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Hi everyone, I did research, and it does not find much guidance on how to handle a repay fund when it is a ROTH 401K. Below are the scenarios and questions that I am trying to resolve. Scenario: An employee separates and takes a total distribution of his 401(k) account balance. His total distribution consisted of $7,000 in employee Roth contributions and $1,500 in matching contributions and $1,500 in profit-sharing contributions, totaling $10,000. The employee rolled over the $7,000 in employee Roth contributions into a Roth IRA and the remaining $3,000 into a traditional IRA. The employee was 60% vested at the time and forfeited 40% of the unvested employer contributions when he took his distribution. The employee was rehired before incurring a 5 year break in service. The plan allows for the restoration of forfeited employer contributions upon full repayment of the $10,000 distribution. To repay the employer contribution portion the employee plans to roll into the plan the $3,000 from his traditional IRA. Because the IRC and the plan do not allow rollovers from Roth IRA's into a 401(k), he is planning to repay the $7,000 using personal funds. My original thought was to return all the funds to the original account as if they had never left the plan, but in this case, the participant would benefit from the tax on the ROTH account since he is using personal funds to repay it. He also has the ROTH IRA from the distribution. The questions now are: Can we code the $7000 of personal funds as Rollover ROTH fund? Should it be coded as Rollover as Pre-tax? If the plan only allows rollover of Pre-tax or ROTH. Are there any issues or concerns for this transaction? Any input will be appreciated. Thank you.

Thank you, Bri. Does it make a difference if the DB plan has a control group? will the answer still be No?

I need help answering this question on Schedule R line 21a. If the employer has 2 plans- a DC plan and a DB plan. The DB plan was frozen a few years ago. Should the plan answer no or yes? Part VII IRS Compliance Questions 21a Does the plan satisfy the coverage and nondiscrimination tests of Code sections 410(b) and 401(a)(4) by combining this plan with any other plans under the permissive aggregation rules? Yes No Thank you.

We have an Employee Stock Purchase Plan (ESPP) that includes two offering periods each year, with purchase dates at the end of June and December. My question is whether we should carry over any unused funds to the next purchase period or refund them to the employee. I would prefer to carry over the excess funds to the next period. However, what happens if an employee withdraws from the plan or chooses not to contribute in the next offering period? Are there any potential issues with carrying over the funds in that case? Thank you.

Hi Kenneth, Thank you for the info. Yes, the allocation period is per payroll not annual, which I believe the client can amend the plan mid-year. Yes, it is a large plan that will require 204h of 45 days' notice. I just want to make sure this can be done. I have not run into this situation before.

Thank you for the info. Yes, that was my original thought that everyone would get 8% through the date the plan is amended which is 7/1/2024. But I did some research, some indicated that because the profit sharing is not a discretionary formula, it can't be changed in mid-year. you cannot take away the benefits that employees already accrued. The plan can be amended for the next plan year effective 01/01/2025. That is where I got stuck on now. Is it possible to amend the plan mid-year or next plan year?

The plan has no eligibility requirements. No age, service, hours, and last-day requirement. It immediately entry. The 1000 hours are for vesting only.

Hi Everyone, Here is what happened: my client would like to change the profit-sharing formula mid-year. The current plan profit sharing is 8% to eligible employees. There is no age, no service required, and no last-day service requirements for the profit-sharing contribution, and the contribution is being funded per payroll. There are 1000 hours for vesting. Now, the client would like to change the formula to lower it based on age. If age 45 or less: 4% Age 46-59: 6%, Age 60 and above: 8%. They like to make it effective mid-year. From my understanding is the formula was already set for the plan year 2024, the client cannot change it anymore. I understand they can amend the plan to have it effective 01/01/2025. My question: Is it possible to change the PS formula mid-year 2024 in this case? if yes, what are the consequences that we need to know? Thanks in advance for all the input!

Thank you. We have been trying to get Ms. M to get her form and document in for the QDRO payment. but she didn't want to. I don't know what Ms. M can do to modify the QDRO, I guess I will wait until she sends it the document to see what it will be. I believe she is afraid it will affect her Medicaid eligibility if she receives the payment.

Hi Everyone, Here is the situation. Alternate payee Ms. M does not want the fund distributed to her, because it will affect her Medicaid benefits. She requested that the fund to be returned to her ex-spouse. She will send in the documents to cancel the QDRO. Is it possible to? I would like to find out what are the steps or things that need to be watched out for. Are there guidelines that we need to follow? This is something that I have never encountered before. Thanks in advance for everyone's info.

Thank you so much for all the responses.

I need help regarding DB partial plan termination. Below is the situation. Company A sold company B. All company B unvested employees who had accrued benefits. Do the employees get 100% vested? 2011 -Form 5500 showed 178 active participants. 2012 showed 0 active participants. Does this consider Partial plan termination? I thought it was, but my other co-worker told me it was not. I like to find out if is there any exemption that the plan was not considered partial plan termination. Am I missing something? Thanks in advance!