 3% of salary so top heavy is satisfied.

Plugged this into the program and combined testing says Joe does not need to get gateway.

Just checking is the program is right.

If a plan participant in a company's 401(k) plan transfers a portion of his account balance into an IRA and gets a divorce:

1. Is the IRA money (which originally emanated from the 401(k) Plan), subject to the QDRO rules or can the split between husband and ex-wife just be subject to a separate agreement?

2. If the plan participant established an individual IRA (not containing any plan monies), how is this handled in a divorce? Does this money need to follow QDRO splitting rules?

This participant is currently receiving $15,000/mo. (no survivor benefit) from a company sponsored defined benefit plan. To determine the amount the ex-wife gets:

1. Is the monthly amount she would receive be $15,000 x the marital fraction? What actuarial adjustments need to be made, if any?

2. Could the wife choose whether or not to take an annuity or a lump sum? If a lump sum is taken, what assumptions would be used to determine the lump sum? If the annuity option is chosen, again, what assumptions would need to be used?

If anyone has a good internet site detailing how this all works, with examples, please pass it along.  

Thanks

A recent reply to an old thread got me curious, what do you use AI/LLM ("AI") for in your practice, if any?  Are you allowed to use it all?  Do you use it internally or externally (with clients)?

I have had this discussion in smaller settings, and I recognize that use of AI varies greatly.

I'll start us off with some easy examples from my practice:

- We do not use AI for anything with PII data, even if the workspace is locked down (not used to inform the AI outside of our workspace)

- We do not use it for legal or compliance questions. I have seen many benefits adjacent professionals do this and the answers can be frightening.  "ChatGPT said we are not an Affiliated Service Group" is a scary sentence...

- We use it to review and revise communications.  Don't like how your email sounds?  feed it to an AI to make it easier to read, understand, etc.

- We use it as a tool to help with formulas and macros for excel.

- I am playing with it as an internal Q&A tool.  By creating your own GPT, you can have the AI prompt you with questions (instead of asking it questions) and limit the source material it looks at to the specific documents you provide. 

Hi, 

8 participants had 415(C) excess since they already rolled the funds into the acquiring company plan the correction could not take place at the terminated plan.  The new RK has sent a check payable to the terminated plan.  Aren't 415 violation able to to be processed/returned from any plan or should we have the check deposited into the terminated plan and then cut a check to the participants ( excess amount)? 

Plan is wrapping all benefits into one new wrap plan 5500.

So closing out the prior plan filings - it is unclear to me - since they no longer have benefits at eoy, I'm thinking we uncheck Insurance under  Plan Funding/Benefit arrangements and just have General assets of the sponsor checked?

Hi, 

8 participants had 415(C) excess since they already rolled the funds into the acquiring company plan the correction could not take place at the terminated plan.  The new RK has sent a check payable to the terminated plan.  Aren't 415 violation able to to be processed/returned from any plan or should we have the check deposited into the terminated plan and then cut a check to the participants ( excess amount)? 

We have inadvertently allowed employees to make pre-tax contributions to a SEP-IRA. Is there a way to correct this problem without requiring distributions of the deferrals? 

hi there,

are there any regulations out there which mention all the required deliveries for DB/CB plans? do you normally send out the valuation reports directly to client and do you send out the AFTAP with the valuation reports or government forms, or all 3 things together?

Good morning everyone, thanks in advance for the help.

We have a client that is looking to acquire another practice.  As part of the agreement, the group being acquired wants them to provide a matching contribution for the first year.  This is a non-Safe Harbor Plan, but does allow for a discretionary matching contribution.

There are no Highly-Compensated Employees included in the group being acquired.  No matching contribution is being made to the group as a whole.

Since there is no match and no HCE, I don't see an issue from a testing standpoint as the HCE would be 0%.

So would I be right to say that there is no issue with giving this small group a discretionary match as long as there remains no matching to the rest of the company as a whole?

Hoping someone has thought about this and willing to impart wisdom.

For context, PTE 80-51 and PTE 91-38 permit bank-maintained collective investment trusts ("CIT") to engage in certain prohibited transactions with plan-related parties as long as the plan holds no more than 10% interest in the CIT and other requirements are satisfied.  

Entity A is a trustee of a CIT (so A is a bank that maintains the CIT), and an affiliate of entity B.  B sponsors a 401K plan, holds less than 10% interest in the CIT.  Both A and B are "parties in interest" for ERISA purposes.

My reading of the PTEs is that since A is a bank that maintains the CIT and B is an affiliate of A (assuming B owns ~80% of A) fees paid to A or B would cannot benefit from the 10% rule.

Has anyone else thought about similar issues? 

Question on how to handle a minor issue.  We have a client who inadvertently deposited a 2025 contribution on 12/30/24 so it's showing up on the 2024 Asset statement.  When filing the Form 5500 would you:

1) Show it as a liability to remove it from the assets
2) Just remove it from the assets and act like it was deposited on January 1

It's not a significant amount, just curious how others have handled it in the past.

Thanks in advance!

I have a question on implementing a new start up QACA - does the plan have to follow the SECURE 2.0 EACA mandate of a deferral minimum of 3% and escalate up to 10 or 15%? Or, can the QACA follow the QACA rules of 3% minimum and escalate up to a 6% required maximum? Thank you!

This question is about investments used for individual-account (defined-contribution) retirement plans.

Leaving aside stable-value accounts and trusts, employer securities, and investments treated as nonqualifying assets for whether a plan’s financial statements need an independent audit:

Are there investments that impose a delay or other restriction on a redemption or withdrawal?

Or impose an exit charge?

I know that it is an allowed correction to let participants stay in a 401(k) plan if they were accidentally let in early, but would it be allowed to amend (prospectively) to let one employee in early by using his actual name in the eligibility waiver section of the document?  My opinion is that it could be discriminatory towards the other employees that were NOT let in, and I advised they do a waiver for all if they want to allow him in, but they don't want to do that.  This is an NHCE, but still doesn't seem allowable to me. 

Let's suppose an employee meets the 500 hours and completes a Election Form (from the plan) that he/she does not wish to contribute,or submits an Election Form to the trustees that he/she elects to make either a 0% or $0 contribution, but the plan contains the standard 1 year eligibility for employer contributions, would that employee NOT be considered a LTPT employee and therefore, the plan does NOT need to follow the LTPT rule?

Of course the employer conttibution rrquirement would still apply as well as  any required testing.

I do not see anywhere this question has been asked or answered.

A plan sponsor wants to change their traditional 401k plan to a safe harbor plan but are concerned about their contribution obligations should they suffer a down year or two in the future, so they are leaning towards a matching SH design.  I've heard that a safe harbor 'maybe' notice can only be used when the 3% SH nonelective contribution is being provided, whether the plan is a QACA or not.  One of their advisors, however, is insisting that you can use a 'maybe' notice for a SH QACA that provides matching contributions only, but this didn't sound right.  As I'm thinking it would be hard for participants to decide how much (or if) to defer if the employer can just rescind their offer for a match at any time during the year, I have to ask - am I correct to believe that the only type of SH plan (QACA or not) that can issue a 'maybe' notice is one that provides the 3% SHNEC?  Thanks in advance for any assistance.  

Have a 401(k) plan that has been co-sponsored by two related entities for many years (company A and company B). Each entity has about 20 - 30 employees.

Effective 1/1/2026, one of the entities will also sponsor an ESOP. No controlled group or affiliated service group issues. They will be slowly funding the ESOP with stock over time but eventually the employees of company A will own 100% of company A. Does this create any any problems with company A continuing to co-sponsor a 401(k) plan along with company B?

Thanks.

Roth IRA owner is trying to set up a trust to be designated as beneficiary of the Roth that will pay income to his surviving spouse until she dies. He is 80;  she is 75.

The Roth was created as a conversion from a traditional IRA in 2010 so it was formed more than 5 years ago. Spouse is designated income beneficiary of the trust for the rest of her life, and then his children and grandchildren become the income beneficiary. The corpus of the trust will be distributed when the children/grandchildren attain a certain age. 

If he dies now, is the spouse required to fully distribute the Roth IRA by the end of the required 10 years period? If the spouse dies before the 10 year period will the children/grandchildren be required to distribute the remaining balance of the Roth IRA within 10 years of the Roth owners death?