Simple questions for a cheat sheet I am making....

• If a participant makes ROTH deferrals, that money has its own 5 year clock... Yes?
• If a participant continues each year to make ROTH deferrals, does that new money use the original clock start date?
• If a participant makes an in-plan ROTH conversion, I know that has its own start date.  And every time they do an in-plan ROTH conversion the conversion gets its own start date.  
  Here are the questions...  all in-Plan ROTH conversions need to be in their own investment account... That account can be on paper... correct?  My system will track it, that's all that matters, correct?

Thanks

I realize record keeping platforms generally indicate 10% will be withheld unless the participant elects something different (implied higher.)

But can a participant elect zero withholding on an RMD? Example below. Thank you.

I have a client who pays people who could be classified as independent contractors as statutory employees and issues them a W-2. Do these employees count towards the limit of determining if a plan sponsor has to do auto enrollment or not?

Hi

There is an ongoing discussion in one of the companies I work with. They are evaluating moving from a SIMPLE 401k plan to a Safe Harbor plan, to ensure that the compliance tests are passed and to enable a possible Mega Backdoor Roth plan. I have been able to simulate the tests and with the Simple 401k plan, the ACP falls into non-compliance quite quickly. However, I've done some research and found that Safe Harbor plans offer some type of waiver over tests. But I've also found that after-tax contributions do not qualify for safe harbor test exemption, meaning that even when the company adopts a safe harbor strategy, it is very likely we would fail the ACP test.  Can someone help me confirm if safe harbor plans with after-tax contributions are subject to ACP testing? (and, why are they called safe harbor if they are not entirely safe?). Thank you so much for your help!

FR

X had benefits in a former employer’s 401k plan. X wanted to direct the benefits to make loans to local construction contractors (no familial, no other business relationship), with promissory notes with stated interest rate and with collateral to secure repayment. X sets up an account at a local bank to roll the $$$ into the account. Between X, the bank and his accountant, there was a miscommunication; rather than an IRA, the bank simply opened a regular business account for X. The 401k plan sent the $$$ to the bank and reported it as a direct rollover distribution from the 401k plan. The bank placed the $$$ in the account (not an IRA). Now that the problem has been discovered, X has sought my assistance to remedy the situation. Any suggestions will be appreciated

The owner (plan sponsor) of a 401(k) plan is retiring. The owner turns 73 this November (2024) and his first RMD has been calculated for this year at ~ $150,000. Three months ago, the owner spent $2,850,000 from his share of the 401(k) plan assets to purchase a lifetime income annuity for himself outside the 401(k) plan.

Does SECURE 2.0 Act allow the monthly payments from the lifetime income annuity that are paid to the owner during 2024 to count toward satisfying the owner's 2024 RMD from his 401(k) plan account?

For plans that are MEPs because the employers are related in a way but do not fit together as an affiliated service group or controlled group, what wording should be used for the blank on the new MEP Schedule in Part I1(d)?  Derrin Watson has described these employers as "kissing cousins" and of course, we wouldn't use that unofficial terminology, but, we want to make sure to use appropriate wording.  What is everyone else using?  I do believe it at least needs to mention "defined contribution plan".  Thank you.

I want to withdrawal my 401 k  funds

Good morning, I have a few clients that don't want to log in and electronically sign the forms themselves.  What steps do they need to take to authorize me to sign the forms (with my name) on their behalf?

I think I know, I just wanted to be 100% sure.

Thank you!

Plan name is different than employer name.  But we filed the 5558 with the ERs name as both the ER and plan names.

For example:

Employer:  Connecticut Fencing Company

Plan name:  Fences 'R' Us 401(k) Plan

5558 filed with plan name:  Connecticut Fencing Company 401(k) Plan

EIN and PN are correct.  Will we have a problem?  Software is giving me a warning.

How does everyone else work with their clients to obtain ERISA bonds? Do you purchase and maintain the ERISA bond for your clients, do you have them reach out to their insurance agent? 

What's the best practice?

Do I have to file a 5500-SF for a plan that was effective 1/1/23 but not adopted until May 2024?

I have a client (small plan, 401(k)) for whom I have e-filed the 5500SF each year.  They no longer use my services, and wish to file an amended 2022 Form 5500-SF.

Can they: create EFAST filing credentials, then immediately file an amended 5500?  

I imagine the answer is "yes", but I am totally unfamiliar with that process, since I file all of my clients' 5500s myself.

Thank you!

The General Instructions for Schedule MEP states "All MEPs must complete Parts I and II to indicate the specific type of plan or arrangement..."  Under Who Must File it states "Schedule MEP (Form 5500) must be attached to a Form 5500 or Form 5500-SF filed for a pension plan that checks the “multiple-employer plan” box on Part I of Form 5500 or Form 5500-SF..."

My MEP experience is limited to closed MEP's so I'm looking for some clarity.  Are participating employers in an open MEP required to file Schedule MEP with their 2023 Form 5500-SF's?  The MEP administrator is saying no, because they have never checked the multiple-employer plan box on Part I of the Form 5500-SF.

Just general discussion re the reality of actual administration. Seems to me that if an employer chooses to offer this, requiring employee self-certification of the 5 required certification elements, annually, would be the way to go. Is there any particular advantage to going with the registering the loan with the employer, or registering with a third party service provider?

I'm also wondering about the realities of what happens when the certification is incorrect, or the loan itself doesn't qualify as a QEL in spite of the certification. According to Q.E-4 of Notice 2024-63, if the certification turns out to be incorrect, the match does not need to be corrected. So does this really amount to a "get out of jail free" for the employer, or are there other ramifications?

The initial determination of whether there is even a Qualified Education Loan (QEL) in the first place can be fairly complex, and I'm not sold on the ability of most participants to accurately make this determination. And I sure as heck don't want to deal with it at the TPA level.

Are you seeing a lot of demand for it? We've only had a few inquiries, but it is coming...

Any discussion is welcomed. 

My understanding is the mid-year safe harbor change can't be done after August 31st (assuming 12/31 PYE) because of the SH notice requirement....given the 3 month requirement for the creation of the new SH plan.

If the new 401(k) SH plan is a nonelective contribution, is a Safe Harbor notice still required ?

Thx!

Hi, all.  I have a client that would like to sell his company and is thinking that the significantly I-can-never-have-enough-liability-to-use-this-up overfunded DB plan his company sponsors might be a great selling point to a buyer who has an underfunded plan or a significant pending liability in its plan.  The idea is that the buyer buys my client, they merge the two plans and voila!  No more excess assets.

Does anyone know anyone who brokers or matchmakes this kind of business proposition?

Thanks in advance!

Ilene

403(b) plan has a Discretionary Match, allocated per payroll, no true-up.  Match formula is dollar for dollar up to 5% of pay.

Participant makes $700,000 per annum.  2024 Comp limit is $345,000.

Should they stop the match when it gets to $17,250? (5% of $345k)  Or stop when their compensation hits $345k?  Or continue the match and we will use $345,000 as comp in the ACP test only?

And there is a wrinkle:

They changed the match starting August 1 to be only up to 2%  What would the annual max be then?  Would it be 3.75%? Or $12,075?

That’s (7/12)*.05 + (5/12)*.02 :  7 months of 5% and 5 months of 2% averaged.

I know it’s a lot here.  Just trying to point them in the right direction if/when to stop.

Keep in mind these are payroll matches, not annual.

We have a H&W Benefits issues resulting from some restructuring.

Parent has two subsidiaries, A and B.  Some of the employees of A are going to be transferred to B and paid under B's EIN, however, they are going to remain participants in A's H&W benefits.  As a result, B will have a group of employees that participate in B's H&W benefits and another (new) group of employees who participate in A's H&W benefits (former A employees).  

What, if any, are the issues with this type of structure?  What should my concerns be?  Is this allowed?  Is everything okay, so long as we are able to pass some sort of testing?  

(I don't do much H&W work; I primarily deal with retirement benefits, so anything you can think of will be helpful).

Thanks a ton!

If we amend a plan to allow for Federal disaster relief distributions, is that semi-permanent?  

Can they remove that provision without a cutback of benefits?  Like age 59 1/2 withdrawals?