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?
 

Client filed for bankruptcy, has an underfunded plan, so PBGC is assuming administration/becoming trustee of the plan.  A final IRS Form will need to be filed. Who files this? Is it the bankruptcy trustee? PBGC says they would not file, although they would file the final 5500. Thanks

My husband went through a nasty divorce.  He did what was ordered by the Court, she received over $200,000 for house and he paid child support- never late.  Part of the divorce was he get half of her pension, 401K from Disney.  For years, it was a cat and mouse game where exwife and Disney Fidelity would not disclose the name of her plans.  Discovery, subpoenas filed (this was back in 2005).  Finally in 2022, my husband got an award from Disney Fidelity.  Not much, but it was purpose.  Now in Feb, we get a letter from Disney Fidelity that ex-wife is trying to retire but her funds are being held up.  Trying to speak to somebody from Disney Fidelity QDRO dept is virutally impossible, but we did get this one guy who was super helpful and although couldn't come right out - told my husband to do another QDRO because she had another plan which he could be entitled to.  My husband and his previous lawyer back in 2005 always felt she hid money.  His ex-wife has hired her new 5th lawyer and they are trying to do a Motion to Vacate the original QDRO back in 2005.  My question is that the QDRO would apply to the plans the ex wife had during their marriage of 1988 to 2005, I dont understand why the guy from Disney Fidelity told us to subpoena Fidelity for her plan subsequent to 2005?  Why then?  Any advice would be so helpful.  Thx

Internal Revenue Code § 414A, which sets an automatic-contribution arrangement as a tax-qualification condition for a § 401(k) arrangement, does not apply “earlier than the date that is [one] year after the close of the first taxable year with respect to which the employer maintaining the plan normally employed more than 10 employees.” I.R.C. § 414A(c)(4)(B).

Section 414A does not define what “the employer maintaining the plan” means.

Section 414(b)-(c)-(m)-(n)-(o) specifies several tax Code sections for which more than one organization or business might be treated as one employer. But § 414A is not among these.

Imagine a business organization is setting up a new plan with a new § 401(k) arrangement. Even counting owners, this organization has only six employees (and is unlikely ever to have more). The organization is commonly controlled with several other organizations, each of which has a separate retirement plan. (Assume none of coverage, nondiscrimination, or top-heavy is a worry.) The common-control employer has hundreds of employees.

If you advise this new plan sponsor, what do you say about whether it must or need not make its § 401(k) arrangement an automatic-contribution arrangement?

I got an email from a client concerned about how much data is public on EFAST2.  They have had this plan since the inception of EFAST why now I don't know. 

The CEO is saying he was reading on all the instructions that he saw something that said you could request some or all of your data to not be made public.  I couldn't find anything in the instruction or on the website talking about this. 

I thought I would throw it out here before I go back and say, "can you show me what you are reading" if anyone has heard of this? 

I mean if you could do this every company would try and it would be more common knowledge around a firm like I work at which has hundreds of employees. 

Have we missed the boat on this somehow? 

Any help would be appreciated. 

Thanks

Good morning everyone, and sorry for all the questions.  Been getting a lot of plans recently that have some interesting quirks/potential issues.

We have a plan that's coming over that's current matching formula is:

"133 1/3% of the first 3% of contributed eligible compensation, plus 100% of the next 3% of contributed eligible compensation"

Question 1) I've never seen a matching formula in excess of 100% of compensation, so I wanted to confirm that this was acceptable.

Question 2) They've asked about increasing the matching formula.  Can they simply do 133 1/3% of 100% of contributed eligible compensation?  Or is there a maximum of 100% of compensation?

Thanks in advance everyone!