Gilmore

How about a dollar cap on the safe harbor match just for HCEs?

They have had a decline in business over the last couple of years. Employee count is down and very little participation by the employees who are left. Although the business is continuing they are also losing a key person who was handling the day to day operation of the plan and they don't want to train someone new.

A partnership (2 partners) with a safe harbor match 401(k) wants to terminate the plan. Plan is top heavy. Historically the partners' K1s are not completed until late September of the following year. Also historically, the partners make deferrals during the plan year which are matched, usually incorrectly and corrections are needed after the K1s are available. To terminate the plan I was thinking we remove match for HCEs (the 2 partners are the only HCEs) starting 1/1/2026, and terminate the plan in 2026 after the K1s are completed and we know that we have the correct match for 2025. Currently there is enough funds in the forfeiture account to fund the 2026 safe harbor match for the non-HCEs, and there is a very low risk that the partners 2026 K1 compensation would not support their salary deferrals, which I'm sure they would continue to make. Appreciate any feedback or ideas. Thank you.

We have had similar situations where the plan continued for a time so participants had more time to pay off/down loan balances.

We are using it as a "hey let's not wait any longer to get that 5500 that's been sitting there for weeks to be e-filed, just in case the system crashes and no one is there to fix it".

Two employees both terminate on 8/21/2025. Both are paid the equivalent of 6 months pay as a severance package. One is paid their severance on 8/20/2025 and one is paid their severance on 8/22/2025. Is the severance compensation treated any differently because one is paid on or before the date of severance and one is paid after the date of severance? I have asked this question a couple of times over the years to a couple of respected ERISA attorneys, and the opinion of each was the severance paid on or before the severance date was plan compensation.

I've relied mainly on ASPPA Spring and Winter virtuals and ERISApedia as mentioned earlier, and do not bother with any program that does not automatically report my credit to the IRS. ASPPA is expensive, no doubt about it. I know someone several years ago (just after they stopped issuing new ERPAs) who forgot to go through the renewal process even though he had the credits and the IRS would not reinstate. Being the only ERPA in the office I'm overly cautious about maintaining my status and so pony up for the CE when necessary. My issue right now is the IRS keeps telling me they mailed my renewal card (up this year) and I never get it. We've verified the address three times now. At least they were willing to email me a letter saying my renewal was good to 2028 but I'd still like to have the card and feel legit.

If this is for one NHCE only, is there a scenario in which crediting of prior employer service might work?

Agree with both Paul and Pam. This is our second year of using just ERISApedia. We used the EOB exclusively for nearly 20 years. To Paul's point, when it went online it was not easy to use. That's what prompted us to look at ERISApedia. We kept both for a few years then went with ERISApedia mainly because of all the added features such as the ASK questions, easy access to regulations, their customer support, and the Ferenczy material. Paul is right again, with respect to the ASK questions. You need to pay attention to the date of the question and answer to make certain it is still relevant. Like Pam we do take advantage of their free webinars. We feel better about attending the free webinars by supporting their product. What we miss most about the EOB as a TPA is the incredibly detailed examples and explanations.

Thanks Paul. What makes a QACA not an EACA?

I would think "yes" since the QACA is also an EACA.

I have a similar situation. Company Y purchased Company Z in a stock sale. Both have 401(k) plans. Company Z's plan was terminated the day before the acquistition transaction. Company Z is continuing as Company Z, with new owners. Company Z's employees are still employed under Company Z and are now participating in Company Y's plan. Company Y's counsel affirms that terminating the plan the day before the transaction has created a distributable event for the Company Z participants of Company Z's plan, so each participant will be making their own distribution election (rollover, lump sum, ex.) Paul, in this scenario you would agree that since the plan was terminated the day before the transaction distributions are ok? Thanks very much.

Thank you very much.

Company A buys Company B in a stock sale. Company A's plan has no provisions for employer contributions. Company B's plan has a discretionary match subject to a vesting schedule. Company B's plan is to be merged into Company A's plan. Under Company B, a participant is 60% vested under a 6-year graded schedule. When the plan's are merged Company A's recordkeeper will need to set up a source for Company B's match, and the participant's match will need to be set up at 60%. Question. Would I be correct that as the participant continues to earn vesting service the vesting for the account must increase accordingly. Further, would Company A's plan need to be amended to accommodate the protected vesting for the merged Company B accounts? Thank you.

Thank you. That was the purpose of the question. To be certain that it was reasonable to apply the 12/31/2024 rollover amount to the IRA and not the 401(k) so that the 2025 RMD using the 12/31/2024 would be considered as coming from the IRA.

Thanks. I didn't think the RMD could be avoided in this strange scenario, just wanted to be certain that it would be reasonable to assume the 2025 RMD could be taken from the IRA (the only one she will have) so she could do her QCD in 2025. I believe it was her tax advisor that originally told her the RMD could come from the 401(k) plan which is why she waited so late in the year otherwise she probably would have made the rollover with time to spare. Happy Holidays and thanks for the responses on a Friday afternoon.

A participant in a 401(k) is taking RMDs. The participant would like to start using her RMD for a Qualified Charitable Donation, so she sets up a direct rollover of the 401(k) account to a new IRA so a portion of her 2025 RMD can be a QCD. (The 2024 RMD was taken before the rollover was processed.) The recordkeeper will only process rollovers as paper checks. The distribution was processed from the 401(k) but the recordkeeper said it is likely that the participant will not receive the check until after the end of the year. If that happens, the 401(k) will have a $0 balance on December 31, 2024 and so will the IRA. Is the date of the check from the 401(k) distribution sufficient to use that balance as the 12/31/2024 balance for the new IRA so the 2025 RMD can be processed from the IRA? Thank you.

I'm still trying to reconcile the message that individuals need to save more for retirement and the steps being taken to ensure that every employer has some type of plan, and the increasing options for a participant to take money out of the plan.

For loans, I'm assuming our FT "Edit Plan" options are the same as yours, and if so, see if you have an option under J.59 "Indicate whether a signature line appears on the loan procedures".

The document that we use is pretty clear that an "Eligible Employee" may roll money into the plan, but only an active "Participant" can request a loan.

Point taken. I withdraw by comment.

Maybe the new administration/Congress will see their way to getting rid of this before 2026.

Which stinks for someone turning 63 on 12/31/2024. They go all of 2025 age 63 with the exception of one day.

Our concern was for our non-safe harbor ACA plans that rely on the additional ADP/ACP testing window. Our recommendation was to take the conservative approach that LTPTs should be included in the covered group so as to not possibly lose the extended testing period.

I see, thank you for that clarification. Luckly for me and my group we mostly handle smaller plans so the number of times this may come up will hopefully be limited, but I do understand what you are saying. Right now the process at least with the recordkeeper involved is a paper process so the Plan Administrator is pretty involved, but I can see when systems are updated to allow for online requests your concern being an issue. Thank you.