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?

Does anyone know if CMS would consider an HSA-qualified HDHP to be an integrated plan (as defined by the Creditable Coverage Simplified Determination safe harbor)? I have been looking for an authoritative source that tells me how to apply the safe harbor criteria when lifetime and annual limits for EHBs are no longer allowed by the ACA. Is it safe to entirely disregard the integrated plan criteria solely because two of the three plan provisions are no longer valid for most plans? In other words, can an employer rely on the yellow-highlighted instructions and apply the non-integrated plan criteria to a plan with a combined plan year deductible if that plan no longer has combined annual and lifetime maximums per the ACA?

Per CMS simplified determination method:

Integrated Plan - An integrated plan is any plan of benefits that is offered to a Medicare eligible individual where the prescription drug benefit is combined with other coverage offered by the entity (i.e., medical, dental, vision, etc.) and the plan has all of the following plan provisions: 1) a combined plan year deductible for all benefits under the plan, 2) a combined annual benefit maximum for all benefits under the plan, and 3) a combined lifetime benefit maximum for all benefits under the plan.

A prescription drug plan that meets the above parameters is considered an integrated plan for the purpose of using the simplified method and would have to meet steps 1, 2, 3 and 4(c) of the simplified method If it does not meet all of the criteria, then it is not considered to be an integrated plan and would have to meet steps 1, 2, 3 and either 4(a) or 4(b).

A controlled group of companies, C, sponsors a 401(k) plan. Unbeknownst to C, one of its subsidiaries, N, in order to win a contract signed on as a participating employer in a multi-employer pension plan H.  

H has a frozen DB plan and a 401(k) plan, 12 of N's employees are eligible under both C's 401(k) and H's pension. H's DB plan could not pass testing, so using SECURE Act relief, they  aggregated H into a DB/DC plan and then demanded data on C's entire control group of 4,000 employees - which C gave them. The H plan then passed 410(b) and 401(a)(4) testing.

Of course, C has been performing its own independent ADP/ACP testing for years, not even being aware of H until the recent demand for control group data. H's actuaries are now recommending that C go back in time and re-do their ADP/ACP testing to aggregate H's 401(k) data. H's actuaries admit that the SECURE Act relief that allowed H to aggregate its DB plan with its DC plan, and thereby pull in C, is silent on how H's decision to aggregate would affect C.

So what say you experts? Does C have to re-do its historical ADP/ACP testing to add H's data to the mix?

I'm hoping someone can help me here:

• 401(k) plan excludes employees regularly scheduled for under 500 hours per year, with a failsafe that if such a person actually exceeds 500 hours in an eligibility computation period, they become eligible. This was done to avoid LTPT eligibility tracking, i.e., anyone with one year of 500 hours will be eligible to defer, so will not become an LTPT employee.
• Plan also provides that 500 hours in an eligibility computation period is an eligibility year of service. 
• BIS is 500 hours. 
• If someone moves from an eligible to ineligible class, they may no longer defer as of the date of the move. 
• An employee has worked full-time for several years, and will have well over 1,000 hours in 2024. As of 1/1/25, they will move to part-time, scheduled for under 500 hours per year. Assume they actually work under 500 hours in 2025.

Is it permissible to move this person to ineligible status starting in 1/1/25 (the date they are no longer in an eligible class) such that they are no longer eligible to defer, despite having satisfied a year of eligibility service?

If not, what about 1/1/26 after they have a one-year BIS in 2025?

Hello!  An employee was terminated August 15, 2024.  She will receive 2 months of severance pay.  

The Simple Plan is through Schwab and just a standard prototype plan along with Form 5305.  

It is unclear by the definition of compensation if deferrals and the match are required on the "severance pay".  

Any information would be helpful!

Thanks!

Plan calls for SC for loans with balance over $5k.

So, if the balance is $6,500 and they want a loan for $3,000 I still have to get SC, right?

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

The sponsors in the affected areas can get relief on filing their taxes and making deposits, but I don't see where this gives an extension on the 5500 filing deadline?  Am I missing something?

Governmental entity mistakenly filing Form 5500-SFs for years.  Should we simply stop filing (and risk inquiry from DOL/IRS) or notify DOL/IRS that they will stop filing 5500s because they are not subject to ERISA?  

If a new cash balance pension plan is being implemented now effective January 1, 2023, can the plan exclude employees who terminated during 2023 even though they would have satisfied the eligibility requirements as of 1/1/23?  Can there be an exclusion for any employee who wasn't employed on 12/1/23 for example?  Or would that be considered an impermissible service exclusion?

Alternatively, we can provide an accrual for 2023 with a 3 year cliff vesting schedule and exclude all vesting service prior to 1/1/23.  There is an existing 401(k) profit sharing plan that will continue.  Per EOB, if there is a second plan of the employer that doesn't terminate within 5 years before or after the effective date of the new plan, that is not considered a predecessor plan for purposes of excluding vesting service prior to plan establishment.

Any other options?

Thanks.

The 2024 Instructions for Form 1099-R just came out and page 16 provided the following guidance regarding the Box 7 distribution code for the various new SECURE 1.0 and SECURE 2.0 distribution types (QBAD; EPED; TIID and DAV):

".....use Code 1 even if the distribution is made for .....a qualified birth or adoption distribution, an emergency personal expense distribution, a terminally ill individual distribution, or an eligible distribution to a domestic abuse victim under section 72(t)(2)(B), (D), (E), (F), (G), (H), (I), (K), or (L)."

However, I didn't see any guidance on which code should be used for qualified disaster recovery distributions under Section 331 of SECURE 2.0 / IRC 72(t)(11). Did I miss it? Should we use Code 1 or 2 for qualified disaster recovery distributions?

We have a client XX that was acquired by YY in 2021, but they opted to merge the YY 401k plan into the XX plan rather than the other way around (usually the seller’s plan transfers into the buyer’s plan). The assets transferred in June 2022. As part of the merger, they changed the plan name and the plan EIN of the XX plan to the YY plan name and EIN effective 6/30/22

The issue is a final 5500 was filed for the legacy YY plan for PY 2022 (after assets transferred to XX). But that same EIN is still being used for the current merged plan. I, along with the plan auditor, suggested amending the plan number of the current merged plan to 002. 

The recordkeeper, however, is saying that in order to change the plan's three digit number from 001 to 002, a final 5500 needs to be filed for 001 showing assets going to zero. The "transfer out" from the XX plan and into the YY plan would be captured in Schedule H showing a "transfer" to YY-002.

I understand that if a plan terminates or transfers/mergers, then a final 5500 should be prepared. But the plan did not terminate in this case. The seller's plan name and EIN were amended to match the buying company's name and EIN. 

I'm thinking there should be a retro amendment changing the 3 digit plan number of the current merged plan to 002. Amend the 2022 XX filing to reflect the changes of Plan Name, EIN, and plan number in line 4 of Part II. Then the Final 5500 for the legacy YY plan should be amended to have plan 002 in the 5(b)(3) box of Part IV of Compliance questions.

I feel like this would be the most logical and easiest for the DOL to follow. But I've been receiving conflicting information, from ERISA counsel, on whether it's required to file a Final 5500 if you're changing a three digit plan number. But I feel like those who view it as required is just because it almost always correlates with a termination or merger.

Any and all feedback is appreciated. I wasn't involved in the plans back in 2022 so trying to clean up now. 

Plan sponsor is an LLC taxed as a partnership.  They sponsor a safe harbor 401(k) with elective, safe harbor non-elective and profit sharing.

They are on extension .  Plan is on a platform with Equitable.  Contributions for the employee are correct.  As far as the partners, they always mess up the allocation, Equitable returned some money as they claimed there ws too much contributed to the elective portion; this took 3 months to straighten out. The client continually makes the contribution to the wrong "bucket"and Equitable returned one of their deposits.

Maybe a dumb question, but for a partnership, how does one determine the split among deferral, profit sharing and safe harbor?

We had advised them that any contribution made during the year go to profit sharing, and then redistributed to their different "buckets."

How is it determined how much goes into which in order that the contriubtions for the employees is done correctly.

Company A has a traditional 401(k) plan with a safe harbor provision, no automatic enrollment, plan has been around several years, well before SECURE 2.0. 

Company B - does not have a plan. 

Company B owners - purchase Company A as an equity purchase as of 7/1/2023. Company B intends to become a participating employer in Company A's plan as of 1/1/2025. It is a control group. Assume the transition period runs until 12/31/2024. 

The two companies are similar in size for number of employees, about 30 each. 

Is the resulting plan exempt from the automatic enrollment rule of SECURE 2.0? Or would it need to add an automatic enrollment provision that satisfies SECURE 2.0 as of 1/1/2025? what say all you lovely people? 

I just want to make sure there's no issue here and I'm not overthinking it.

There's a Plan with only owners + family members participating in the 401(k) portion of the Plan.  They are doing a basic Safe Harbor Match (110% of the 1st 3% plus 50% of the next 2%).  So obviously the Plan is Top Heavy and only the owners + family are getting the Match.

My understanding is that this plan is exempt from Top Heavy Testing, since they are doing the match and are offering the 401(k) Plan to all employees each year (no one else wants it).

Thanks in advance!

A plan was required to be audited in the past but no audit required now since the # of account holders dropped just below 100 as of 1/1/2023 and 1/1/2024.   Looking ahead to 2025 - what if the account holders go to 105 as of 1/1/2025?  I'm reading that the plan can file as per the prior year if between 80 and 120 account holders.  So in this case the plan could file 5500-SF for and no audit for the 2025 plan year? Filing the 5500 wrong certainly has bad consequence which is why I'm asking.  Thank you.

Our plan document uses the IRS safe-harbor rules for hardship withdrawals.  Am I correct that overdue student loan repayments do not count as approved reasons for hardship withdrawals?  I don't want to deny the request until I am sure.

I have read threads about this and it still seems unclear.

We are looking at a plan that is a 1 participant DB that has existed 9 years but has never had an AFTAP. Benefit accruals are not frozen through year 5. Benefit accruals are frozen years 6,7,8 and 9. Clearly the participant does not get benefit increases for years 6-9. If she worked more than 1,000 hours each year in years 6-9 does she at least get a 415 limit increase for years of participation? I would think not. 

This appears to be a plan that has always been well funded. If an AFTAP is done this year (above 110%) is there any way to restore accruals (and 415 limit increases) for years 6,7,8 and 9?

Thanks!

I know the answer but just thought i'd throw it out there.

company always deposits 401(k) on time. first 401k with new recordkeeper, despite best effort they couldn't get it through until past 7 business days.

I think we still need to report it but I feel like it's a reasonable period due to circumstances

Hi all--I'm getting conflicting advice on what should hopefully be a straightforward issue.

I work for a US-based small business, and we have a wholly-owned French subsidiary. US business is the parent co & pays the US employees, while the French sub pays our French employees. Meanwhile, we also have a few remote individuals in countries like Canada & Portugal, and we use an EOR (Rippling) to pay them.

I am looking to set up a 401K for our US employees and speaking to potential plan providers. One plan provider said our structure should present no issues when it comes to controlled groups since any associated rules would only be looking at US employees; however, another provider has been adamant in saying that all non-US employees (French & otherwise) will be included in Department of Labor non-discrimination testing due to controlled group rules.  If the latter is true, this obviously prevents an issue for us since (1) we cannot actually offer a 401K to non-US employees, and (2) wages are very different across country lines.

Can someone please advise?

I am getting mired in what should be a very simple problem:  Whether the employer has an obligation to contribute earnings in a situation in which an employee's entire after-tax contribution for the year is correct, but the timing of it is wrong.

Example:  Susie has regular compensation of $345,000, plus a $50,000 bonus she receives on January 15.  She elects to make an after-tax contribution of 5% of compensation.  The employer erroneously fails to treat the bonus as compensation for purposes of the plan.  This has no effect on the total amount of her after-tax contribution for the year, because her compensation in excess of $345,000 would have been disregarded.  However, if the bonus had been taken into consideration,  a $2,500 after-tax contribution would have gone into the plan in January, and then contributions would have stopped in late October.  Presumably, the employer has no obligation to make a QNEC, because total after-tax contributions for the year would have been correct.  However, is it obligated to make up earnings for the period from January 15 through when contributions would otherwise have stopped?

Rev. Proc. 2021-30 does provide that:

Quote

the Plan Sponsor may treat the date on which the contributions would have been made as the midpoint of the plan year (or the midpoint of the portion of the plan year) for which the failure occurred.

So presumably we could treat the date on which contributions would have been made as July 1, even though we know that they would actually have been made on January 15.  But we still have the issue of whether the sponsor is required to make up earnings for the period July 1 through end of October.