A client provided a census file and we ran the ADP test and processed 3 corrective distributions By March 15.  The plan auditor discovered in August, there was incorrect compensation on the census file.  The 3 with the refunds ended up with higher wages.  Of course then it meant the the issued refunds were too high. Approximate example: correct refund should have been $5500 but $7500issued.  Two of the 3 are over 59 1/2 and so their excess can be considered in-service under the terms of the plan.  

But then there is the younger HCE.  Do you believe this must be corrected?  We could have the participant return funds and have the record keeper change the 1099-R that will come out in January if that's even possible.  I'd rather avoid that. 

Thoughts - thank you. 

Tom

Can someone please help cite IRS code that states it is unlawful to take in-service withdrawals of elective deferrals and safe harbor funds before age 59.5?

If an active employee has medical coverage but does *not* qualify for coverage when its time for open enrollment, do they qualify for cobra offer?  In this case, the business is using the ACA one year lookback measurement to determine eligibility and the variable rate employee dropped to around 20 hr/week so they will not qualify for 2025 coverage.  But, they do have coverage currently.  Should a Cobra offer be made effective 1/1/25 in this scenario?  Or, is it not a qualifying event that they no longer qualify during open enrollment due to dropping under required number of hours?

Greetings, I am the Executor of an estate.  Immediately post death the wife send in the beneficiary form to her spouses company.  The decedent had been the plans administrator and never send in his beneficiary form for two reasons 1.  He had discussed with his wife he wanted some of the money to go to his mother and the wife (third wife- with a prenuptial agreement) refused to agree to allocate some of th 401K money to her husbands mother.  2) since she wouldn't sign we refused to send it in because his believed his prenuptial agreement would direct all the money to his estate. 

The company is small -only two employees. when the man diet, the other employee. wss then named to Fiduciary for the business.  He inaccurately signed a new distribution form and transfered the money to the wife's 401K.    The Fiduciary has been made aware of this error ( which was conveniently hidden).  Now what do I do to get that money to the decedents estate?

I hope everyone is well.  I work for a TPA Firm, and our main office address is in Atlanta, GA and I'm in Florida and we have others in South Carolina.  The entire state of Georgia, Alabama, North Carolina and South Carolina and parts of Florida were given tax relief for victims of Hurricane Helene under Hurricane Helene Notice IR-2024-253. I would assume our clients could file under the Hurricane Relief extending the due date until May 1, 2025, even if they are not in the states with full relief because we are practitioners in the areas that were impacted.  MOST of our client are in GA, FL, SC & NC. Now with Hurricane Milton I believe the entire state of Florida will now be given the same relief and not just certain counties in Florida impacted by Debby and Helene. Of course, we aren't advising this however, it's the reality that clients don't all have power or capacity to deal with 5500's at the moment.  I'm curious how other TPA firms in the impacted areas are handling this.  Thank you so much for your time and responses.   

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.