I'm hoping someone can help set me straight here.

An employer offers two medical plans. Plan 1's self-only coverage is $500/month. Plan 2's self-only coverage is $1,200/month. In order to use the ACA FPL safe harbor, the employer offers a $400/month employer contribution toward either Plan 1 or Plan 2. After the employer contribution, Plan 1's coverage is $100/month and Plan 2's is $800/month. Assume that neither $500/month for Plan 1 nor $800 or $1,200/month for Plan 2 meets any ACA safe harbor (i.e., without the employer contribution, no coverage is affordable). 

The employer's policy is to stop the $400/month employer contribution if an employee is out on unpaid non-protected leave (e.g., not yet FMLA eligible, not ADA, no state law, etc.). The medical insurance policy allows active coverage to continue for up to six months. 

An employee is going out on a three-month non-protected leave during a stability period in which they are full-time. Active coverage will be offered for the full three months.

• If the employee is on Plan 1 and the employer stops the $400/month credit, the employee will not have affordable coverage ($500/month). I assume this will be a problem as the employee still needs access to affordable coverage while in a stability period.
• If the employee is on Plan 2 and the employer stops the $400/month credit, the employee will not have affordable coverage ($1,200/month) but is not enrolled in the "affordable" coverage (Plan 1) to begin with, i.e., it was already not affordable but they had access to an affordable plan during open enrollment. Is this a problem?
• What if the employer only continued the $400/month credit during non-protected leaves for employees who were already enrolled in Plan 1 (but not any other plan)?
• If the employer's plan terms or policies say as much, is it permissible to continue/stop the employer credit only for employees enrolled in certain plans?
• If so, might the cost increase allow them to switch from Plan 2 to Plan 1?

Appreciate any input. 

A U.S. based tax-exempt organization 457(b) plan sponsor wants its new CFO, an Australian citizen who does not have a social security number, to participate in the plan.  I'm only guessing, but I would think that a non-U.S. citizen earning compensation within the U.S. from a U.S. employer would need a social security number unless the individual is exempt from U.S. taxes, most likely pursuant to a tax treaty between the two countries, although I'm no subject matter expert.  If so exempt, then presumably there is no advantage to the CFO participating in the plan (other than perhaps receiving an employer match if the employer decides to make one).

Anyone with other thoughts concerning this situation?  Absent a social security number, I'm not sure our systems will even allow us to establish a plan account for this individual.

Is there a grace period before an employer has to start withholding from an eligible employee's paycheck?  For example, employee is eligible on 1/1/2025.  The employee was given the required notices 30 days prior to 1/1/2025.  If the employee does not make an election to contribute (or not contribute) is the employer required to start withholding from the 1st paycheck after 1/1/2025?  Or can the employer say that they'll start automatically withholding with the first paycheck 30 days after 1/1/2025?   

Which Federal website are other TPA's using to see what the current "prime" interest rate is when processing participant loans when the document says the interest rate to be used is "prime plus ___%"?

Moody's, Wall Street and Bloomberg are all showing different prime rates...

Are TPA's just trusting the pre-populated rate that comes through from the recordkeeper instead of checking on it themselves?

Thanks.

Hi, 

Our client contacted us to let us know that a participant completed a deferral election form November 2023 and they've been making deposits into her brokerage account.  However, the deductions were never set up with payroll.  She just noticed a year later.  

The client spoke with their payroll company and their labor lawyer and both said as long as they don't tell her it's required, she can sign something and can have deductions for the next 3 payrolls to make up for it.  The payroll person even mentioned her writing the company a check (I explained that the money shouldn't be from her, if would need to come from her SDBA if she were to pay it back).  

I explained to her they have two issues going on: 1. failure to implement and because of that 2. excess deposits.  I calculated a QNEC, g/l and the full safe harbor match and then figured out the difference between that and what was deposited. 

I guess I'm just looking for guidance because even with the deposits being made erroneously, I feel like this is still a MDO that needs to be corrected.  

Does a safe harbor plan with less than 100 employees need to give the safe harbor match (or non-elective) contribution to these Part Time employees now eligible to participate?

I've got two 403b plans where there is definitely no controlled group and no ASG.  However, they do operate closely together, to the point where employees are shared.  Over the years I've made the plans identical, but now I'm thinking about a 403b MEP.

The main consideration is that the want to continue to not have automatic enrollment.  Both plans are pre-2022, so they are currently not required to offer it, but the way I'm reading the IRS clarifications, if Plan A becomes a MEP by Plan B merging into it, they will be subject to the SECURE auto enrollment rules.  Is that correct?

Thanks.

403b Guru's of benefitslink, please help me out with this one.

Client is a 501c3 and Im looking at what I was told was a pretty simple 403b (plan 001).  Nothing exceptional stands out in the plan document, participants get a 3% non-elective on top of a 50% match up to 4% of comp.  The plan files a Form 5500 every year.

After speaking to the accountant, what happens in practice is throwing me off a bit.  

• Elective deferrals in excess of 4% of comp are actually deposited to a second 403b plan (lets call it plan 002).  I havent seen a plan document for this plan, and no 5500s have been filed.  It sounds like its a deferral only non-ERISA 403b.
• Both plans are with the same provider
• Plan 001 does not mention anything about deferrals in excess of 4% of comp being funded to a different plan

This doesn't seem right to me, I would expect that plan 001 would have to spell out that it will only accept elective deferrals up to 4%.  Am I missing something?

What is the point of splitting elective deferrals into two plans?

any insight would be greatly appreciated.

If a new plan with more than 10 people elect to have a QACA instead of the EACA with safe harbor basic matching, would this satisfy the auto-enroll requirement under SECURE 2.0?

An owner is selling his business.  He will be paid in equal annual installments over the next 10 years, well over 6 figures each year.  He will not be working for the new owners and will likely be retired.

Would the income he receives from the sale over the next 10 years be considered passive income?  He is asking whether he can set up a solo 401k for himself, create a sole prop business entity for himself and use the annual payment to him as a basis for funding a solo 401k plan.  Is proceeds from a business sale considered passive income and prohibit him from using it for retirement plan purposes?

Thank you

Is it possible for a Plan to use different subsequent eligibility computation periods for different money sources?

For example, a Plan would like to do 1 year of service, with 1,000 hours, for the deferrals and safe harbor match, but do 2 years of service with 1,000 hours for profit sharing. They would like to "switch to plan year" to calculate subsequent eligibility computation periods for deferrals and safe harbor match, but use anniversary of hire to calculate subsequent eligibility computation periods for profit sharing. Is this possible? What additional testing would the Plan be subject to?

Does it say anywhere that the comp limit is the FIRST $345,000 earned? (for 2024)

My doc says "Compensation in excess of $200,000 [as indexed] shall be disregarded for all purposes other than for purposes of Elective deferral."

Does that mean someone who earns $700,000 a year, but doesn't start deferring until the second half of the year will get no match?  Doesn't make sense.  But plan sponsor and advisor want something in writing.

what are the most practical options (cost first, quality second) to offer a fully bundled Safe Harbor Match (Basic formula) stand-alone 401(k) Plan?  For a small company with 15-20 employeees (high turnover, bunch of part-timers).

With community property no longer nullifying the exception to spousal attribution, the following question has come up:

If an individual is an independent contactor and provides services(not management) to spouse's business 1 day per week and also provides same services to other businesses, would the spousal exception still apply?

The no participation clause states: the individual is not a director or employee, and does not participate in the management, of that business.  Taken literally, none of those things are true.

Is there more to "participation" than director/employee/management? 

First, was sorry to hear of Mike Preston's passing.  I had been using his PPA Present Values software for checking purposes for a number of years, and with his passing is no longer supported for interest and mortality updates.  Any other standalone software alternatives that are recommended?

Does anyone has experience with merging a non ERISA church 401k or 401a into a Non ERISA Church 403b plan? This is permitted under Code Section 414(z) as implemented by the PATH Act of 2015. I am interested in the mechanics of how to do this - lets say the 401k is the existing plan, but the Church wants to have non ERISA 403b plan. Would the client need a Board Resolution, along with a new 403b plan into which the current 401k can be merged? I believe there is a requirement that all accounts that are merged be nonforfeitable - i.e. fully vested. I realize there are no regulations on this issue to date. Any thoughts would be appreciated!

I answedred my own question but I thought this was interesting enough to share:

Participant takes a loan from the 401(k) Plan to pay for the higher education expenses of their dependent or themselves or their spouse.  Why does this not qualify as a "Qualified Student Loan"?

Answer:  SECURE inddicates that the following definition applies to qualifying student loans:

221(d)(1) Qualified education loan

The term "qualified education loan" means any indebtedness incurred by the taxpayer solely to pay qualified higher education expenses—

(A) which are incurred on behalf of the taxpayer, the taxpayer's spouse, or any dependent of the taxpayer as of the time the indebtedness was incurred,

(B) which are paid or incurred within a reasonable period of time before or after the indebtedness is incurred, and

(C) which are attributable to education furnished during a period during which the recipient was an eligible student.

Such term includes indebtedness used to refinance indebtedness which qualifies as a qualified education loan. The term "qualified education loan" shall not include any indebtedness owed to a person who is related (within the meaning of section 267(b) or 707(b)(1)) to the taxpayer or to any person by reason of a loan under any qualified employer plan (as defined in section 72(p)(4)) or under any contract referred to in section 72(p)(5).

Hi, 

I'm going to apologize ahead of time.  I'm a small business owner, and in no way a benefits expert.  

Our company has only 8 people in the plan.  5 of those 8 have ownership above 5% and thus are HCE as I understand it.  One more has a salary in excess of 150k, thus also an HCE.  We offer a 100% on the first 3% and 50% on the next 2% for our match.  We also have a profit sharing component to the plan.  

My understanding is that because we have the safe harbor plan, we're exempt from testing (ADP, top-heavy, etc) for the primary 401k.  However, our TPA is informing us that there is testing associated with the profit sharing component.  Is this correct?  We're looking to max out our portion as owners, and provide a different but equal amount to the two non-hce's and a 3rd amount to the one HCE that is a non-owner.  

My further understanding of the profit share is that we can only "share" up to 25% of the total compensation of all eligible employees, but that the money is pooled.  eg, 8 employees each making 100k, we would have no more than 200K that could be put into the profit share portion, and no single employee could crest the 69k combined threshold (unless with catchup contribution).

I'm hopeful someone here can provide some additional insight for me.  If we make a "profit share contribution" to all employees, HCE and Non, are we subject to testing?  If so, is there anywhere where I can plug in our numbers and understand my options?  Additionally, do we need to provide the same to all non-owner or non-hce's?   

Thanks for helping me through this.  Not my forte, and I struggle at times with our TPA's ability to explain our options and the laws we must follow.

I'm looking for service provider recommendations to determine Creditable Coverage re: Medicare Part D.   We have a client who has a high deductible health plan combined with an HRA that needs to obtain an actuarial determination as soon as possible.   It's a small client (roughly 45 employees) so any referrals to firms that are affordable (if at all possible) would be greatly appreciated.  Thank you. 

Hi,  A non-owner participant, DOB 01/22/36, terminated on May 10, 2022.   His RBD was 4/1/23, I believe.   His RMD forms were forwarded in late 2023 to the plan contact when I learned of his termination.   The contact never returned the forms because she never heard from the participant.

It turns out he died on May 5, 2022.  Primary Beneficiary was his wife, DOB 2/6/40.   Turns out the wife died March 18, 2023.  Her Beneficiaries are their two adult sons.  

Questions:

1.   I am right to think that since participant died before his RBD, no RMD’s are required for 10 years? (Per a certain webcast)

2. Since the wife died before his RBD, are the distributions still delayed for 10 years?  Is the wife now considered the participant when using the tables?  Which table?

This has stumped me and my colleagues.  One colleague suggested that this is pre-Secure, so the old rules apply, which really confused me.

Help!