An attorney changed status to "of counsel" in 2021 when he attained age 70.  He attained age 73 in 2024.  I think he needed to receive a RMD by April 1, 2025 since he is no longer considered an employee of the law firm.  Thoughts?

this is a take over one man plan with BOY val date, I'm wondering if we can change that to EOY val date assuming auto approved

We have a law firm client with 5 equity partners, 5 non-equity attorneys and about 50 employees. They sponsor a 401(k) Plan.

One of the 5 non-equity attorneys who was not even an HCE has now become an equity partner owning 20% of the firm. He incorporated so now his corporation is the 20% equity partner in the law firm. Apparently at about the same time his corporation adopted a SEP.

We believe there is an affiliated service group between his corporation in which he is the 100% shareholder and the Law Firm of which he has a 20% equity interest in.

We believe his SEP will need to consider all employees of the law firm to meet coverage under 410(b). This would mean his SEP would need to cover about 20 employees of the law firm.

Anyone agree or disagree with this?

Thanks.

I own company a 100% and had a DB plan which terminated.

I started a new company and now own only 50% and want to start a DB plan.

Same line of business.

Does my old DB offset my new DB?

I'm guessing that this has already come up on the forum.  I have a plan that is a SHMC plan.  The employer wants to terminate the SHMC plan and set up a SIMPLE IRA plan in 2025.  

Secure allows the employer go SIMPLE to SH, but I can't determine if they can go the other way.  

I'm concerned about the 12 month moratorium rule for the 401(k) plan. 

What is the correction if a plan uses a $1,000 cash-out threshold but the plan in operation has been involuntarily cashing out participants with account balances between $1-$5,000? And yes an IRA agreement was in place, however the plan document was not amended to permit these mandatory cash-outs/rollovers. It appears to have been going on for several years and has not been identified as an inadvertent failure. Thank you!

Another deferral timiing question that's not clear (to me)......

If a plan sponsor is offering a new executive the opportunity to defer a sign-on bonus (not performance-based) with a vesting schedule of 12-months or more, under what deferral election timing rule does this fall?

Would it be certain forfeitable rights (election w/i 30 days of the award)?

Would it be initial plan eligibility (within 30 days of becomeing eleigible, and the deferral applies to amounts unearned)?

Thanks!

How do you keep track of updates to mandatory state taxes? I've been searching for a service that we can subscribe to that will send notifications when changes are made by state with no positive results. I'm trying to make sure our system aligns with all those requirements.

I'm curious to hear others' thoughts on the interaction of the short-term deferral exemption with the earnout provisions of 409A. Say an employee has an agreement that pays out the full value (i.e., not a SAR) of 1,000 shares of company stock upon a change in control, but only if the employee is employed on the date of the CIC. Clearly a short-term deferral. 

What if the agreement also uses the earnout provision for transaction-based compensation, allowing the employee to receive contingent payments over the next five years as and when the selling shareholders receive them? The employee does not need to remain employed for the next five years.

This seems to add a deferred payment that would blow the short-term deferral exemption. (I'm not sure each separate earnout payment would be considered subject to a SROF on its own.) 

The earnout provisions, as I read them, do not exempt the arrangement entirely from 409A, but rather say that the payment timing will not violate the initial deferral election rules or the fixed time of payment rules. In other words, the series of earnout payments will be deemed to comply with 409A. 

The proposed regulations address this issue for stock rights and allow them to remain exempt from 409A even if they include an earnout provision.

But what about a short-term deferral?

Does anyone know when the updated segment rates will be available?  The last rates we have are January 2025.

Plan is a safe harbor plan meeting safe harbor a 100% match on the first 4% of deferrals.

Plan has a flexible discretionary match that would generally meet ACP safe harbor requirements except that plan sponsor only wants to match pre-tax deferrals. Two NHCEs make Roth contributions, no HCEs make Roth.  I think that is a problem because the ratio of matching would be higher for HCEs than NHCEs. Plan would pass ACP testing, but I still don't think they can exclude Roth deferrals from the discretionary because they specifically elected that both the "ADP and ACP test safe harbor" provisions will be used for any Plan Year in which any type of matching contribution is made.

Since they've elected that ACP safe harbor provisions will be used, I think that they have to use the safe harbor provisions and can't revert to ACP testing.

Am I missing something?  This is a takeover plan for us and in prior years the service provider did allow the discretionary match to be made only on pre-tax deferrals.

Thank you for any guidance.

I'm looking for contact info for the plan administrator(s) of Fedex portable pension, Fedex pension and Fedex 401k, specifically for QDRO purposes. Any info would be helpful.

Sorry for all of the questions lately.  We have a client who does a flat 4% Safe Harbor Match who is looking to bring in a new group of employees.  For this new group they want to give them the same 4% match long-term, but for the first year they want to give them a 7% match.  Is that something that we can even do, if it passes the necessary ACP testing?  Or is it not even possible to do since the match is a Safe Harbor?  

I guess can we give only certain employees a 3% discretionary match but not everyone (assuming it passes the necessary testing)?

Lets say you have a real estate firm that employs a hundred "independent brokers" who are all paid via 1099 Forms.  The real estate firm itself has several W-2 employees, primarily the owners and clerical people.  My question is could the real estate firm adopt a plan that excludes the independent brokers, but does cover all of the W-2 Employees and the owners who are primarily paid via K1 under an LLC?  Assuming that is possible, could the real estate firm then offer to the independent brokers the ability to adopt their plan, but under terms of a multiple employer firm.  To clarify, each independent broker would be considered a separate firm that chooses to adopt the plan for the employees of the "independent broker's firm"?  This would be similar to a MEP that covers several independent franchises where there is no common ownership, making this to not be a controlled group.  I am guessing that problems might be due to Affiliated Service Group Rules and/or the independent broker being deemed employees of the real estate firm.  I understand that the key to this topic is proving that the "1099 employee" is truly an independent contractor, including the ability to control work hours and work location; and that a Form SS-8 can be filed where the IRS determines if the person is truly independent, or if that person must be treated as a W-2 employee for issues like benefit coverage.  Any and all comments are greatly appreciated.  Thanks in advance!!!

Wondering if anyone encountered this before or has insight on it. If a 401(k) is adopted by an agent (i.e. business manager) who wasn’t authorized to do so, but employees become enrolled and make deferrals etc. and eventually the employer discovers the issue — what is the status of the plan and what must happen to the “plan assets”? Would any of ERISA’s provisions apply or not? Could the employer delay returning the contributions to let litigation run its course or would this implicate anti-alienation restrictions? Thanks for any thoughts. What if certain participants were not eligible under the terms of the plan…how would that be navigated in light of the fact that the entire plan was improperly adopted?

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?