austin3515

I agree but we do still order thousands of copies a year and that's a lot more paper than one combined notice...

Well I was talking about the 99.999% I guess...

We send out one notice for all distributions. The admin people sure do like the simplicity of that. No edits at all. I would posit that if the only thing you're changing is the name of the plan perhaps you could skip that step with a little clever wording! That seems to be what the recordkeepers do too, but they have references to the call in numbers and websites throughout, etc.

Does anyone have a generic special tax notice that they have been using that doesn;t reference any recordkeeper names? Something special designed for TPA's for example? I know Relius Documents spits one out but I think they customize it quite a bit based on plan document elections and we want one for all plans. The IRS one has two separate notices, one for Roth and one for Pre-tax and that's, well, not workable.

The only other exception is with respect to employees who have not met the maximum eligbility provisions. So 3 months of service for 401(k) and 1 YOS for match is allowable, BUT you would lose your top-heavy exemption (if you needed it)...

You only needed one all along so it never mattered, LOL. Even the 2 year eligibility plan "never" switched to the plan year. Thanks though for the stellar response! And thankfully it lines up with how I wrote my formulas!

Would it be fair to say that "FICA Wages" = Total Compensation less Section 125 premiums? Lots of articles that throw around the term "FICA Wages" like "everyone knows what that means."

Trying to write some formulas... Plan Year End = 12/31. Participant is hired on 12/31/2023. Their first 12 months is finished 12/30/2024,which is year 1. Their 2nd year (assuming switch to plan year) is calendar 2024. Agreed? And if their hire is 1/1/2024, and their 12 months is finished 12/31/2024, because that coincides with the plan year exactly, clearly we would not count the same exact 12 months, right? I could see someone (especially a formula if one is not careful) mistakenly crediting the same 12 months twice because it counts both the first 12 months AND the first full plan year).

Trust me I think about it all the time. If I wasn't so darn busy addressing all of this stuff I just might have...

Sometimes I feel like I'm the only one who sees this. Thank you very much for saying this.

OK ya got me. but it's still got make ya mad. A rule change here and there, ok. But the stuff they're pushing is major major change... But I suppose I was indirectly implying that perhaps others of a more human-like form might throw in the towel...

People will literally quit over this stuff. I swear Empower might just shut down. How often can they spend 50 million programming for all this stuff???

"The Helping Young Americans Save for Retirement Act is a bipartisan legislation that aims to encourage savings by younger workers in defined contribution plans. The bill would allow employees aged 18 to 20 to contribute to 401(k) and ERISA-covered 403(b) plans after completing one year of service, although employers could exclude them from receiving employer-matching or nonelective contributions." It's too much. They need to give us a minute! Does anyone have Brian Graffs direct dial/email address? If so tell him Austin Powers will make himself available Congressional Testimony for as long as it takes to convince Congress that this has to stop. https://www.mercer.com/insights/law-and-policy/bipartisan-bill-would-lower-dc-plan-eligibility-age-to-18/

I still maintain that there is one thing that has been clear from the get-go. if you can find a way to get out from under these rules (and there is almost always a near-cost free solution) than you should take it. To me this thread has proven that beyond the shadow of a doubt. Thanks the education!!

I feel better that I was tricked that Derrin and Brad Pitt both say is very misleading, LOL. I will just add though that the regs themselves make it a heck of a lot clearer.

I was wondering if Brad Pitt was working under an alias 🤣 I've only gotten to "know" Kelsey Mayo recently from some webinars but she is definitely excellent as well 👍

This example is so spot on and agrees with David Schultz and G8Rs... Every other article I read on this did not go into enough depth to make it clear why it was 2025. I always thought it was because you needed at least 2023 and 2024 to be eligible (due to the pre 2023 exclusion), not that it was the delayed effective date of the provisions that made it 2025. https://www.truckerhuss.com/2023/09/long-term-part-time-workers-more-questions-than-answers-for-defined-contribution-plans/#:~:text=Section 125 of SECURE 2.0%3A LTPT&text=Pre-2021 service is also,governed 403(b) plans. Examples When is an employee eligible to enter a calendar year 401(k) plan if the employee has 500 hours in 2021, 500 in 2022, and 450 in 2023? Answer: The employee would enter the 401(k) plan on January 1, 2025. Under SECURE 1.0, this employee does not meet the 3-year rule as of the end of 2023; therefore, the employee is not eligible to participate as of January 1, 2024. Under SECURE 2.0, effective for plan years beginning on and after January 1, 2025, the 3-year rule is reduced to two years; therefore, this employee has satisfied the new rules for eligibility (based on performing at least 500 hours of service in 2021 and 2022), and will become eligible for participation as of January 1, 2025. Note: For 401(k) plans, service performed prior to 2021 is excluded. For 403(b) plans, service performed before 2023 is excluded. The LTPT rule under SECURE 1.0 does not apply to 403(b) plans. SECURE 2.0 extended the LTPT rule to 403(b) plans. Therefore, if the plan in the above example were a 403(b) Plan, the employee would not be eligible for the plan, as service performed under a 403(b) plan prior to 2023 is excluded for purposes of the LTPT rule Also the Proposed Regs seem to line up with this too. "(2) Determination of 12-month periods—(i) In general. Except for any 12-month period beginning before January 1, 2021, all 12-month periods during which an employee is credited with at least 500 hours of service with the employer or employers maintaining the plan must be taken into account for purposes of determining whether an employee has satisfied the requirements of paragraphs (b)(1)(i)(A) and (B) of this section."

Service performed before January 1, 2023, is not considered for purposes of this new SECURE 2.0 rule (but may need to be counted for vesting purposes, see below). https://www.ballardspahr.com/insights/alerts-and-articles/2023/11/long-term-part-time-employee-participation-in-401k-plans-begins-in-2024

The one excpetion as I have referenced before is those top-heavy safe harbor match plans with a lot of people between 500 and 1,000. For them, the LTPT is the only viable option.

The conversation with clients was pretty straightforward. Across the board as I explained the rules and what would be required, they all agreed iut should be avoided at all costs. I promise we did not increase the cost of employer contributions, nor did we degrade testing, by much for anyone. Those things are obviously front and center in the conversations and they very easily addressed through otherwise excludable rules and the new top-heavy rule for otherwise excludables. It's not that hard to find excellent solutions and the vast majority of the time the increase in employer contributions is exactly ZERO and the degradation to testing is the same.

Wait a minute I do not agree with your 2nd paragraph. In your example they did not have 3 consecutive years. And under SECURE 2.0 they did not have 2 consecutive years, because verbatim what SECURE 2.0 says is 12 month periods before 1/1/2023 are disregarded. Now if you're saying that some circuitious trip through ERISA and the Code brings us to some other conclusion, I can promise you everyone has missed it. My interpretation seems to line up with the Seyfarth article I pasted in. I think they're a big law firm, arent they? I'd be surprised if they were wrong anyway.

FWIW I agree with your 2nd pargraph 100%. But your first paragraph in my opinion proves my main point which is "folks, run for the hills!" If you can understand the impressive intellect that David Shultz has put forth, then you're a smarter person than I am (I was lost!). But I was smart enough to run like H-E- double hockey stick in the other direction 👍. You should too...

I applied the logic in exactly the opposite direction. If no one is between 500 and 1,000, doing the amendment does 2 things: 1) It doesn't change who is eligible at all. 2) It allows me to never ever ever have to review those abhorrent rules for anhything. I apply the same logic to top-paid group actually. Sometimes I will encounter a plan that has made that election when 5 people out of 100 make more than HCE cap. I always eliminate top-paid group even though it makes no difference so I don't have to document every year that it doesnt make a difference. HAve I had the same conversation 100 times with 100 people? Sure. Other reasonable approaches are out there, but I did not want my clients to even have to know the term.

https://www.seyfarth.com/news-insights/the-long-wait-for-the-long-term-part-time-guidance-is-over.html Beginning in 2024, under the SECURE Act, 401(k) plans are required to permit part-time employees who perform work for at least 500 hours of service over three consecutive years to contribute to a 401(k) plan. SECURE 2.0 expanded part-time employee eligibility even further, providing that employees who work for at least 500 hours of service over two consecutive years must be eligible to contribute to a 401(k) plan beginning in 2025. Employees who meet these eligibility standards are referred to as “long-term part-time” employees, or LTPT employees, throughout.

Sec 125 of SECURE 2.0 “(4) 12-MONTH PERIOD.—For purposes of this subsection, 12-month periods shall be determined in the same manner as under the last sentence of subsection (a)(3)(A), except that 12-month periods beginning before January 1, 2023, shall not be taken into account.”. Not an interpretation, a direct quote 👍