James Shen

Hi Everyone, I have a client who offers an enhanced SH Match ($1 for $1 on the first 4%). They then stack a discretionary match on top of that ($1 for $1 on the next 2%). It almost works like a two-tiered match, but it's the same $1 for $1 formula. Ascensus is now telling them they can't do that. Ascensus is saying that the discretionary match must be made on the first 2% of deferrals, meaning if someone defers 1%, they get the 1% SH match and 1% discretionary match. Here's what we've been told: The 4 and the 2 are not added together. If an employee defers 4%, they get the full 4% Safe Harbor Match and the 2% Employer Match. If an employee defers 1%, they get 1% Safe Harbor Match and 1% Employer Match. If an employee contributes 6% they get the 4% Safe Harbor Match and the 2% Employer Match. If they defer 7% or above, they get the 4% Safe Harbor Match and the 2% Employer Match. Is that right? The plan sponsor is not allowed to choose to match percents 5 and 6 only on a discretionary basis? Any help is appreciated!

Thank you Lou! I thought it might be something along those lines!

Question for the team: My client is a small business. The father started the company and transferred 100% of ownership to his two sons in 2016, splitting the ownership 50/50. In 2016, the Father was 68 years old. In 2018 (or 2019), the Father started his RMDs, even though he is still employed and no longer a 5% owner. The Father is still getting RMDs but doesn't want them since he doesn't need the money. Would someone be able to help me with this situation? Can we stop the RMDs since he is still employed but no longer a 5% owner? I believe he was erroneously left as an owner on the year-end questionnaire in 2016 because the previous plan admin did not understand the ramifications of not updating the ownership. I'm not sure if you can stop an RMD, once it has started, even though it was a mistake to begin with. I'm also unsure of attribution rules since his sons are now the owners. I would appreciate any help! Thank you!

@Bri I have not seen the final 5500 so I can't say for sure. But great question and I will ask to see it to confirm.

@CuseFan Thank you! The TPA for B's 401(k) Plan said the same thing. My client wanted my input, but as a financial advisor, this is a little out of my comfort zone so I thought I'd ask this group. I agree with your assessment.

My client (company A) acquired a company (company B) in 2021. 2022 was the final year of B's 401(k). Since it was a SH plan with a generous plan design, ERISA counsel told us we could not merge the plan until end of year, 2022. Totally fine. Blackout started for participants on 12/28/2022 and the final asset transfer happened on 01/05/2023. Are we able to file the 2022 5500 as the final 5500 and mark that all assets have been transferred?