austin3515

Where I personally land is that we all seem to agree that the law does not say there is a requirement for a sweep. You only have people who are saying it was "probably what they meant." I fail to see how anyone can be faulted for applying what the law actually says. Now if you limited your EACA to anyone whose last name started with a Z I'd be concerned for you.

I didn't fill in the whole process but for those who opt out, the plan sponsor has to go into the website and document an affirmative election for 0%. I know Empower for example permits that. I've been using a simple opt out form like this for a while for a client with auto enroll, but a large group of field workers who never use computers for work, and who would not want to be auto enrolled in general. They all sign my little one pager opting out and then the sponsor records it on the website. This prevents the recordkeeper from entering the auto deferral on payroll. Its not great to add the extra step, but it's a lot better than the alternative.

The biggest issue by far is that to opt out, one has to a) read the materials; b) comprehend the materials; c) have the ability to login in to whatever website it is that requires the election; d) have the technology to do that login. That excludes a huge swath of the population. Mind you I have clients who successfully completed MEDICAL SCHOOL who are excluded from this class. The traditional employer who adds auto enrollment (other than by mandate) has robust employee communications, not a huge amount of turnover, employees making well above minimum wage (let's say more than $50,000). Then, when they get auto enrolled, they were already aware, and they're not worried about paying the rent. IF they were, HR had the time to help them opt out. Everything at MacDoodles is the complete opposite of this.

Thank you Peter! I want to offer some context here. I am really concerned about this going into 2025. The following example is not at all unusual. Clients for 20 years have said "I cannot add auto enrollment, this is not right for my demographic." And they were right, they knew their employees. Let's assume an entrepreneur owns 50 MacDoodles and has 100 people a year become eligible. They ALL make minimum wage (or within $2 or $3 an hour of minimum wage). Let's assume the Employer is not as "aggressive" as I am proposing they should be in giving every opportunity to opt out. Does anyone disagree that rather than being over the moon that their employer cares so much about their retirement years, the employees will instead be calling payroll to find out what moron messed up their paycheck which is now a full $15 less a week? providing these people with instructions on how log into some other website is just not going to cut it. We all need to find a solution for this. This will not go well, I promise you. This is a disaster waiting to happen for a client like this.

You might say the only thing they are opting out of is automatic enrollment. That's probably a better way to put into words what I am trying to do.

Peter does "re-write" require the plan sponsor to "check" everyone to see if they opted out regardless of this language though, right? My goal was that after the employee finishes their onboarding employee paperwork (I9/W4 etc) they have a very short list of people who would be auto enrolled. So the goal is to allow people to make a broad statement that they don;t want to be auto enrolled - either because they don't want to contribute at all, or want to pick their own rate.

A lot of bigger companies use onboarding/hr systems that guide people through filling out employment paperwork. And some of them have a very low paid demographic for whom a "blind" application of auto enrollment would result in a nightmare for clients. People making minimum wage have trouble paying for rent and groceries. How do we feel about a form with the following options (paraphrasing)? The point would be to get them to respond and make it easy for them to opt out. There are often language barriers and technology challenges, etc. By intialling here _____________,I confirm that the following statement applies to me: I understand the automatic enrollment provisions of the Plan and I do not wish to be automatically enrolled in payroll deduction contributions, nor to have my contributions automatically increased each year. If and when I decide to contribute to the Plan I will make an affirmative payroll deduction contribution election. If no election is made above you will be automatically enrolled in the Plan as described in the Automatic Contribuion Arrangement Notice.

You could consider it profit sharing if there was an objective of not taking money away from someone. Subject of course to any allocation conditions and nondiscrimination. Obviously if there is a vesting schedule on profit sharing etc. you'll want to move the money to their profit sharing money type. We've been pretty accomodating to clients who do not want to take amounts (especially small amounts) away from NHCE's. I know if we had overfunded someone's account by $100 I would not want to go to that person tell them I screwed and take $100 from them. Most (but not all) of my clients have shared that sentiment...

Well here we are with 3 months to go. Any more clarity here? This is insane that this question is not answered. It's go time...

it makes no sense to me that they are not doing an ACAT transfer for the brokerage accounts. Someone might have hundreds of positions in their account. I have never heard of these accounts not transferring in kind. I guess that doesn't help much but I guess would just really push back on that position. If Fidelity is the SDBA provider, they can transfer in kind to Schwab, etc. That happens literally all the time.

I should point out as well, it is not at all uncommon for these audits not to be done by the 15th. Through no fault of our own (as the TPA) and despite the CPA's very best intentions and efforts, these audits do not get done in time. I think it is generally accepted as the norm to file the form sans audit report and get it done and amended and filed as soon as possible. You might get a DOL letter before you are able to amend but that usually says you have 45 days to comply. So I agree you're not going to have an audit done by 10/15th but I've rarely (not never) seen actual penalties imposed for delay. Many years ago my advice was to NOT file and then use the DFVC program later in liue of filing a 5500 that was known to be deficient. I was in the clear minority on that position due chiefly to the fact that everyone else was filing on time without the audit report. If the 5500 is filed without the report I can confidently tell you, your client will have a lot of company.

If you turn 60 at any time in 2025, you are eligible in that year for the whole year. You will therefore turn 63 in 2028. Because you turn 63 in 2028 you will of course not turn 64, so 2028 is the last year. So 2025, 2026, 20278 and 2028 is 4 years (60, 61, 62 and 63). So your assumption is correct. Happy Coding to you!!

I find it hard to believe that in the face of overwhelming evidence they would have no choice but to concede. Perhaps if you send them a screenshot of this post, with the Austin Powers, confirming they need the audit, they will realize the foolishness of their ways. I feel like this question is akin to the follwing: The client says "2 + 2 = 5" please proceed accordingly. IT's unsolvable equation and therefore it's impossible to suggest the proper path. If you file the 5500SF with 135 balances I assume the DOL would flag it as invalid in need of an audit (seems to be a pretty basic check, even the software validations should flag that). And if you file the large 5500 without the audit, it's only a matter of time before the DOL comes calling for sure. So again, this is the unsolvable equation.

This rule just changed for 2023, and I think we all noted your post does not say "there are more than 120 people with balances" perhaps you were just writing in shorthand and there are 1,000 people with balances but it's the big shiny object in your post that I cannot unsee 😁

If a school district sets up a foundation and funds the foundation (and perhaps has the ability to hire and fire board members), is it possible that the foundation and school could be in a controlled group? Not sure if this is a thing, but my first google search found no results...

I've given many presentations on S2.0 and this is something I bring up a lot. A lot of payroll is done only as a means to an end with respect to a larger operational system. I have a trucking company as a client, and they use software that does payroll, sure, but also tracks everything about miles driven, trucking routes, assigning jobs to truckers, tracking the trucks (maintenance, miles,, etc.) Are they really going to spend a bazillion dollars on this? I hope the answer is yes but really who knows.

On a seperate note, curious to know if others agree or perhaps have heard that payroll companies are implementing this as a modification of existing catch-up rules, and not an optional provision to "opt into." I just think their payroll systems are going to calculate the limit differently as a result of this change. They have already made decisions on how to proceed here since it is effective in just 4 months. Has anyone heard from the likes of ADP/PayChex/Paylocity, etc?

Well I'm still waiting on their response so perhaps they will surprise me. But if I were drafting amendments and giving counsel about brand new legislation, and knowing that advice will affect thousands (nay, tens of thousands of plans), and I knew there was this much ambiguity in the law, I think I would try and delay until the IRS at least told us what they thought. Wouldn't it be a shame to have to come back to all their clients with their tail between their legs and say "Well I think I was right but the IRS disagreed so everything I told you shouldn't be relied upon." That's not a position I would like to be in. And not for nothing, but this decision for sure is not in a vacuum. I would be shocked if every payroll company out there is trying to accomodate this new catch-up limit, and I'll bet a million dollars they're not asking their clients if they want to take advantage of that new feature. They are just turning it on when it's ready for all of their clients. I have no proof of this of course, but I'm pretty sure I'm right!

Well they could tell us. I am waiting for Relius to respond to me on this question. I did suggest that now would certainly be a good time for them to tell us what they think. But then I'm sure the answer is "we're waiting for the IRS to tell us what they think." Kinda hard to argue with that.

Right about now would be a great time for the IRS to weigh in 🤪

You forgot the part about the mandatory Roth catch-ups determination being based on Social Security Wages. An oversight I'm sure!

I submitted this question to Relius a well but curious if you are all in agreement: My reading of the Relius 403(b) document and the Corbel formatted 401k prototype document is that the 60-63 catch-ups will automatically be added because those documents merely reference "up to the catch-up limits". And now that limit is just higher for ages 60-63. Have others come to the same conclusion? I believe I saw an FT William email taking the position that this was their reading of their own document, which was what got me thinking.

I think it is pretty widely accepted that even owners with less than $100K of comp get the credit. if you look at the text, the words "NHCE" do not appear anywhere in there (its not very long). It only says people with more than $100,000 of comp are not eligible. I'm really talking myself into this...

If they are excluded from the plan no gateway. You could exclude them by name but you would not be able to use average benefits to pass coverage. note that you could also have 2 SPDs; one for those excluded employees and one for everyone else (so everyone else does not see the list of names). But that would be administratively challenging for a TPA to make sure you always manually edit any new SPDs. i assume they are already eligible. If not they could irrevocably elect to be excluded PERMANENTLY (perhaps redundant but I have definitely seen people ask if there is any way to revoke their irrevocable election 🤔) Pretty sure this is an exhaustive list of options unless there is some other differentiator between them and the other sub 1% owners (like job title)

1) they just don’t contribute their own money 2A) Plan NOT top-heavy; use the “each participant is a seperate classification” election for profit sharing and just don’t give them a contribution. 2B) Plan IS too heavy: exclude any direct owners who owns less than 1%. Anyone excluded from the plan is not required to receive the too heavy minimum. both assume you can pass coverage and non discrimination.