austin3515

There is no lack of trust here, no one is worried about this, they just want to know what the right answer is.

Truth be told this was a question from an auditor I am friends with, so I don't even know the identity! This is what I can tell you. I have been a TPA for about a million years. Partners fund their contributions at any time through the date of their 1040 due date (or partnership return if earlier) and the words "late deposit" never left my lips in those conversations. And I don't think I missed anything by not mentioning it. Tell me I'm wrong :).

Anyone know of a brokerage account solution, no advisor attached, for these types of plans? I need a solution where we can have it registered to the trustee of a rabbi trust. In my experience advisors do not like working on these because the opportunity for accumulation is retty low. So I'm looking for a Fidelity/Charles Schwab type retail account where we can just fill out an application and open the account, no advisor comp. Anyone know of a solution?

https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/advisory-opinions/1999-04a I saw this but I cannot figure out where the relevant part is. Anyone? Also this is the 100% owner of the business. I see the point of course about PriceWaterhouseCoopers (just to use an example that makes sense to all of us) withholding partners money and holding onto for it for 6 months... But this is definitely that.

The Applicable DOL Reg: Partners ARE the employer so they have no wages. You can't withhold something from yourself. So pretty clear that they are not subject to this. My question is this: Why can't find anything that says this, like a DOL Notice or an IRS FAQ or an article by a big law firm? Does anyone have anything to point to? I know the reg is pretty clear but this can't be the first time the topic has come up as an interesting question.

I mean I am pretty sure I have done this. The alternative is just not filing the one with <$250K but then you run the risk of getting the letter from the IRS looking for the missing filing. I guess option 3 is to assume "once required to file always required to file" but that hardly seems like a good option. Curious what others have done. I don't have 5500 software in my new position so not sure if its a warning or a filing error. if a filing error than obviously my suggestion would not work (unless filing a paper form).

My understanding is that when a 5500-EZ has less than 250,000 you can mark it as a final 5500, which is what tells the IRS that no filing is due for the following year. I don't see anything in the instructions about this but I think it is better to do this then just not file one in the following year.

BG150 I think I would: 1) File a 5500-SF for the final year that included a non-owner for any portion of the year (i.e., if the non-owner closed their account in 2025, then file an SF for 2025). 2) File a 5500-EZ in 2026, even if under $250K but mark it as a final 5500 (unless assets go over 250K by year end). 3) If a non-owner becomes eligible during 2026 then obviously keep filing SF.

John made me think of a scenario that could stink to high heaven. Owners and family are only employees on 7/1/2026. They are about to hire 10 more employees because they bought another location or something. They amend the plan to add a vesting schedule for everyone eligible on 7/1/2026. OK that would be a problem. I don't think that is normal though, usually there's a one or two HCE's per 20 people or so, and if you did the amendment on that date, as of that date this is a broadly available benefit, and to me you are covered. Again in all my years no one has ever suggested that different vesting schedules is something that has to be BRF tested in a way that the results deteriorate as time goes by.

I feel like it is a pretty normal thing to grandfther everyone in at 100% vesting and then add a vesting schedule for new hires. you can;t amend the old vesting schedule due to cutback rules. Could you forever be required to have immediate vesting (for example if all current employees are HCE's)? That hardly seems fair. Not saying it's not a BRF only that I've never heard of that as an issue for adding a vesting schedule prospectively to new participants. I've only ever heard of a problem going in the other direction (Cutbacks).

What was it the Citgo Doctrine? Or was it the Valero Doctrine? Oh right Chevron 🤣

I can see for sure how including it as a single holding within a CIT is feasible, FWIW. Thanks for posting this though!

I'll be curious to hear Empower and Fidelity's response. If they say this is a no go, then that's the end of that. Have they said anything? This is not a new topic of course.

🙄 Well I can't seem to find a way to rule this out...

“Our goal is to deliver on President Trump’s promise for a new golden age by fostering a retirement system that allows more Americans to retire with dignity,” said U.S. Secretary of Labor Lori Chavez-DeRemer. “This proposed rule will show how plans can consider products that better reflect the investment landscape as it exists today. This greater diversity will drive innovation and result in a major win for American workers, retirees, and their families.” https://www.dol.gov/newsroom/releases/ebsa/ebsa20260330 What I do not understand is, if you make private equity funds available to the public, that would make the private equity funds publicly traded. Wouldn’t that mean we need all of the protections that public investors receive through SEC filings, etc.? Imagine the disclosures needed for liquidity restrictions. I can see the place for this in a pooled, trustee directed plan (especially defined benefit), but not a participant directed one. I don’t get it.

Well on its face it is a true statement. Once you adopt the plan, simply not adopting it again is not enough to end your participation. With that being said I think you just do a new one today and have them execute it. All of their original information regarding the effective date of their participation is unchanged. Then you will have a participation agreement that more perfectly aligns with the new format of the plan document.

"Asymmetry" is much kinder than Bazaaro 🤣 Truthfully the word I wanted to use was probably not appropriate for a public forum!

New Jersey does not allow you to exclude from wages amounts you contribute to deferred compensation and retirement plans, other than 401(k) Plans. Specific plans that New Jersey does not allow taxpayers to exclude contributions to include, but are not limited to, plans under I.R.C. § 403(b), I.R.C. § 457, 409A, I.R.C. § 414(h), SEP, Federal Thrift Savings Funds, or Individual Retirement Accounts. Employer contributions to these plans receive tax-deferred treatment. In addition, both employee and employer contributions to SIMPLE IRAs, SEP, and SARSEP plans are included in taxable wages (neither receive tax-deferred treatment). https://www.nj.gov/treasury/taxation/njit5.shtml I came to learn of this through work on 457b plans. I had no idea how extensive their bizzarness was, including employer contributions to SIMPLE IRA's and SEPs. I am posting here because they do not even allow deductions for 403(b) Plans. This is really insane. Are people aware of this??

NOTE: If "Special schedule" is selected, the schedule must describe a formula from the options already available or a combination thereof (e.g., single rate formula applies to Group A; two rate formula applies to Group B), be objectively determinable and may not be specified in a manner that is subject to Employer discretion. Regardless I think your solution is the best possible option and that is what I will be doing... Thanks! The FT document is new form me...

I agree but that section is moot unless your using the YOS match. Are we in agreement that that has to be an oversight on their part right? Just makes no sense that that option is not there?

I am trying to avoid the 60 day match notice with a discretionary match. I'll be darned but I cannot find anywhere to cap the deferrals taken into account for the match. So for example we have a lot of clients that have no idea how much match they can afford for a given year. So we hardcode the match as a discretionary percentage of the first 4% of pay (could be first 5% of 6%, you get the idea). FT william uses the term "Matched Employee Contributions." I cannot find any where that I can cap that term at a given percentage. Has anyone run into this same issue before?

Well it really only makes a difference when it is an HCE because one person is a larger share of the total. I literally had a scenario where the only HCE had a signficant missed deferral and I was able to exclude him from the ACP test (it was a 403b plan). That felt weird to me! To your second question, that was the next paragraph (Again this book is really pretty neat) EPCRS does not directly address ADP calculations when an employee was improperly excluded for only part of the year. However, the whole-year correction methods in Appendix A apply to partial year corrections in Appendix B. [EPCRS App. B §2.02] Accordingly: The plan must correct ADP failures before dealing with improper exclusion, and The plan has the option to disregard participants with partial exclusion exclusions altogether from the ADP test. (Note that the same choice must be made for all participants subject to the improper exclusion. [¶6.2.2]) If the plan elects to count participants with partial year exclusions, logically it would count the deferrals the participant actually made and disregard corrective QNECs (which are determined after running the ADP test). Example 9.8.2 Dan should have entered his employer’s calendar year safe harbor 401(k) plan on January 1. However, he was improperly excluded until July 1, at which point he elected to defer 6% of his compensation. Dan’s total compensation for the year was $100,000. His actual deferrals for the balance of the year were $3,000. His ADR for the year was 3% ($3,000 / $100,000). The employer can choose to count Dan or exclude Dan in performing the ADP test. Assume the test passes and the NHCE ADP was 4%. Dan’s missed deferrals are $2,000, Dan’s compensation for half the year ($50,000) multiplied by 4%. The corrective QNEC is 25% of $2,000, or $500, using the two-year safe harbor. [¶9.6.5]

Bazaarly the answer is no. From the ERISApedia Plan Corrections textbook (highly recommend!) The plan must perform ADP/ACP testing before correcting errors resulting from failure to implement or improper exclusion. If the plan fails either the ADP or the ACP test, it must first correct those tests before correcting Elective Deferral Failures. EPCRS adds: In order to determine whether the plan passed the ADP or ACP test, the plan may rely on a test performed with respect to those eligible employees who were provided with the opportunity to make elective deferrals or after-tax employee contributions and receive an allocation of employer matching contributions, in accordance with the terms of the plan, and may disregard the employees who were improperly excluded. [EPCRS App. A §.05(2)(g)]

That's actually not true, there is no notice required. There are tw rules relating to 3 months or less. You guys are referring to the newer 3 month rule, but there is an old ancient 3 month rule called the "Brief Exclusion" rule that has been on the books since the early days of EPCRS (well I just know it predates all the 45 day notice stuff). This one is found in Appendix B of EPCRS and says there is no MDO correction if the participant can contribute for the LAST 9 MONHTS of the plan year. So the failure has to be limited to the first 3 months of the plan year. Still of course 100% of missed match is due. Appendix B, Section 2.02, in this (F). I could not figure out the precise citation because of how the formatting shows up. But this text is there. (F) Special Rule for Brief Exclusion from Elective Deferrals and After-Tax Employee Contributions. An Plan Sponsor is not required to make a corrective contribution with respect to elective deferrals (including designated Roth contributions) or after-tax employee contributions, as provided in sections 2.02(1)(a)(ii)(B) and (C), but is required to make a corrective contribution with respect to any matching contributions, as provided in section 2.02(1)(a)(ii)(D), for an employee for a plan year if the employee has been provided the opportunity to make elective deferrals or after-tax employee contributions under the plan for a period of at least the last 9 months in that plan year and during that period the employee had the opportunity to make elective deferrals or after-tax employee contributions in an amount not less than the maximum amount that would have been permitted if no failure had occurred. (See Examples 6 and 7.

I do not have a link, I just googled it to try and find it. Odd. not sure if others can download? I can download, which I don't think is related to the fact that I posed it (,my browser wouldn't know that). I really think this is the most important text: So, the IRS went on to provide that IRC Section 415(c)(3) compensation can, but is not required, include "deemed Section 125 compensation." "Deemed 125 compensation" is defined as an excludable amount that is not available to an employee in cash in lieu of group health coverage under an IRC Section 125 arrangement because that employee is not able to certify that he or she has other health coverage. An amount is only "deemed 125 compensation" if the employer does not otherwise request or collect information regarding the employee's other health coverage as part of the enrollment process for the health plan.