Is the Beneficiary desigantion form required to be notarized if the beneficiary is a spouse?   Is it even needed for all practical purposes?  Our plan docs name spouse as a default beneficiary in the pecking order.  Interested to hear thoughts and opinions.....

We have a non-profit church that wants to start a 401k plan.  They will have more than 10 employees.  Are they required to have auto enrollment starting in 2025?  There is an exception for "church" plans.  This is a plan with a church as the plan sponsor.  I do not think that these carry the same meaning and that this 401k plan will need to offer auto enrollment.  

Any comments are appreciated.

I received half of my exes retirement. The QDRO has been sent back twice. In the mean time ex was terminated from job. The agreement to give half was awarded in the final decree. Would plan give him all of retirement because he was fired before the plan approved the QDRO?

We have a multiple employer plan with two companies, Company A and Company B.    Company B is a participating employer in the Plan sponsored by Company A and the document says ADP/ACP testing is using prior year method.

Company B came into existence in 2022, with only one employee who was classified as an HCE.    In 2023, Company now has 2 employees, the one HCE and now one NHCE who transferred over from Company A and was previously eligible under Company A.    The document counts past service between the two Companies.

What is the prior year deferral percentage for the NHCE when testing for 2023 in Company B?  0% or 3% since it is the first year Company B has NHCE employees?    Can Company B elect to change to current year testing or must both Company A and B move to current year testing?

I've broached the topic of an ASG with a client, and of course they want more information before deciding to engage an ERISA attorney.  DWC has a good article on their website about ASG; is there anything else that you've found that is relatively understandable that can be sent to accounants (and/or plan sponsors)?  Thanks.

S corporation, two owners - father and son, both are 50% shareholders, no other employees.  Is 5500-EZ or 5500-SF required?  In prior years EZ was filed but I do not think it is correct and SF is required?  Anything else that I might be missing?

Plan uses the top-paid group election because they have very high earners.  A small group of NHCE <1% owners do not want to participate in the plan or receive employer contributions. Assuming we can pass coverage, can they designate certain employee owners to be in this "Excluded Division"?  How do you define the division (or do you need to) when the only real differentiator is that they are partners who can not participate while in that division?  Thanks for any input. 

It seems to me that if a business owner has no employees and has less than $100,000 of compensation they would be eligible for the employer contribution credit.

The admin expense credit would not be available because the cap is based on the number of NHCEs and in this example there are zero. But the only restriction on the employer contribution credit is the 100k of comp limit.
 

Thoughts?

A 100% ESOP-owned company has received a letter of intent to be acquired by a private equity company.  The transaction is expected to be a stock sale about 40% above the 12/31/2023 FMV.  Should the expected sale price be disclosed on the diversification notice?  At least 2 of the diversification eligible participants have or will have knowledge of the sale discussion at the time the notices are scheduled to be distributed, but the rest of the eligible group may not know all the details.  Please assume the diversification is timely based upon the availability of the final FMV, I'm only concerned about the fiduciary responsibility of providing the information necessary to make an appropriate election.

Is there specific guidance anywhere that says Employers should not stop payroll matches when the employee reaches the max compensation during the year?

For example, plan matches dollar for dollar.  I don't see why the Employer should stop (testing reasons notwithstanding).

Or, maybe someone started deferring in March with a 50% of deferrals no more than 6% of comp (for a cap of $10,350 on $345,000 in comp).  They hit $345k in September, but hasn't hit that match cap yet.

We know they are supoosed to keep going until they hit a cap, but is there anywhere that says it outright?

I was always told/taught that receivable profit sharing contributions are due the earlier of:

1) September 15
2) The date you file your tax return

In researching something, I just found this on the IRS website:

For example, if the due date of the employer's calendar-year 2022 Form 1040 or Form 1120 is April 18, 2023, with an extended due date of October 16, 2023 (after the automatic six-month extension), the employer has until October 16, 2023, to make a 2022 profit-sharing contribution and deduct it on their 2022 return.

Have I always been taught the wrong thing?  Or am I confusing two different things?  Now I'm confused, but is this an instance that if the company is a C-Corp you do have until October 15 to fund the contribution?

Thanks in advance!

Employer going out of business that has two plans: 403B and a pension plan (assume 100 participants or more).  The 403B plan year is the calendar year.  The pension plan year ends on June 30.  Is the employer required to have an audit performed for each plan for the following time periods? 403B for CY2024 (plan terminated 7.31) ( I believe YES) and pension plan for plan year ending June 30,2025 (I assume also YES). Thanks.

Hello…I’m trying to create a model to project future balances for our participants but am running into a couple of roadblocks.

In past years, we have had 1 ESOP loan.  I reengineered the allocation calculation from our TPA and it seems that once we have an ESOP only allocation of contributions (after accounting for 415 limits and backing out 401k contributions), the loan is allocated to each participant to reduce the actual contribution amount paid.

Fast forward to 2024 and we will now have 2 loans due to a re-leverage.  When I use the same methodology to allocate the loans to participants, two of our participants have a negative contribution amount.  I’m not getting any clear answers from our TPA on how to handle this.

Similar to how 415 excess amounts are re-allocated to participants, would these negatives be re-allocated until no one is negative?

Furthermore, to make up for the fact that the bulk of our contributions are going toward loan payments, we will be doing an S-Corp Distribution in 2024.  S-Corp Distributions earned on allocated stock are allocated in proportion to participants based on beginning share balances less distributions and S-Corp Distributions earned on shares held in suspense are allocated based on Eligible Compensation.

What I’m unclear about is the timing.  Should contributions be allocated first, then S-Corp distributions, or vice versa?  I was going to model it out using both approaches, but the negatives caused by the loan impacted that original plan.

Thank you for your assistance.

Jeff

One of our clients is running into an issue with the testing due to being an employee owned cooperative (we don't administer this plan, just their retirement plans).  There are 17 employees and all are considered more than 5% owners due to the structure of the business.

The people doing the testing are saying they fail “25% Key Employee Test, 55% Average Benefit Test and 25% Owners Test, since by definition everyone is considered an owner and Key Employee.

Do these tests apply to a Plan under this type of structure?  They are asking me for guidance, but this isn't my forte.

Thanks!

In an ERISA Qualified Plan the Participant retired during the marriage of the parties and elected a 50% QJSA for his then current wife as he was required to do by law by Federal law. ERISA § 205(a)-(d), 29 U.S.C. § 1055(a)-(d)  

Now, 6 years later, cometh the divorce, and the Participant wants his now ex-wife, the Alternate Payee, to pay the cost of the QJSA election, that is, the actuarially deduction from his retirement annuity to fund the survivor annuity and achieve actuarial equivalence pursuant to ERISA §§ 205(d)(1)(B), (d)(2)(A)(ii), 29 U.S.C. §§ 1055(d)(1)(B), (d)(2)(A)(ii) and ERISA § 204(c)(3), 29 U.S.C. § 1054(c)(3).

Problem 1 - the Plan Administrators, like most Plan Administrators I have dealt with, have refused to allocate the cost to the ex-wife and to deduct that cost from the ex-wife's share of the retirement annuity.  

Problem 2 - I cannot find any authority to confirm that ERISA permits the parties to agree, on the courts to compel,  the cost of the survivor annuity to be paid by an Alternate Payee.  The sections of ERISA require the Participant to elect a QJSA, but is silent about the "cost". 

Any ideas?

Thanks.  

So, suppose you have a plan that doesn't qualify for any of the exceptions, so the SECURE auto-enrollment provisions apply. Plan is an ACA, but not an EACA, so will have to be amended to be an EACA, SECURE provisions, etc., etc. 

If the participant already has an election in place, can this be "carried over" under the updated SECURE plan provisions? Would your answer change if the election in place is LESS THAN the minimum 3%? 

409A account balance plan that says payment may be made in cash or in-kind. The plan is informally funded with COLI and payment is to be made in a lump sum. If the plan sponsor transfers the COLI policy to the participant as payment, is there an issue? I couldn't find anything in the Regs that prohibits this. 

We have a client who signed the Cycle 3 plan restatement document on Monday, August 1, 2022.

Is this late, or did we get a weekend extension in this case?

https://www.irs.gov/newsroom/irs-relief-now-available-to-hurricane-debby-victims-in-all-of-south-carolina-most-of-florida-and-north-carolina-part-of-georgia-various-deadlines-postponed-to-feb-3-2025

Plan sponsor is preparing a total rewards statement showing what the employee's pay and benefits sum up to and doesn't know what to put down under the Pension plan line.

Doesn't seem to make sense to put their accrued monthly benefit. I'm curious what other plan sponsors do?  Put down the value of the accrued benefit earned in the year? put down the present value of the accrued benefit earned during the year paid as a benefit at normal retirement age?