I have a terminating Defined Benefit Plan with assets in a pooled account at Vanguard.  I prepared my standard Letters of Authorization for the Trustee to sign and submit to Vanguard for the benefit payments.  Vanguard said the Letters were not sufficient but did not provide any alternative.

Does anyone have a form or template that they have successfully used to get payments made from a qualified plan with Vanguard?

Thanks,

Had an actuary ask me about Code 4980's text of:

(I)  allocated under the plan to the accounts of participants in the plan year in which the transfer occurs, or

(II)  credited to a suspense account and allocated from such account to accounts of participants no less rapidly than ratably over the 7-plan-year period beginning with the year of the transfer.

and whether or not that means if the final transfer of excess assets occurs today in mid December, that at least one-seventh of the money has to be posted to accounts by 12/31.  I suggested that the allocation date is going to be 12/31 even if that means waiting until the 2024 census is ready and the PS allocations determined some time over the winter.  As opposed to actually being posted to accounts for participants in the DC plan by 12/31. 

I think (II) covers the issue, even if (I) didn't.

But "allocation" includes as a receivable, no?  (Whether or not (I) would be enough argument....)

--bri

If an allocation of stock is originally based on compensation, but then adjusted several times in order to pass 409(p), does the resulting allocation need to be tested as though the plan was using New Comparability?

To satisfy the new secure 2.0 auto-enrollment feature. A QACA arrangement would be considered an eligible automatic contribution arrangement if the QACA contained a provision that would allow an employee to do a permissible withdrawal?

Is there anything I'm missing here? 

May I also ask, What type of attorney would handle this matter? 

HCE deferred 35k during 2024 (over 50) thus exceeded the 402g limit by 4.5k

The refund will be done prior to 3/15/2025 - does it make a difference if needs to be refunded prior to 12/31/2024?

For 410b, which amount should be used?

For 415(c) limit for PS purposes, is it safe to assume 69k-23k i.e. 46k allocation? The refunds will be made, that is not something to worry about.

Thanks

I've been spinning my wheels on this one, so I am reaching out to my colleagues for guidance.

Bank wishes to lend Company funds secured by Company's equipment, accounts receivable, inventory, etc.

Company is owned 85% by the Company's retirement plan ("Plan") and 15% equally by two individuals: Owner A and Owner B

Three individuals used their balances in the Plan as an equity infusion into Company. One of these individuals is Company's President and Secretary/Treasurer and a Board member; and another is Company's retirement plan trustee (for the 85% Plan shareholder)

While the rollover assets of the Plan can't be pledged as collateral, nor can the Plan guarantee the Bank loan; can any other assets owned by Company be used to secure the loan from the bank, or does it result in a prohibited transaction.  If so, where in the Code, Regs, case law would I find that.  I have searched everywhere.

Ex-spouse died suddenly before the final QDRO was signed by court. The Pension plan involved was a SINGLE LIFE ANNUITY with only benefit to surviving spouse or ex-spouse with QDRO order. The Pension plan administrator approved the QDRO and it was sent back to be signed by lawyers, participant, alternate payee, and court. Is this QDRO now invalid, or does the alternate payee (ex-spouse) still have a right to fight for benefit with another lawyer? 

My spouse had a medical FSA that she contributed to for 2024.  I had an HSA that I contributed to for 2024 and my employer contributed into as well.  I just found out that because my spouse had an FSA, I was not eligible for HSA contributions, so I'm trying to rectify this.  To make matters worse, open enrollment was over a month ago for both of us and we elected to continue with our FSA/HSA respectively.  I called my benefits department--they said I could bring my HSA contributions down to zero, and to avoid them from contributing to my HSA for 2025, I could ask the HSA custodian to close the account or to just "disassociate" it from my employer.  I asked if they would be wanting their employer contributions back for 2024 and they said no.  I'm going to wait until next week to officially do this, as first my spouse is going to see if her employer can cancel her FSA selection for 2025(seems doubtful I would assume).  So ive gotten a few different bits of confusing advice on what to from online forums.  One person said to spend the account down to zero before the end of the year on medical purchases--but can i do that if the contributions were ineligible in the first place??  Without going into too many details, there is a travel version of a medical device that I've been considering purchasing that I know would be an out of pocket expense that could easily remove a large chunk of the funds.  Ive also heard about return of excess, but I'm in a bit of a bind there because my contributions of approx $2400 for the year plus my employers contribution of $600 is $3000 for the year.  But there's only about $2400 in the account since I used funds for medical costs earlier this year--so how can the custodian return the full amount of $3000 if its not in the account?  One thing to note--I never invested my HSA funds, they just sat in the account.  What is the easiest way to rectify this?  If there are multiple solutions, Id rather take the easier one even if that costs me a bit more money(up to a certain extent obviously).  Any and all help is appreciated! 

Company trying to force us to file a QDRO. 

Hi

DC plan sponsored by ABC, Inc owned by Joe.

XYZ Inc is also owned by Joe but no employees.

Joe apparently took salary under XYZ Inc for 2023 and applied for pension purposes.

Joe now decided to let the TPA know this happened and wants TPA to have XYZ adopt the plan as well so that can continue having both firms within the plan.

Can the effective date of adoption be 1/1/2023 for XYZ Inc? Is this correctible under self-correction?

Thank you

Hello,

i have a plan that allows self certification for hardships on line through Voya.

They have a participant that is now requesting his 3rd hardship in 6 months.

Can the plan sponsor set up administrative procedures to request supporting documentation if the participant has requested more than 2 hardships or if they feel it may not be for a hardship reason? 

Appreciate your thoughts.

Is it permissible for a Safe Harbor 401k to exclude a class of employees or is this not allowed? If the Safe Harbor 401k is allowed to exclude employees, would the plan have to pass the coverage test? 

I will be setting up a combo Cash Balance/401k Plan between 2  companies and am not sure whether this will be a CC, ASG or Multi ER plan.  The business structure is as follows: 

Company A owned by Brother and Sister 50/50.  5 years in operation

Company B is owned by Husband and Wife 100%. 20 years in operation.  The owners of Company A are the adult children of Company B.

Company B has 1 non-owner employee

The two owner groups take W-2 pay from each respective owner company.  Beginning in 2024, the parents of Company B will draw W-2 pay from Company A

Company A wants to set up the 2 plans with Company B the adopting employer.

Is this considered a controlled group due to attribution or is it an ASG or multi-ER plan?

The type of business is Property Management and they are affiliated with one another.

Thank you for any guidance you can offer in this situation.

Is it possible to have two separate vesting schedules in one plan? I have a client that is considering removing SH, however they have a union group entitled to a certain match %. Due to permissive aggregation, we believe the union group can continue their same matching formula and vesting at 100%. However, for anyone nonunion moving to a discretionary match, is it possible to have a separate vesting schedule? 

A 401k participant passed away leaving his wife as his 401k account beneficiary.  The account has stayed in the plan and has been re-titled to be in her name at this time.

Are there are restrictions on who she can name as her beneficiary for this account?  She has no kids and does not want to leave it to her brothers.  Can she name a non-profit or other entity?

Thank you

According to my understanding, if a person earns compensation and defers under a NQDC plan in state A, but then retires and moves to state B, state A can't touch the money unless it is paid out over 10 year (since state A is not the domicile -- see code section 114).

What if a participant has deferred compensation

1. from 2022 to be paid out in a lump sum.
2. from 2023 to be paid out over 15 years.

Should 1 be taxed in state A and 2 be taxed in state B?  Or do we look at plan benefits as a whole, and tax it all in state B?

EDIT:  I guess another question is this -- if we look at the plan benefits as a whole, they are paid out over 10 years, but they are no longer substantially similar payments (since half is paid in a lump sum and half over 10 years).  So does that mean NONE of this qualifies as retirement income under Code Section 114?

Participant dies, and has both ROTH and Pre-Tax funds.

Elects to rollover ROTH fund to her ROTH IRA

Elects to rollover Pre-Tax funds to her traditional IRA.

Custodian issues 3 checks.

First check is to the beneficiary's Traditional IRA for the Pre-Tax funds.

Second check is payable to the beneficiary's ROTH IRA for amount of cumulative earnings in the ROTH 401(k) source.

Third check is payable directly to the participant in the amount of the cumulative ROTH basis.

I have a call into to custodian about why they did this but I'm wondering is the path of least resistance is to -

1 deposit the pre-tax funds to the IRA.

2 deposit the ROTH earnings to the ROTH IRA as a death benefit rollover

3 deposit the ROTH basis to the participant to the ROTH IRA as a 60 day rollover.

Note participant was not yet RMD age but beneficiary is over by a couple years, that would not impact direct rollover but would it impact her ability to do 60 day rollover? 

I mean I think the correct way to do this would be stop payment on the basis check and reissue to he ROTH IRA with correct 1099-R code. But since there will be no tax consequence either way, I'm trying to see if the work around is just simpler than dealing with custodian.

Our payroll system allows catchup contributions all year long, as a separate "bucket", distinct from other contributions (401k, Roth, and 401a).  There is no control on whether the employee is on target during the year to qualify for catchup once they designate catchup contributions. 

We noticed an issue with some employees not deferring enough to meet the statutory limit, however the catchup functionality in the payroll system is programmed to stop at $7500, regardless of the amount of the deferral or satisfaction of the underlying statutory limit by the employee. 

In the case where an employee either doesn't qualify for all or part of the catchup because they didn't meet the statutory limit but designated catchup deferrals, the plan "recharacterizes" the catchup at year's end, but doesn't make any adjustment for match on the recharacterized funds, even if the employee wasn't provided their full match for the deferrals that year. 

Example on this is that in 2023, one employee was stopped $10,000 lower than the elected deferral to the "catchup bucket" (deferral was designated at approximately $17,510 into catchup) and didn't meet the statutory limit due to this cap (the employee contributed a total of $9000 to the pre-tax and Roth accounts).  The employee ended the year with ~$16,000 deferred instead of what she believes she designated (~$26,000).

I have two questions based on this situation:

1 - is stopping the contributions to the "catchup bucket" at $7500 generally a problem or an operational error when the employee elects a higher catchup amount than $7500?

2 - is there an issue with not retroactively contributing matching funds to the recharacterized funds if the employee didn't already receive their full match for the year?

We have a client that turned into a co-op, so all 14 employees own an equal percentage of the company (about 7%).  So technically all employees are greater than a 5% owner and therefore an HCE.  Am I correct in saying that there would be no compliance testing?  I just want to make sure.

Thanks!