If a 401k plan is terminating for example as of 5/31/25, all account balances are required to become 100% vested. But when do the remaining forfeitures have to be reallocated - is it as of 5/31 or can forfeitures remain after this date to pay expenses such as mailing fees, etc. It seems like they should go to participant accounts as of the termination date? Thank you!

Originally posted in 457b forum but so far no responses so I thought I would try it here:

Participant in a non-governmental 457(b) plan incurred a severance from employment and elected to defer distribution of his account (as allowed under the plan document).  The participant was subsequently rehired a few weeks later and continued his participation in the plan.  When the deferred distribution date arrived (2 years later) the recordkeeper failed to segregate the participant's contributions (based on first period of employment and second period of employment) and distributed his entire account, including deferrals made after he was rehired.  Participant is still employed.  Was the participant entitled to receive the distribution of his account attributable to deferrals in his first period of employment (because he did have a severance from employment and elected a deferred distribution date)?  If so, can we treat the distribution of the deferrals made during his subsequent re-employment as an "overpayment" and apply the correction method for overpayments in EPCRS to correct (knowing that 457(b) plans are not included in EPCRS)?  Any thoughts?

The NHCE elected to make a $5,000 Roth deferral. Pay was not reduced and no deferral (Roth or pre-tax) was made at all. The only EPCRS correction I see is for the employer to make a 40% pretax contribution, with earnings, to a QNEC. The employer and employee would like to do more.  (1) contribute the 40%, with earnings, to an employee Roth account (2) and amend the 2024 W-2 to include the 40% with earnings.

The IRS website (not EPCRS) allows retroactive characterization if a deferral had been made but incorrectly designated as non-Roth. https://www.irs.gov/retirement-plans/fixing-common-mistakes-correcting-a-roth-contribution-failure  However, I don't see anything in EPCRS that would allow this for an employer QNEC. 

I'm inclined to tell the client to act in good faith but it would be nice to know if there is more creative guidance for this issue than making a 40% pre-tax QNEC.

A prospective client wants to adopt 401K/PS/Cash Balance combo for the 2024 plan year. However, they already made the SEP contributions for the 2024 plan year. Is it possible for them to adopt the combo strategy? If so, how does the NDT work with the SEP contributions? Where can I find more information on this?

TIA

I assume that when an employee makes repayments on their 401k loan, the employer doesn't match those repayments because it's not a contribution. I haven't seen anywhere that an employer couldn't match those repayments, but my gut feeling tells me an employer doesn't and shouldn't match 401(k) loan repayments. 

I am an Orange County California employee and I plan to retire in 3 years with 25 years of service. I have a defined pension plan where I can retire after a certain number of years of service, at a certain age, with a certain income history and I'm eligible for a lifetime annuity (2.7% of my top 3 earning years times each year of service). I started this job 3 years into marriage (2001) and we divorced 10 years later (2011). My top 3 earning years were long after the divorce. 

I remember being told by my attorney that we needed to hire a QDRO attorney but that was never done. I also remember calling the County retirement and being told the divorce had been reported to them and that I would not be able to collect my pension until the QDRO was complete. 

I have read online that my ex may not be entitled to any portion of my pension if I remarry, or if I remarry before I retire, or if I retire before the QDRO is complete. I'll be engaged next month and I do plan on remarrying before I retire. Can anyone please confirm any of this for me, is it true, and that simple?

If not true or that simple, can someone please explain what I can expect or should do in this situation (never did a QDRO, it's been 14 years since the divorce, and I plan to remarry)? She will not need any portion of my pension as she has done very well for herself these past 14 years, 17 years when I retire, and I will need it all. She has not remarried, if that matters. 

Thank you 

The firm that I work for can't really decide how this adjustment should be made so I'll appeal to a larger audience and hope the flaming isn't too intense.

2024 calendar year plan, EOY valuation. 12/31/2024 assets $2,209,224.

Before the amendment, the total maximum liability at 12/31/2024 is $2,095,478 ($1,911,601 FT + $183,877 TNC). After the amendment, the total maximum liability at 12/31/2024 is $3,465,035 ($1,911,601 FT + $1,553,434 TNC). The increased maximum liability due to the amendment is $1,369,557.

After the amendment, the required minimum as of 12/31/2024 is $1,438,375, so this amount plus any interest discount as of the date of deposit is fully deductible, even if the adjusted deduction limit is smaller. Please correct me if that's wrong.

If we pretend there is no reduction, the 2024 deduction limit would be $1,911,601 FT + (1,911,601 * 0.5) cushion + 1,553,434 TNC - 2,209,224 assets = 2,211,612.

What we can't agree on is where the increased liability is subtracted. Our software suggests that we'd subtract the increased liability from the max FT before calculating the 50% cushion: ($1,911,601 FT + ((1,911,601 - 1,369,557) * 0.5) cushion + 1,553,434 TNC - 2,209,224 assets = $1,526,833. Discussions have suggested that the increase liability should simply be subtracted from the unadjusted deduction limit, so $2,211,612 - 1,369,557 = $842,055 (ignored since required minimum is higher). Some have even argued that there is no reduction since the FT does not increase due to the amendment, but that seems unreasonable.

Would love any feedback you all can provide. 

Let me explain what I mean by that, not being a Cafeteria plan guru. As I understand it, if testing is failed, then the NHC's have no consequences - their benefits are still excluded from income. The HCE's will have their benefits included in income. So isn't this just the same position they would be in anyway? They (the HCE's) are no WORSE off than they would be otherwise without the plan - what's the real downside?

I feel like I'm maybe missing something - I'd be interested in any thoughts you may have. Thanks!

Parent Company is in Korea. US Company is part of the controlled group.  They have some Korean Employees who soley worked in Korea for 2024.  They are now in the US working and getting paid US dollars.  For 2024 HCE determination, do we consider 2023 Korean income?

I was reviewing Form W-4P to determine if the payer is to withhold differently for annuities that started, for example, in 2017 vs. 2025 when there is no W-4P on file. 

2025 Form W-4P states: 
"If you don’t give Form W-4P to your payer..., then the payer will withhold tax from your payments as if your filing status is single with no adjustments in Steps 2 through 4. For payments that began before 2025, your current withholding election (or your default rate) remains in effect unless you submit a new Form W-4P.  

Client A, who annuitized in 2017 and never submitted a withholding certificate, had an original "default withholding rate" of "married with 3 allowances". 

Client B, who annuitized in 2025 and has not submitted a withholding certificate, has a default withholding rate of "single with no adjustments".

Am I understanding correctly that in 2025, in the continued absence of a Form W-4P, Client A's default withholding remains "married with 3 allowances"?

We just want to know if in the absence of a W-4P, whether or not Client A's withholding must conform to the newer default of "single with no adjustments" or if it remains with the original default of "married with 3 allowances".

TIA

Company A sponsors a 401(k) plan and there are two participating employers who are currently a part of the same controlled group with Company A.  Buyer is purchasing Company A only.  The participating employers are not being purchased and Buyer / Seller do not want to create a multiple employer plan by allowing the employers to continue participation post-closing.  Can the current plan be spun off into two plans and if so, are there any concerns that the assets are and will continue to be comingled post-closing considering that the participating employers will no longer be a part of Company A's controlled group?

We have a client with a 401(k).  The client does not want to hire an investment consultant.  Instead, they are looking for a resource for where to get a report of metrics for the investments in the Plan so they can do this work themselves.

Does anyone know of a good resource for this?

I understand the benefits of an investment consultant and they have been communicated to the client, but this is their decision.

Our firm is managing the investments and the administration for a client where each participant has individual brokerage accounts. We process def, match, and ps into each of their individual brokerage accounts. For those who have client's that aren't at traditional record keepers, is it recommended to have individual accounts for each money source? 

I was married to a DC law enforcement officer for 24 years - married in 1992, before we were divorced in 2016.  He has since passed in 2023 and I found out after his death that he had retired in early 2000.  We had been separated before our final divorce.  I did not waive my rights to benefits but was denied spousal benefits from the DC Retirement Board.  Can I seek an investigation into my ex-husband’s retirement package to determine if there was fraudulent activity that has prevented me from being the primary beneficiary?

Participant in a non-governmental 457(b) plan incurred a severance from employment and elected to defer distribution of his account (as allowed under the plan document).  the participant was subsequently rehired a few weeks later and continued his participation in the plan.  When the deferred distribution date arrived (2 years later) the recordkeeper failed to segregate the participant's contributions and distributed his entire account, including deferrals made after he was rehired.  Participant is still employed.  Was the participant entitled to receive the distribution of his account attributable to deferrals in his first period of employment (because he did have a severance from employment and elected a deferred distribution date)?  If so, can we treat the distribution of the deferrals made during his subsequent re-employment an "overpayment" and use the correction method for overpayments in EPCRS to correct (knowing that 457(b) plans are not included in EPCRS)?  Any thoughts?

We're being asked to takeover and merge 3 separate plans.  Entity A purchased entities B&C during 2023.  Entity A participates in a PEO 401k Plan.  Entities B & C each maintain their own safe harbor 401k, with different safe harbor formulas.  Entity A's plan is also SH.  We are told it was a stock purchase (B&C are LLCs) and nothing has been done with these plans until now to bring them together.  They have been maintained and each have separate TPAs.  Since they are all owned by the same owner now we intend to merge the plans effective 1/1/26 sponsored by Entity A and with entities B&C as participating sponsors.  Am i missing anything?  Any reason this can't be done?  We're waiting until 2026 because of the issues that would be involved with a mid-year change to safe harbor plans.

As of this morning, it appears HHS has removed nearly all of the Section 1557 subregulatory guidance (FAQs and Fact Sheets). Entries still appear in search results on the HHS website (as of noon-ish on Feb. 5), but the content itself is gone.  (Also see the link here to OCR's Section 1557 section -- it's broken.)

Archived copies should generally be available at web.archive.org (although I didn't check for each and every missing page), but it does appear that the current guidance/enforcement may be changing.

Section 401(k)(4)(A) allows providing a “de minimis financial incentive (not paid for with plan assets)” for a participant’s choice to elect deferrals.

BenefitsLink neighbors, have you seen anyone do this?

What was the incentive?

Who paid for the incentive—the employer? Or a service provider?

Did the incentive result in the behavior the payer wanted?

Did the payer find it received good value for the payer’s money?

Bundled 401(k) service provider wants to attract rollover contribution dollars.  Accordingly, the provider wants to offer a promotional program where a participant will not be charged an asset-based fee for 6 months on any rollover contributions made to their 401(k) plan.  At the end of the 6-month period, the participant will be charged an asset-based fee on the rollover contribution account that is equal to the asset-based fee for all other accounts in the plan for all other participants.

In addition to providing administrative services, depending on the plan, the bundled provider offers: (a) directed trustee services; (b) 3(21) or 3(38) services; (c) online participant managed account services; and (d) discretionary trustee services for pooled accounts.

Other potentially relevant facts:

• Proper and timely service provider and participant fee disclosures will be made.
• This offer will apply to all participants in a given plan regardless of the participant’s existing account balance and regardless of the amount of the rollover contribution.
• Marketing materials will not be deemed to be providing investment advice (or any other fiduciary services beyond what is already offered in the plan).
• Participant education services -- but not investment advice -- will be provided to participants in connection with this 6-month promotional offer.

Any issues?  Benefits, rights and features issues?  Prohibited transaction issues?  Any action the trustee should take to minimize any DOL/IRS risk?

Any thoughts would be greatly appreciated.  Thanks.

A participant made ineligible deferrals in 2024.

There is no mandatory withholding on the excess deferrals using code "8". However, can the participant choose to have taxes withheld?

Thank you.