DavidO

Thank you Bill! It would seem that with the new requirement from Secure that new plans have an ACA, many new 401Ks might as well use a QACA to avoid the 100% vesting on the 3% nonelective contribution.

I'm new to 401K's and was hoping to get some confirmation or correction on a plan design. I understand that the 3% SH nonelective contribution must be immediately 100% vested. My question is, if the plan also has a QACA does that remove the 100% immediate vesting requirement and change it to a 2 year cliff requirement? Thank you for any guidance.

Assume a non-SH 401K plan where the employer is making discretionary contributions. A non-owner HCE becomes eligible for deferral but was not given the opportunity to defer thus creating a MDO. The corrective QNEC is 10%. Question 1: In general, can a corrective QNEC be used for the 3% TH and for the 5% gateway allocations? Question 2: The non-owner HCE become eligible for deferrals (triggering the MDO), but does not satisfy eligibility for the discretionary contributions. Am I correct that because of the corrective QNEC they must receive TH 3%? Thank you for any help!

Thank you all! That's what I assumed but wanted validation.

Assume a contribution was made to a DB plan in excess of the 404(o) limit in December 2023. The contribution was made prior to the end of they plan year so it cannot be attributed to the 2024 plan year. The plan now has a nondeductible contribution in the plan. After electing the 4972(c)(7) exemption from excise tax on the nondeductible contribution, the contribution will be able to be deducted in the following year. My question is, does the nondeductible contribution get reported on the 2023 5500 or on the 2024 5500? Thank you for any help.

Interesting. I just reread the instructions and your coworker seems to be correct. I have always attached regardless of quarterlies. Probably still will, but definitely would be comfortable not doing it based on the instructions.

You can only count compensation for the 6% or 25% limit from employee's that are receiving an allocation. So in your case, only Joe. Look at Code Section 404(n). It excludes including deferrals in calculating deduction limits.

It may be worth asking ERISA counsel before proceeding, but personally I would be comfortable with it assuming you accrue the benefits based on comp and service after the employees were gone. If you can have a conversation with the plan sponsor and explain the potential risk and they are willing to take on that risk then I would be comfortable administering it.

Interesting approach. Thank you for your help!

It's not an actual distribution. I'm referring to how to calculate the FT for a regular accrued benefit. When assuming 100% LS, 1.430(d)-1(f)(4)(iii)(B) changes the mortality table to the 417(e) mortality table. If I were to calculate a distribution on 6/30/23 using 417(e) assumptions I would be using the applicable mortality table in effect at the beginning of the stability period (which in this scenario would be 2022). When valuing a regular annuity (not assuming LS) 430 would calculate the FT using the prescribed mortality table for the year in which the valuation date occurs (2023 in this scenario), but the language in 1.430(d)-1(f)(4)(iii)(B) seems to say that you are valuing the benefit as if you were distributing on the valuation date which would theoretically push you back to the 2022 applicable mortality table.

EOY Valuation. So you would say use 2023? The reason I'm questioning that answer is that if the distribution is assumed to occur on 6/30/23 then it falls within the 7/1/22 - 6/30/23 stability period which would be using the 2022 table.

Plan Year: 7/1/22 - 6/30/23 Stability Period: Plan Year Assume 100% LS for Funding EOY Valuation Using the annuity substitution rule for 430 funding, which 417(e) Applicable Mortality table should be used when valuing the LS? 2022 or 2023? 1.430(d)-1(f)(4)(iii)(B) says to use "the current applicable mortality table under section 417(e)(3) that would apply to a distribution with an annuity starting date occurring on the valuation date". Thanks for any help with this!