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.

Have a plan that uses a recordkeeper to load contributions with the payroll company with 360 integration. A new participant had contributions withheld but the recordkeeper did not accept the contributions for the participant due to their failure to set up the participant's account. This happened earlier this plan year and the contributions were made a month later. The total amount of late contributions is $58 and the missed contributions were corrected by back dating the contributions. The recordkeeper is telling the client they have to go through VCP and file a 5330. Is this correct?

A potential client has a SIMPLE IRA plan for their business. They are continuing the SIMPLE, covering all employees and making the required contributions, but the owner wants to establish a solok and rollover SIMPLE balance into the solok only to take advantage of other investments not offered in the SIMPLE. The owner does not intend to ever make contributions to the solok. The SIMPLE plan has been in existence for more than 2 years. Would this be allowed?

Not safe harbor. No one made any contributions. Originally a soloK where the owner rolled money into the solok but has never made any contributions.

I have a plan that inadvertently did not offer 401k enrollment to eligible employees (non-auto enroll). However, there were no contributions by any HCEs or NHCEs for any of the plan years involved or any matching contributions. What would be the basis for the missed deferral opportunity? Should it be assumed that it is 3%?

The plan assets would be greater than $250K.

We have a SH plan where the business has sold. The employees now work for new company and all have rolled over to the new company's plan. Only the former owner remains and wants to keep the plan - so it is essentially back to being a soloK next year for 2024. I have reviewed the instructions for the 5500SF and EZ and only see the requirements for being eligible to file 5500EZ. Does the owner have to keep filing 5500SF or can he start filing 5500EZ?

I have a new prospective client that currently has a SIMPLE IRA plan that has been in place for over 5 years and has 15 employees. I want to make sure that the advisor is relaying the correct information to the client. The advisor has told them that moving to a 401k would allow them to receive the start up credit plus the employer contribution credit plus the automatic enrollment credit. Does this sound right?

I need some assistance determining the Vesting Percentage for a former Employee, please. This client has revolving door of employees and sometimes makes determining what service qualifies for vesting a little complicated and need some help in making sure I am counting vesting service correctly. The employee in question has Original Date of Hire was 6/25/2014 and he worked 1,000 hours in 2014. He termed in January, 2015 and was Re-Hired in November, 2016 so neither of 2015 or 2016 plan years did he work the 1000 hours. He termed on 5/20/2017 having worked his 1,000 required hours for the year 2017. He was Re-Hired on 9/18/19 but worked less than the hours required during the remainder of 2019. Now he has termed again on 7/1/2023. I believe he gets vesting service credit for 2014, 2017, 2020, 2021, 2022 and 2023. Does that sound right?

If this is adviser is licensed and has a broker/dealer, the adviser is required to first get approval from his B/D for any outside business activity. They do not have a sense of humor in disclosing after the fact or using the "I didn't know" routine.

I have a plan that was a start up plan in 2023. They just notified us through their annual compliance questionnaire that the owner had a soloK that he rolled into the start up plan that was set up with a different name and EIN. Upon further questioning as to why he did not tell us about this prior plan he stated because it was for his other company before he had employees. He did not make any contributions to it in 2023 - he only made contributions in the new start up plan along with his employees. He only mentioned it because his provider for his soloK told him that he had a problem because of the successor plan rule. What is the best way to correct this situation?