FishOn

I just did an analysis on our largest plan in terms of employee count using 2024 census data to determine who might be potentially affected. For this plan it ended up being about 8% of the employees (like Artie heard). It seems that what the hard part and sticking point for the employers are that there is another "type" of employee in addition to HCEs, Keys and NHCEs with a completely different compensation determination than regular plan compensation or statutory compensation.

All this time we have been reading and planning for this provision to start 1/1/2026. However, I saw in the final regs "The final regulations generally will now apply with respect to contributions in taxable years beginning after Dec. 31, 2026." Does this mean that plans do not have to implement this until 1/1/2027? Am I reading this wrong?

Would the plan adoption agreement need to have In Plan Roth Transfers selected in order to accommodate the recharacterizations of catchups for HCEs who are also HPIs?

Would the plan adoption agreement need to have In Plan Roth Transfers selected in order to accommodate the recharacterizations of catchups for HCEs who are also HPIs?

For traditional tested plans, an ADP test failure can be corrected by recharacterizing excess contributions as catch-up contributions, provided the HCE has not yet reached their maximum catch-up contribution limit for the year. I have not been able to find much, if anything, on the impact of testing failures where recharacterizing excess contributions as catch-up contributions will cause a the catch-up to be recharacterized as Roth for those that are HCEs who are also High Income Earners. If the HCE (is also HIE) made only pre-tax contributions, will recharacterizing excess contributions to catch-up mean that we have to do a Roth Transfer for the catch-up portion?

Admittedly, the more I read about the MAE and when a small business crosses over the 10 employee threshold, the confused I become. If a plan was adopted and effective 1/1/2023, but hires the 11th employee on 4/1/2025, is the effective date when the plan has to add MAE 1/1/2027?

I have been told there has been some recent guidance from the IRS (Jan 10 2025?) in Applying Mandatory AE in that to new participants or new hires is not acceptable under the new guidance. Is this true? And if so, what if a plan sponsor has already received an affirmative election by the participant to contribute or decline to contribute? Do they have to go through the process all over again?

If a new plan with more than 10 people elect to have a QACA instead of the EACA with safe harbor basic matching, would this satisfy the auto-enroll requirement under SECURE 2.0?

This may be a silly question, but we have a similar situation except that the plan is moving to a PEP. @RatherBeGolfing do you think the answers you provided be the same?

Several of the recordkeepers we work with have the availability to calculate the actual earning from posting date the contributions should have been deposited to provide actual earning as if they were invested on time to make the participants whole. The resulting gain/loss can be billed to the plan sponsor.

We have a plan where the plan sponsor/trustee made a contribution on behalf of his daughter who is neither employed or received compensation from the plan sponsor. She is ineligible. He then moved the contribution to a plan checking account and invested the money in a short term real estate loan along with his money. The real estate loan/note is not a party-in-interest. What are the proper steps to correct this?

I have a plan that currently has no eligibility or age requirements. They would like to amend the plan to require age 21, 6 months of service with 500 hours effective 2/1/2024. By amending the eligibility criteria, would all under 21 eligible participants be grandfathered and continue being an eligible employee if they were hired before 2/1/2024? Or could they be excluded because they are not 21?

Large plan filer with payroll integration to the recordkeeper. Originally safe harbor match 100% up to 5%. However, signed an amendment for 2021 plan year to change to safe harbor basic match and distributed the participant notice as such. The plan information on the recordkeeper website and materials were updated to safe harbor basic match. This is where I get the plan without any of the knowledge of the amendment. Plan was restated later (effective date 1/1/21 signed 2022) with the prior safe harbor match 100% up to 5% and have provided the annual notices accordingly to plan sponsor to distribute to participants in 2023. The plan sponsor never changed the safe harbor matching formula in their payroll and has been matching 100% up to 5% for 2021, 2022 and 2023. Before and after the determination period was on pay period basis. Since the restated and signed plan document matches the operation of the plan, is there anything to correct?

I have a plan participant that is requesting a hardship distribution under the down payment for purchase of primary residence. When evidence was requested, it turns out that it is for down payment and rent for a home that the participant will be leasing. If I am not mistaken, in order to qualify for a hardship distribution, the amount requested must be necessary to cover costs directly related to the purchase itself and not a deposit and first month rent. Is there any wiggle room for leasing other than for reason of eviction?

Yes, that is what has be done. Like it was deposited on the correct date into the investments the participant selected.