We have a plan that allows for in-service distributions.  A participant who is over 59.5, but under the age for an RMD, has already taken 3 smaller in-service distributions this year and is now inquiring about another.  I've always been told that the Plan can't be used like a bank account, and these consistent in-service distributions could cause an issue.

So, that leads to two questions:

1) How many in-service distributions are viewed as excessive and, if audited, could cause an issue?
2) What would the ramifications be if it was viewed as excessive?

Thanks in advance everyone!

Having a discussion with someone about SSRA as testing age. 

I do not believe it can be used as it is not a uniform testing age and nowhere it says it is ok, at least from what I have been checking. 

Per EOB, non-discrimination answer book and other sources, if there is no uniformity then use 65, nowhere it said it is ok testing using SSRA ages.

What say you?

Hi

I am looking into a DB plan design for a professional boxer and researching what a reasonable NRA is for a new DB plan. Currently, age is mid 20s.

I looked online and on average, it is age 37.

Some retire in the 20s, early to late thirties. On very exceptional situations, past 40.

So, using NRA of 35-37 seems reasonable with a 10 YOP for a DB plan. Apparently planning to retire within 5 to 7 years.

Any comments?

I've got a pooled plan where the plan sponsor doesn't want to show the investment fees separately from other gains/losses.  He says that it's net gains that matters - if the net is better than 'average', then the participants are fine.  He is fine with it showing on the SAR, and he is happy to tell his participants that the fees on the SAR are net against the total gains on their statement.

That isn't sitting well with me.  I'd think that in a pooled plan, the disclosure standard is even higher since all the assets are controlled by the trustee.  The fact that there are lawsuits about fees seems to indicate that disclosing fees so they can be monitored is the right thing to do.

So my question is, is there something in black and white that supports either side?  If it's a gray area, then that's fine, too, as long as I can present as such and tell the plan sponsor that this decision is on them.

Thanks.

A 401k plan is going through the correction program to make amends for not giving quite a few individuals the opportunity to make 401k contributions.  When calculating the associated match on the MDO, is it required that the match be 100% vested even if the plan uses a 6 year graded match vesting schedule?

Thank you

We have a situation whereby the client is attempting to get information to us about a potential first time 5500 filing.   We could file an extension to be on the safe side.  Is there a problem with then not filing the 5500 if it ends up there is no filing requirement?  I know we could file one anyway but this could go on for years when it wouldn't have to.

Thanks

Does anyone have any insight on Curaechoice?  It appears to be a medical provider network entity that contracts directly with employers.  Also, I've read a few articles regarding these entities as well, some pro and some against these type of contracts.  Does anyone know whether there is any IRS guidance on these entities?  From what I can tell, as long as the entities are following employee benefits laws, there should not be any issues. There is a guest article in benefitslink that I reviewed, but I cannot tell how long ago the article was written.  Thanks in advance.

We have a client who gives premium incentives to the employees for getting a physical- I know that's fine. But now they want to require spouses to have a physical if they are on the plan as well-- and "require" them to do so to be on the plan. Can they do that?  I know they can probably give an additional premium discount, but can they require the physical for them to be enrolled? That seems extreme, but I need to know the rules so we can forward it to them. 

Will a Court sign a Qualifed Domestic Relations Order if it is only signed by one party and the party refuses to sign?

My ex-husband died 4 years ago. He had a TBI for 12 years.  I got a letter from the fire department he worked for telling me contact his previous employer because the pension company saw his obituary and they wanted to contact family for his pension. We were married while he worked for this previous employer and then moved to Florida.  He never contacted them again.  We were divorced and no QDRO was completed. 

I read some ERISA regulations that stated that the wife is beneficiary unless signs a notarized paper go give it someone else. Documents, such as, who is beneficiary must be kept indefinitely by company while other documents only kept 7 years.  They say they have no documents, of course.

I was told 3 different stories from the previous employer:

1. Wife gets pension, if divorced and no QDRO filled out then ex-wife gets pension.

2. Will go through his estate and give to his daughters.

3. I appealed the decision and now they say that no one gets his pension.

This sounds a little fishy.

How can they just keep his pension funds??

Supreme Court Case Egelhoff vs Egelhoff decision sided with ex-wife to receive pension money since it came under ERISA and she was his wife at the time he worked for company and no QDRO or changes made to beneficiary.

So, my question is - how can my ex-husband's previous employer and the pension company legally not disperse his pension?  The company searched me out because I did not know him being entitled to this pension.

Thanks for any information someone might have to help me.

LisaPension information for ex-wife and Supreme Court Ruling.docx

"Fringe benefits" may be excluded to determine 414(s) compensation. My question is what types of compensation can reasonably be treated by the employer as being "fringe benefits"?

I don't see that the IRS has a clear definition of "fringe benefits”. For example, Pub 15-B, which provides guidance on how certain fringe benefits are taxed, simply states, "A fringe benefit is a form of pay for the performance of services."

"Fringe benefits" seems to be a business term. Thus, it would seem that almost any form of wages other than regular pay can arguably be considered by an employer as a "fringe benefit" in interpreting their 401(k) plan document.

Take "paid leave" for example. Can the employer adopt a written policy regarding whether to include “paid leave” as compensation under the Plan or exclude “paid leave” as “fringe benefits”. The issue can go either way. But adopt a policy and then be consistent in how you apply the policy.

Thoughts? Thank you.

Is anyone aware of a tax change (effective 2024) requiring employers to pay FMLA and unemployment taxes on employer contributions for the year the contribution is made for residents of Massachusetts only? Google searching did not result in any answers to confirm if this inquiry is indeed accurate.

Thank you

Compensation includes bonuses.

Participant A made an affirmative elective to defer

Participant B was auto enrolled.

There were bonus payments issued in 2024 and deferrals were not withheld.

How to correct -

Does the 9 month rule apply so no QNEC is required?

The 9 month rule would apply if the  initial elections were not timely processed.( assuming deferral elections must be properly implemented consistently from April 1st - December 31st

The question is does the 9 month rule apply regarding missed deferrals subsequent to enrollment. Deferrals properly calculated. When the  bonus was paid no deferral was calculated, 

We have differing opinions

One opinion is the 9 month rule applies even though these are deferrals after the initial elections were  processed

The other opinion is the 9 month rules does not apply since these are missed deferrals subsequent to enrollment and are subject to a QNEC

Until recently, many employee-benefits lawyers advised an employer not to provide an automatic-contribution arrangement. Why? Because an employer might administer the arrangement imperfectly, sometimes missing some people, and that would call for corrections and expense.

Have law changes made those worries smaller? Are the exposures smaller? Are the fixes less expensive?

Here’s why I’m thinking about this:

A charity, unadvised until now, provides an automatic-contribution arrangement for its § 403(b) plan. The default is 3% of pay, with yearly increases until 6% of pay.

I believe the charity will have lapses and errors that result in failing to start elective deferrals for people to be auto-enrolled. I believe the charity is unable to design and implement work methods to avoid inevitable lapses and errors.

The automatic-contribution arrangement is not needed to meet any coverage or nondiscrimination rule.

Internal Revenue Code § 414A does not require an automatic-contribution arrangement because the plan’s elective-deferral arrangement was established before December 29, 2022.

Should the plan sponsor continue, or get rid of, the automatic-contribution arrangement?

If you suggest keeping the arrangement, what can I say about why the charity’s exposure to corrections is only a small risk?

Does anyone know the answer to the following question, or are we all waiting for guidance from the IRS?:

Scenario: A 401k plan was established effective January 1, 2023, and the client opted at the time the plan was being established to wait until January 1, 2025 to add the mandatory automatic enrollment provisions to the plan.

Question: When the plan is amended effective January 1, 2025 to add the mandatory automatic enrollment provisions to the plan, which participants must be included in the automatic enrollment provisions? Does it need to be applied to all who are plan participants as of January 1, 2025 as well as all future plan participants, or can it just be applied to those who first become participants on or after January 1, 2025?

Hi

If the employer is refusing to make the 3% non-elective safe harbor, what is the penalty or other issues?

Tx

Does the tax relief provided in TX-2024-13 for taxpayers in various counties in Texas apply to the PCORI Fee?  The relief gives taxpayers until November 1, 2024 to file and make tax payments.  The relief includes Excise Tax Returns normally due on April 30, July 31...  I don't see the PCORI mentioned specifically and can't find any guidance or opinion on the matter but it seems like the position could be taken that for taxpayers in the specific Texas counties have until Nov 1, 2024 to file and make the 7/31/24 payment.  Looking for other thoughts or even specific guidance on this question.

IRS announces tax relief for taxpayers impacted by severe storms, straight-line winds, tornadoes and flooding in Texas | Internal Revenue Service

Let's focus on the ownership tests only - It is my understanding that for a person to be considered an HCE the ownership level is at 5%, and for a person to be considered a key employee the threshold is at "more than 5%".  So, if for a two-person partnership, setting up the ownership level at 5.01% and 94.99% avoids both the non-discrim and top-heavy tests.  Am I correct?

I think I know the answer to this, but just want to make sure I'm not missing something. Section III.G of Notice 2008-113 states that, in short, an "insider" is a director or officer of the service recipient or owns more than 10% of the service recipient as determined under the Securities Exchange Act of 1934. Additionally, for purposes of the Notice, it is determined "without regard to whether the service recipient has any class of equity securities registered under § 12 of such Act."

Seems pretty straightforward to me that this last provision is meant to cover as insiders those who aren't in publicly traded companies (and therefore making certain corrections under the Notice unavailable due to an insider being involved). I'm working with a nongovernmental tax exempt entity on a failure to make a timely payment under a 457(f) plan in 2023 to a C-Suite executive.  The executive is an officer and therefore certainly looks like an insider even though the entity could not under any circumstances have registered securities, and in fact has no ownership at all.

Any way to get around the idea that this executive is an insider for purposes of Notice 2008-113?

Our group needs to get clarification on:  Can the 3% safe harbor non elective contribution be used to help pass the cross-tested analysis.

Some say it can be used to help pass only the rate group

Some say that the safe harbor match can be used to pass the testing

Some say that the 3% can't be used to help pass the testing requirements.

are we all wrong?  Is some part above correct?