Gilmore

Question for small, "boutique" TPA firms. Would anyone know or be willing to share the name of a Cyber auditing firm that they used and had a good experience, especially price-wise? Thank you.

So let's say the plan year ends 4/30. In 2023 a participant defers all of their deferrals for 2023 on 12/31/2023 ($30,000). Then from 1/1/2024 to 4/30/2024 they defer another $10,000. I'm assuming that $32,500 is used in the ADP for 4/30/2024. $22,500 from 2023 and $10,000 in 2024. Assume the 2024 limits are the same as 2023. ADP fails and the refund is $3000. Since the 2024 catchup limit would apply, I am assuming that the $7500 deferred as catchup in 2023 would be allowed to remain in the plan, and $3000 of the $7500 catchup limit for 2024 is used, IF the deferrals were Roth, and can remain in the plan. If they were pretax, then further guidance would need to dictate how to treat the correction amount. Would it not be inconceivable that under future IRS guidance that the participant could be given the option to take the distribution or elect a Roth conversion if the plan was permitted to allow that as an option? Either way the funds are taxed but the participant could have the option to keep the money in the plan as Roth?

And it's account balance we are counting starting in 2023, yes?

Not to muddy the water, but let's say there is a legitimate business classification to exclude employees. Is the jury still out as to whether or not the exclusion applies to the Long Term Part Time rules? Thanks.

Thank you Paul, very much. Here's a followup question, and I realize there likely is not an answer at the moment. Let's say we amend the plan effective 7/1/2024 for the plan year ending 6/30/2025. Normally we could operationally allow Roth as long as an amendment is adopted by 6/30/2025, correct? But by not actually adopting the amendment before 12/31/2024, does that then negate anyone from making catch-up in 2024? I realize for most the plan is amended first if for no other reason than it is easier to produce participant communications with the plan already amended. I'm just trying to figure out how much wiggle room there is for the inevitable inadvertent errors that are likely to come with this new rule.

Am I correct in thinking that, since the determination for who is a high-earner for purposes of catch-up contributions is based on the calendar year, and catch-ups are generally determined based on the calendar year, then all plans with 2023 high-earners would need to have Roth available starting January 1, 2024 to allow catch-ups after January 1, 2024, even if the plan is an off-calendar year plan? Let's say I have a 401(k) plan with a 6/30 plan year end, and currently does not allow Roth. I think I'm correct that the determination of the high-earners for purposes of determining whose catch-up must be Roth is still determined using the 2023 calendar year. So let's say I start the new plan year 7/1/2023 with no Roth provisions. I come to 12/31/2023 and determine there are participants that earned more than $145,000 in 2023. Some of those participants like to front-load their deferrals early in the year. Would I be correct that we could not allow any catch-up from 1/1/2024 to 6/30/2024 if we do not amend the plan before 6/30/2024, since we have high-earners in the prior calendar year, and no Roth option? If we do amend the plan starting 7/1/2024, then everyone would then have the opportunity to make their 2024 catch-ups? Thanks.

Is anybody ready to rock and roll with this one? Another question... If a plan currently provides for EACA provisions, and all participants remain under the EACA so the extended ADP/ACP testing window is permitted, and the plan chooses NOT to automatically enroll LTPTs, any thoughts on whether that will negate the extended testing window?

When I first saw the question I thought this was headed in the direction of cyber security and trying to limit the amount of sensitive information that is retained and possibly at risk that could have been deleted.

What I was referring to, Blue, is that in a refinance, if the new loan $14,000 is intended to start a new 5 year payback period you need to combine the new loan amount ($14,000) PLUS the amount of the loan being refinanced ($18,000). If the account balance cannot support the full $18,000 combined loan amounts, then the new loan must be paid back within the original 5 year period of the loan being refinanced. So if the original loan was started 3 years ago, and was not a residential loan, the refinanced loan would need to be paid back within the roughly two year period remaining on the first loan. Of course none of that matters if the loan program allows for two loans to be outstanding.

You may want to start with the Plan's Loan Procedures/Policy to see what options are available. Multiple loans may be allowed, or a single loan may be refinanced, or a combination of both. Some policies require only 1 loan to be outstanding and no new loan until the outstanding loan is paid off. If a refi is the only option, check with whatever service provider is assisting in the admin, if you have one, to see what options are available under a refi. From the balances that you included in the original post it would appear that combining both balances into one $14,000 loan would not allow for a new 5 year period to start since the new loan ($14,000) plus the replaced loan ($4,000) would total $18,000 and exceed the amount available based on the $32,000 balance. (Unless in the $32,000 vested balance you are not also including the current $4,000 loan balance, in which case the balance might be enough.)

PenChecks has been our go-to as well, unless the recordkeeper has their own option. Just curious, are you having an issue with PenChecks? Understandable if you care not to say.

Actually, disregard that. Either way your filing a 2022 5500 that would be using the 2022 instructions, so I think an audit would be required for 2022.

Are you saying the plan year runs 2/1/22 to 1/31/23, or is the first year a short year ending 12/31/2022?

Or wait until the original is confirmed, then file your amended return.

My apologies if this has been answered before. I saw one post from 2018 that was not very conclusive. Is it possible for a 403(b) plan to allow for prevailing wage contributions in the 403(b) plan, as is possible in a 401(k)? So the fringe benefit portion of the prevailing wage, if not used for any other purpose, would be deposited in the 403(b) rather than given out as cash. I'm assuming if it is allowed it would be subject to the availability in the plan document and the service providers limitations. Thanks very much.

Thanks. Up to the client of course, and I believe they are looking to keep everything with one provider, which is understandable.

Got it, thanks very much. We do not handle the ESOP and I'm thinking eventually the ESOP provider will take over the 401k as well. Just want to make sure we keep it in good order until it goes.

Thank you for the additional information Paul. Do the issues you are addressing have carry over to say a separate 401(k) plan, or are these specific to the ESOP?

Not to mention the issue of LTPT potentially added to the counts in the future. This is a huge relief.

Thanks Bird for this question. Timely for us, too as we just experienced a similar situation. Am I correct in the following fact pattern? Two 50%, long time owners. In June 2022, ownership is transferred 100% to a new ESOP. Both have non-owner spouses in the plan. They are the only officers, and exceed the comp limit each year. Assuming ESOP continues to maintain 100% ownership, and prior owners continue to be the only officers. For 2022, both owners and the spouses are considered to be 5% owners. For 2023, both owners and the spouses are considered to be 5% owners (looking back to 2022). For 2024, no 5% owners. Prior owners, as officers exceeding the comp limit are Key Employees. Spouses, as non-officers are now former key employees. Does that all sound appropriate? Thanks very much.

In this case, the plan requires last day employment to accrue a match allocation, no exceptions. The HCE died during the year. When the Plan Admin calculated the match they did not consider death as being a reason to apply the last day rule. This is the first time that a participant has died. If the plan sponsor amended the plan to allow the death exception to the last day rule going forward, do you think that would be an adequate answer to the rhetorical question of what they would do in the future? Thank you.

Would SECURE Sec 301 apply if the overpayment was to an HCE? Say an employer miscalculates an HCEs match and prior to discovering the error the HCE has terminated and already taken a distribution. ACP passes so no corrective distributions were due. Does the fact that the HCE is the only overpayment negate Sec 301, or can the employer allow the HCE to keep the overage assuming no other participants are affected? Thank you.

When the post-severance compensation rules came out several years ago I had a conversation with our clients to discuss the options. Usually the decision to include or exclude came down to their payroll system and the administrative complexity of excluding some post severance, like unpaid leave pay, and including some post severance like final hours worked. Our default is to include, if that helps.

Concur with D Lewis. We also use FT and an administrator here was able to set up the file as a csv and import into the FT System. I know that's not much help with Relius, but maybe some hope?

Gateway passes, if applicable?