For employees who fail to affirmatively elect a deferral rate, and are automatically enrolled at the plan's default percentage, how does the employer apply the default percent to tips received as cash to the employee? 

I understand excluding cash tips from plan compensation has its own complications, especially since most HCE do not receive tips. 

I am not asking about how to employees defer from tips when they affirmatively make an election - those employees can turn in their tips each shift if their expected net pay is not large enough to cover the elected deferral amount. 

I am wondering specifically what guidance or advice folks have been given sponsors who have to implement an EACA or better (most of ours go with QACA), in light of the auto enroll mandate in SECURE 2.0. 

If there is another thread on this somewhere, please feel free to share, I wasn't able to find anything recent, but perhaps did not use the right search terms. 

Thanks!

We have such a mess.  For multiple years I had an FSA that I contributed to and my husband had a HDHP with an HSA that his employer contributed to (500/yr) but he did not (he did not even realize he had it).  The wording during open enrollments for both employers was not clear (really confusing).  Last year realized we may have had both and couldn't but thought if he had a HDHP and was not on my insurance he could have HSA and contribute and I could have my insurance and FSA for me (even tried to explain to one of our HR depts to make sure we were doing correctly) and now realize we were still WRONG.  Open enrollment for both now so want to make sure we are correct.  Am I right that we can have our individual insurances without the other on our plans and he can contribute to his HSA and I don't opt for FSA and his HSA would be available for both of us?  OR: He ask his employer not to contribute to HSA and I can have FSA that can be used for both of us?  If second option: what do we do about the money still in his HSA?  Also: how do we correct for the years we did this incorrectly?  What a mess we are in.  Thanks for any advice on where to go from here.  We would like to make this right.  I don't think we ever hit the yearly contribution limits or if so not by much.  Thanks

Has anyone had issues getting their login updated for the IRS' secure messaging portal?

Looks like they did an update and even when I try to follow the instructions it is not letting me in. 

Any tips or tricks? 

https://www.irs.gov/help/tege-secure-messaging

I have a QDRO that was just signed by a Judge with a Seal on it. I am sending it to my ex-husband's 401k Plan at Lincoln Financial. Is there anyway that I can request that the company not notify my husband that funds are being transferred out of his retirement account for safety reasons. I have a lot of safety issues with his new wife 

While working at a major medical center in NYC for 35 years, I had been contributing to a 457b plan for a number of my later years… Long story short, when I retired 5 years ago, there was no mention of the election requirement, regarding this account… and, I only just recently learned about this from the account’s administrator… So, I was never given the option of deferring the payout or receiving it in increments or as an annuity… Rather, they just sent me a letter this week, saying that they are sending me the check for the lump sum in 7-10 days… (again, I reiterate, this is the 1st mention of this account with me, 5 years post-separation)…

Since this unanticipated delayed payout will require a hefty tax payment this year, can anyone recommend any sort of recourse that I might have, as far as “encouraging” my former employee to provide me with the options that they should have offered to me 5 years ago?

Thank you all for any feedback, insight or assistance…

Trying to payout this account.  The participant (80) died in 2023.  Has been taking RMDs.  We need to take an RMD for the spouse now so we can roll the balance to her IRA.  Do all pension RMDs use the uniform life table?  CPA wonders if it should be a single life table.

Thanks

Not IRA specific but hoping someone can provide guidance

What is/was the deadline for a sole proprietor/Schedule C to make 2023 Roth salary deferral contributions and employer contributions (profit sharing) to a previously established (in 2022) Solo 401(k)?

My research is giving me conflicting answers

thank you

Good Morning:

    In the instance of "civil" litigation between two parties regarding an ERISA covered benefit plan, can the defendant in such a suit, that involves an allegation of material misrepresentation (fraud), have the case removed to Federal Court based upon wording contained within the ERISA Statute itself? Thanks in advance for any replies!

We administer a small traditional defined benefit plan that covers the company owner and his spouse.

He is now of the age that he needs to take an RMD.

I know there are many different ways to make the RMD as low as possible but in this case he is not looking for that.

Suppose he wants to take the RMD calculated as an annual annuity and take his first RMD on 11/15/2024 (He could wait until 4/1/2025 but does not want to). Suppose the pre and post interest rate in the document is 5%. Furthermore, his monthly accrued benefit is $15,000.

1. Is it acceptable to calculate the annual RMD as follows?         $15,000 X 12.05 = $180,750?

2. Suppose he takes his first RMD on 11/15/2024. Suppose they terminate the plan 3/1/2025 and all assets are distributed 5/15/2025. Since one year from 11/15/2024 would be 11/15/2025, must he take an RMD when all assets are paid from the plan on 5/15/2025?

Thanks!

We are administering a PEP plan and one of the members wants to terminate. From our understanding, since only the plan sponsor has the authority to terminate a 401(k) plan and in PEPs the sponsor is the PPP, in order to terminate, the member must spin off their plan from the PEP and then terminate that plan.

However, our PPP is insisting that this is not needed and that they can terminate this individual adopting employer without a spin-off. We are having a hard time finding actual guidance on this. Who is correct?

An Employer has an HSA plan and contributes to the HSA, however, an employee was declined an account by the financial institution.  What options does the employer have with their money they would contribute.

Had a potential client come to us who found out their 5500s were never filed for 2020 and 2021 because they say they never had reminders or communications from ADP. They immediately filed them when they found out in September 2024, but did not file thru DFVCP. They then received notice CP 283. It is a small plan and those penalties are hefty, so they are looking to see how they can reduce. I checked EFAST and I don't see filings for two other years, and late filings (by a couple of weeks) for two additional years but unsure if they ever received notices regarding that.  1) Is it even possible to refile 2020 and 2021 through DFVCP?  2) The reasons for being late are typical from COVID - anyone have any success with penalty abatement?

Plan in existence for 10+ years.

Initially only has 401k+SH

2020 added PS subject to 2/20 vesting.

Can service prior to 1/1/2020 be excluded for vesting service for PS portion?

What to do after QDRO has been submitted to x-spouse retirement company who will not release funds? The Company was submitted all legal papers, then company requested a rewritten amendment in the language they preferred which was completed by an attorney, the company then asked for my spouse and my social security which were also submitted, the company then requested for a judge seal which was also done and submitted.  The company erased all emails from their server between myself and all representatives....after I had printed every single email out. My attorney is not longer available to assist in this matter due to illness. 

Our plan is highest 36 months salary for benefits calculation.  I'm trying to understand how 401(a)(17)-1(b)(3)(iii) - sections (A) and (B) work in regards to an employee who resigns mid-year.  Sub-paragraph (A) appears to state that the HCE's earnings are capped on a prorated basis ($345,000/12 per month), while sub-paragraph (B) appears to state that the proration does not apply to a partial year employee. 

If an employee has salary above the 401(a)(17) limit, e.g. they have an annual salary of $600,000, which is above the 2024 limit of $345,000, and they depart on 6/30, how do (3)(iii)(A) and (B) apply? 

Paragraph (A) states "Proration required. If compensation for a period of less than 12 months is used for a plan year, then the otherwise applicable annual compensation limit is reduced in the same proportion as the reduction in the 12-month period." - so the $600,000 would be capped by a pro-rata amount of the annual limit, or $172,500, even thought their six-month earnings of $300,000 was below the annual cap of $345,000."

And: "if the period for determining compensation used in calculating an employee's allocation or accrual for a plan year is a short plan year (i.e., shorter than 12 months), the annual compensation limit is an amount equal to the otherwise applicable annual compensation limit multiplied by a fraction, the numerator of which is the number of months in the short plan year, and the denominator of which is 12"

While (B) has three separate statements, the second sentence appears most applicable to this situation:

"No proration required for participation for less than a full plan year. Notwithstanding paragraph (b)(3)(iii)(A) of this section, a plan is not treated as using compensation for less than 12 months for a plan year merely because the plan formula provides that the allocation or accrual for each employee is based on compensation for the portion of the plan year during which the employee is a participant in the plan.

In addition, no proration is required merely because an employee is covered under a plan for less than a full plan year, provided that allocations or benefit accruals are otherwise determined using compensation for a period of at least 12 months.

Finally, notwithstanding paragraph (b)(3)(iii)(A) of this section, no proration is required merely because the amount of elective contributions (within the meaning of § 1.401(k)-6, matching contributions (within the meaning of § 1.401(m)-5, or employee contributions (within the meaning of § 1.401(m)-5 that is contributed for each pay period during a plan year is determined separately using compensation for that pay period."

I'm confused how these work together and which actually applies to an HCE as in my example.

Under the provision of the Act dealing with the ability to get ER Roth Matching Contributions, is the employee taxed on the match immediately?  If so, what happens if the funds are not vested at the time the employee leaves employment?  Is there a deduction, would they amend their return, etc.?  Or am I missing the mark on the fact that they would be immediately responsible for the tax?  Any help greatly appreciated.

I have been told by a long-time church plan actuary that church plans are subject to the pre-ERISA minimum funding requirements which they summarized as "contributions must be made such that the plan's unfunded liability doesn't increase". Despite several hours of research, I can't find any confirmation that 1) church plans are subject to the pre-ERISA minimum, or 2) that the pre-ERISA minimum is in fact a contribution to at least maintain the funded position of the plan. All I can find is that the plan must be funded (Rev Rul 71-91). Is anyone able or willing to confirm (preferably with some form of documentation) what I was told?

Interested to see if anyone has dealt with a recordkeeper that has a solution for a company that wants to leave their PEP.  My understanding of the process is they must establish a new plan, transfer to the new plan, then terminate the plan.

The recordkeepers that we have PEPs with currently do not have a viable solution for this process.

Curious to see if anyone else is running into this issue and if you have a work around.

Thanks!

Hello benefit experts!

I have not encountered this before, and hence the question.

Two spouses are participating in the same non-governmental 457b plan and have accounts at another company's 401k plan. They are getting divorced. As part of their divorce settlement, one spouse agreed to give over her entire 457b funds to the other spouse in exchange for the second spouse to transfer the same amount to her from his 401k account. The reason they did this was to avoid distribution to one spouse after relocation / termination. The custodian didn't need QDRO, just a letter from the trustee, for the transfer. The transfer is now complete. 

What, if any, IRS documentation or forms need to be filed for this transfer of 457b funds from one spouse to another? 

Thank you!!

This is a very rare occurrence for us but I need clarification.

Participant terminates employment after attainment of the later of age 62/NRA and has balance say of $3,000.  Participant does not respond to distribution communication provided to them.  The plan provides for the standard provisions of mandatory IRA rollover <$7,000 but cash-out if <$1,000.  The plan also appears to say that a terminated participant who has attained 62/NRA is not to be rolled to an IRA but instead provided a lump sum distribution.  That doesn't seem helpful to a person of retirement age.

Is my understanding correct.  Thank you!