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Our RTO document doesn't specifically address this and I can't find it in the Regs. After someone has a new child, so a Status Change event, is there any sort of deadline that they have to make an election to start contributing to a Dependent Care FSA? It seems like during the 12 week or so maternity leave, the decision for child care could change a couple of times before something is decided. So, I can see where an employer might give the employee a pretty long period of time before they shut off the ability to make a DCA election after this Status Change event. Can someone point me to something in the Regs that states a definitive time period? Thanks

When someone over age 55 switches from Family to Single coverage May 1st, does the annual limit you use to calculate the prorata annual contribution limit include the Catchup $1000? So $8200 for 4 months, then $4600 for 8 months. Or do you use the annual limit of $7200 or $3600 for the prorata calculations, and then add the $1000 to that? Thanks

The employer pays a maintenance fee to the TPA for administration of FSA activity.

The situation comes up every so often. Someone has basically decided not to save in an FSA anymore but has a small balance at the end of the year. The Plan has a Rollover option so this small account just sits out there rolling from year to year. The company has to keep paying maintenance fees and would like us to be able to forfeit some of these small accounts to get them closed out.

Our current document provider doesn't have language/options that allows a Plan sponsor to set a minimum that they'll allow an employee to rollover from one year to the next in their FSA, but we'd like to add an appendix/amendment to limit rollovers to $25 and anything under $25 will be forfeited. Do you all know if anything in the Regs that would prohibit that type of language? Thanks all.

That's the answer I was looking for. Thanks for the link too.

For those owners who are having some DCA contributions reclassified as after-tax in order to pass the Average Benefits Test, can the employer pull that money out of the funding account and just give it back to the employee? Or, does the employee still need to use those funds for qualified DCA expenses? It sort of makes sense to give those dollars back to the employee since they aren't really getting any pretax benefits from it anymore. Thanks

I'm testing a Plan that's failing the Contributions & Benefits test, the DCA 25% Concentration Test and the DCA 55% Ave Benefits Test. The software is giving me a $4000+ number for the correction to the HCEs DCA contribution amount. Would that "reclassification" then funnel down to a new number to be used now in the Contributions & Benefits test, since his DCA contribution total is going to be adjusted? Thanks

That's how I thought it worked. Thanks Brian.

Hi all, When running the Contributions & Benefits test, do you add up all pretax contributions (Ins. premiums, HSA, FSA, DCA, LPFSA) together and then test the HCEs vs. NHCEs, or do you just use a shorter list of contribution types? Thanks

Based on your Plan balance, if it's large enough, the Plan may require you to take distributions in 5 annual installments. They should have a distribution policy in place that would spell that out. But if forced to take distribution, a rollover to an IRA is your best bet at spreading the taxability out over a number of years if you want.

Never mind. I hadn't thought about taking the deduction on the 1040 for non-payroll deducted contributions.

If I can make after-tax contributions to an HSA, what benefit is that? Just the tax free growth? Wouldn't payroll deduction pretax contributions make the most sense? Then my expenditures are saving me at least 20% right off the top.

Wouldn't the money going into the HSA account need to be pre-tax payroll deduction money? I wasn't aware that you could just deposit into your HSA any other way. ???

I'm working with an EACA calendar year Plan. They'd like to do an re-enrollment on June 1st to increase anyone under 4% up to a 4% deferral rate. Plus also turning on deferral acceleration to auto increase each June 1st by 1% up to 6%. Are there any Annual Notice issues since this would preclude us from making this amendment mid-year? We plan on providing a Plan amendment notice to everyone and send out multiple communication pieces. Thanks for your help.

Keep in mind that all of the sudden imposing allocation conditions would mean that they cannot make any more matching contributions throughout the Plan Year. They will have to hold off on making matching contributions until the end of the year because you don't want to take anything away from someone who now doesn't meet the conditions. i.e. they didn't work the 1,000 hours our quit before 12/31.

Mistakes like this happen. The Plan should be made whole sooner rather than later while you make the effort to recover the funds, if possible. I think the broker's on the hook for this one.

I guess my question would be what's the harm in failing the ACP? That money gets kicked out of the Plan and into the pockets of the HCEs so what are they worried about?

The answer we usually give is to use the Closing settlement statement for what the participant needs to bring to closing and that's the amount needed for the purchase of the residence.

I wish I would've kept one I got for a client who has their Plan at MetLife. Their disclosure was 70+ pages long and included all possible product combinations they offered so you had to know exactly what you had before you could find which parts applied to your Plan. It was so obvious that they wanted to make it as hard as possible for the Plan Sponsor to be able to figure out what they were being charged.

What I can't understand is why, if this is a 401(k) Plan, the QDRO hasn't been processed yet? The ex-spouse is usually on the phone right after the QDRO is signed by the judge wondering how soon they can get the money. Nevertheless, the Order should state as of what date the split is to occur, how much the ex-spouse should receive and whether or not they are entitled to investment gains/losses, dividends and fees. On the other hand, if the Plan is a defined benefit pension plan, then the ex-spouse may not have access to the funds until the Participant is entitled to a distribution - typically age 65.

One situation you have issue with is terminating long-term employees so that the owners can get their stock. Vesting will ensure that your Plan account balance will not just disappear. In fact, they will most likely swap your stock out for cash or possibly invest that into a mutual fund within the Plan so that sounds like a better deal than holding stock in a declining atmosphere.

I work in a Bank Trust Dept that provides bundled services. We have 250 Plans and 28,000 participants on the Relius platform. We have relationship managers that act as quarterback, and our client services staff is somewhat segregated into teams that process contributions and trades, a distribution team, testing team, special projects person, phone support and an Education team. There is cross training for the folks who do the daily processing so someone can step in to help when required. It works very well.

This has probably been asked before but if a Company President directs the handling of the company retirement plan to his son who's the investment advisor with a national investment provider and receiving compensation, would this constitute a conflict of interest or prohibited transaction?

Does anyone have any experience with tax reporting on distributions from this type of Plan? We can't decide whether the funds should be returned to the City and paid out as W-2 wages or if the Trust pays the Firefighter and reports this payment on a 1099-MISC. Any help from someone with some experience in this area would be appreciated. Thanks