Gilmore

Whoops, yes that's incorrect. Thanks for pointing that out. I meant to say the balance on 12/31/2023 (for the 2024 RMD) was $150,000.

Has anyone had this come up? A 401(k) participant is a non-owner, 75 years old, still employed by the plan sponsor. They take a direct rollover distribution to an IRA in 2024 of their entire $150,000. They are still working, so no RMD is taken. They continue to contribute to the plan during 2024 and at the end of the year they have a $5,000 balance. They terminate on 12/15/2024. Now an RMD is needed by 4/1/2024. Assume the balance on 1/1/2023 was $150,000. I believe the RMD needed at 75 would be $6097, which is more than what is now in the 401(k) account. Is the participant required to take the remaining $5000 in the account, plus take an additional $1097 from the rollover IRA by 4/1/2025? Thank you.

I just reconfirmed this information today with FT. At this time it seems that their system will be able to file a 5330 only. Is anyone aware of how the filing process will be coordinated with the actual payment of the excise tax? Thank you.

Well I see now that the 5330 is not filed using the IRIS system. Would anyone care to share how they are now dealing with 5330s? Thank you.

In the past when assisting a client with a late deposit correction we would prepare a paper Form 5330 for the client to sign and mail to the IRS with a check for their excise tax payment. Now I understand that for most employers the 5330 will need to be filed electronically. We have received the proper credentials to use the IRS's IRIS filing site (and have already filed 2023 1099Rs.) Question is, how do we coordinate the client's payment of the excise tax with the e-filing of the 5330? Can anyone share any insight on that process? Thank you very much.

410(b) needs to be considered as well, no? Unless the coverage transition period can be used by both plans?

I'm wondering if the fact that the DOL changed the beginning count methodology to account balances rather than account balances and non-participating eligible employees lends some weight to counting actual account balances as of the first day of the plan year and not account balances that might not show up in the plan until nine months later?

Thanks everyone. I was on the DOL site and did not see anything other than the normal VFCP information so I wanted to make sure I wasn't missing something. Thanks for confirming.

I believe it was late 2022 that the DOL issued proposed changes to VFCP to allow for a "self correction" option under VFCP. Can anyone tell me if that option is available at this time? Thanks very much.

Is the plan an EACA that would allow for an extended testing window? If not, does the document allow for the match to HCEs to be reduced so as not to fail the ACP test?

I asked this question once to the great Sal Tripodi. We had a situation in which a bank exec was leaving and paid six months severance on their termination date. Sal concluded that since the compensation was not paid post-severance the compensation should be included.

Thanks Paul. The document we use defaults anything that does not specifically use Elapsed Time as defaulting to the hours of service failsafe. That is why we are advising the few clients that do use the consecutive service option and do not want to follow the Elapsed Time rules to also take into account the LTPT rules.

Meaning, we have a couple of plans that require, for example, "six months of consecutive" service. We have been advising those clients that they are still subject to the LTPT rules since an employee with an irregular work schedule may never have six months of consecutive service, but may work 1000 hours in a computation period. I'm assuming this means they would then also have to apply the LTPT eligibility.

Does that change if the document requires "consecutive months" of service?

All of our One Year of Service plans shift the computation period to the plan year, so for the most part we are dealing with just January 1 entry dates for LTPTs. I'm assuming non-auto enroll plans would still get to use the first 3 months of the plan year to find missed LTPTs and correct without a QNEC? One more reason for clients to get us their census data asap.

What does the document say about who receives the non-elective contribution?

Nope, that was wrong. Sorry about that. Should have left for Thanksgiving break.

Employer would get an EIN; Trust would get a TIN. Is that what Paul was referring to?

I know that you do not need to cover everyone under the automatic-contribution arrangement, but in doing so you lose the benefit of the 6-month testing window if you are otherwise an EACA. So I'm assuming in Nate's example with the Relius doc, if you do not include LTPT in the EACA you would lose the 6-month testing window, even though LTPTs are not part of coverage?

When aggregating for coverage, how "identical" do the plans need to be? Does it matter if the investments options are not the same, for example?

Does Section 125 (d) of SECURE 2.0 limit years counted for vesting to those after 12/31/2020? I see that section has a lot of strike this, and insert this, but everything that I'm finding that says years prior to 2021 are not counted for vesting reference 125(d).

I saw an article in the Newsletter the other day regarding LTPT. The article said (paraphrasing), that in general the IRS has said that all years of service must be taken into account when determining vesting for an LTPT. Wasn't it SECURE 2.0 or some other more recent guidance that allowed 401(k) plans to not count years prior to January 1, 2021 for vesting? Thanks.

"Lost earnings" to me sounds like a late deposit from a prior year corrected in 2022. If they terminated in 2021 and took a full distribution before the end of 2021, and late deposit earnings were made after 1/1/2022, I would not count them in the 1/1/2022 beginning count.

Never used it, but some plans have an option for a "first few weeks" rule. Not sure if that is what they are looking at. That would be in the plan document.

I believe you can set up a safe harbor with a 10/31/2024 year end, and amend to a calendar year plan for 1/1/2025. As long as the first year, the short year (11/1/2024 to 12/31/2024), and the following year are all safe harbor there should be no concern for losing the safe harbor status. This way you can still get in some deferrals for 2023 if that is a goal.