A university is adding a new employee-paid vision plan to its benefits package. Currently, the university allows employees to enroll in a health care flexible spending account if they enroll in health, dental, or both to help pay for qualified medical expenses. If an employee chooses to enroll in the new employee-paid vision plan only (not enroll in health, dental, or both), are they eligible to enroll in the health care flexible spending account? The health care flexible spending account that is currently offered by the university is not the HCFSA limited purpose. Furthermore, is the university required to link the new employee-paid vision plan with the HCFSA, or is this optional?

Reviewing the current fee setup during our audit and see there are fees being paid for out of the Plan for investment advisory (participants). The issue is this is our own internal wealth management group. They are under a LLC while the company is an LLP.

Another challenge is the wealth management team was very outspoken to not use specific record keeper services (managed accounts) as it could conflict/overlap with our internal wealth company. Those that would use our internal advisors are mostly HCE where I do believe the managed services by the recordkeeper benefits all. The NHCE employees do have the option to use our internal advisors. 

This seems to be walking a very gray line and wanted outside thoughts. 

I don’t understand how the internal wealth management group is helping making fiduciary decisions, specific around investments but then can get paid for advisor fees from the Plan for those clients of their. 
 

If a school district sets up a foundation and funds the foundation (and perhaps has the ability to hire and fire board members), is it possible that the foundation and school could be in a controlled group?

Not sure if this is a thing, but my first google search found no results... 

Has anyone done a projection or estimate for 2025’s inflation-adjusted elective-deferral limit?

And for the two (50-, 60-63) age-based catch-up limits?

Assume a non-SH 401K plan where the employer is making discretionary contributions. A non-owner HCE becomes eligible for deferral but was not given the opportunity to defer thus creating a MDO. The corrective QNEC is 10%.

Question 1: In general, can a corrective QNEC be used for the 3% TH and for the 5% gateway allocations?

Question 2: The non-owner HCE become eligible for deferrals (triggering the MDO), but does not satisfy eligibility for the discretionary contributions. Am I correct that because of the corrective QNEC they must receive TH 3%?

Thank you for any help!

I believe you can't fund a defined benefit and a sEP in the same year.

I set up a DB for a client, in December 2023, have been following up for the date of the contribution, client finally returns my call only yesterday to find out he contributed $66,000 to a SEP in 2023.

I'm looking for a cite that addresses a DB and a SEP in the same year.  If need be, I'm going to have him transfer the $66,000 from the SEP.

Hi All,

We recently came across a situation at work regarding HCEs. Since I started working at this company last year, New Hire executives and above that are “considered” a highly compensated employee is excluded from participating in the plan, meaning those we hire with a salary over $155K for 2024. Per the IRS definition, determination depends on if the employee was a 5% owner in the current testing period or the 12 months preferring the testing period OR if they earned greater than $155K in 2024. Im our plan documents state that HCEs are excluded from the plan. My question is, should they be eligible to participate in the 401k plan as a new hire (assuming they meet the eligibility requirements for the plan)? And then in the following year for 2025, determine their eligibility based on their actual gross compensation for 2024? Just confused if we should be allowing them to enter the plan at all in their first year.

Is there any remedy if an employee states that they made a Roth election in 2024  by mistake and it should have been pre-tax? The enrollment system is online, so it is possible they mis-read the entry. I am aware of this regulation below that states Roth is irrevocable. But what if it was a matter of an online error? Can the plan sponsor direct the recordkeeper to move it to the pre tax source and then record the  2024 W2 correctly?

The rules of IRS Reg. section 1.401(k)-1(f)(1) and (2) for designated Roth contributions under a 401(a) plan apply to designated Roth contributions under a section 403(b) plan. Thus, a designated Roth contribution under a section 403(b) plan is a section 403(b) elective deferral that is [IRS Reg. 1.403(b)-3(c)]:

Designated irrevocably by the employee at the time of the cash or deferred election as a designated Roth contribution that is being made in lieu of all or a portion of the section 403(b) elective deferrals;

In 2025, a particular participant’s limit on elective deferrals might involve four (or more) variations, turning with the participant’s age (0-49, 50-59, 60-63, 64-).

Some employers might try, in payroll, to impose a during-the-year cutoff on § 401(k), § 403(b), or § 457(b) elective deferrals. But some employers might lack software or other ways to impose such a cutoff reliably. For some, imposing an unnuanced cutoff could deprive a 60-63 participant or even participants older than 49 of what might be a legitimate elective deferral.

How important is it to apply a cutoff during a year?

Or is it good enough that each January an employer checks the recently closed year’s sum of amounts paid over for elective deferrals to find each individual with an excess and instruct a corrective distribution?

In which situations would an excess deferral not be corrected by a corrective distribution or by W-2 reporting?

Is it permissible for an employee to cancel his coverage when he enrolled solely because a court issued a QMCSO requiring him to cover his dependent and such order was subsequently rescinded?  Employee was not previously enrolled and had to enroll for coverage to comply with the original order to cover the child.  

Hello, 

I just came across a situation I'm struggling to navigate, would really appreciate input from more experienced folks in the forum. Scenario below:

1. Married clients own two companies in a controlled group, business "A" with W-2 employees and business "B" with only spousal employees (real estate holding company with s-corp election). Neither company offered a retirement plan.

2. Business A has been sold effective 9/1/24. If Business B were to create a solo 401k plan with a 10/1 adoption date, would controlled group rules still apply for the remainder of 2024 tax year?

Thanks in advance to anybody who's willing to help me think through this puzzle! 

I am considering selling my TPA business.  The vast majority of the business income is derived from administering self-funded group health plans.  Has anyone been through the process recently and know how long the transaction can take and how much the "going rate" is for a book of business sale?

how often does a plan need to provide a participant statement in a 401(k) Plan?

The money is all in a brokerage account (pooled)

This plan is 401(k) their are 4 participants

2 hce and2 nhce's

Have a corporate ext receive earned income

I am working on the 12/31/2023 plan year end. 

Do the hce's have until the due date of their corporate return 9/15/2024 to make their salary deferral contribution for the 12/31/2023 plan year end

Employer wants to limit contributions to situations only if employee is employed on date of contribution.  Currently, employee vests in a contribution and then the contribution is made let's say 1 month after the vesting date.  Employer wants to amend plan so that if the employee is not employed on date of contribution, then they don't get the contribution.  Is that even permissible ?

Bob was born 3/1/1953
He turns 72 after December 31, 2022 therefore his RMD age is now 73
He turns 73 on 3/1/2026... he needs to take a 2026 RMD
He can put off his 1st RMD payment as long as it is paid by April 1 of the following year, 4/1/2027.

Q/ This payment he makes on or before 4/1/2027 represents the 2026 RMD based on his 12/31/2025 year end balance... correct?
OR; is the deal he can put off his 1st RMD payment until 2027, the amount of the RMD is based on the 2026 YE Balance,  but the catch is he must take it by 4/1

What I struggle with is if he puts off his 1st RMD (the 2026 RMD based on 2025 YE Bal) until  4/1/27 (the following year) and then he needs to take another one for 2027 based on the 2026 YE Bal, he is going to have 2 RMD payments hitting his personal account in 2027...  a lot of taxes to come up with.  Am I overthinking this?

I have a non-gonvernmental Plan, but they do educational services and do get some grant money for pre-school programs.  Would they be considered exempt from ACP Testing?  I just want to make sure, as the issue is coming up with the auditors if it is required or not.

Thanks in advance!

It has been determined that 2 years ago, a plan failed the ADP test.  The HCE (not an owner) terminated and already took a rollover distribution the following year, so it has been over a year since that distribution has been taken.

Earnings have been calculated through date of distribution and an amended 1099-R will be issued.  When they (hopefully) withdraw this non-taxable amount from their IRA, are their additional earnings that need to be calculated, or is this amount simply frozen in time at the date of the actual distribution?

I am reviewing a health plan SPD. Has there been any official model NSA/TiC summary published by the Departments of Health and Human Services, Labor and Treasury of an approved summary notice that is suggested for this purpose? Alternatively, is there any summary language that anyone would be willing to share?

I submitted this question to Relius a well but curious if you are all in agreement:

My reading of the Relius 403(b) document and the Corbel formatted 401k prototype document is that the 60-63 catch-ups will automatically be added because those documents merely reference "up to the catch-up limits". And now that limit is just higher for ages 60-63.

Have others come to the same conclusion? I believe I saw an FT William email taking the position that this was their reading of their own document, which was what got me thinking.