austin3515

Well this is how I see it: (E) sets the beginning number alone. The beginning number alone is 150% of the 2024 catch-up limit. After 2024, the reference to 2024 is moot. Why? Because (C)(i) says the amount in paragraph (E) is adjusted for inflation. I actually don't where the other view would come from?

I don't think anyone mentioned the bold text below? 414(v)(2)(C). Doesn't that suggest COLA adjustments? (C) Cost-of-living adjustment (i) Certain large employers In the case of a year beginning after December 31, 2006, the Secretary shall adjust annually the $5,000 amount in subparagraph (B)(i) and the $2,500 amount in subparagraph (B)(ii) for increases in the cost-of-living at the same time and in the same manner as adjustments under section 415(d); except that the base period taken into account shall be the calendar quarter beginning July 1, 2005, and any increase under this subparagraph which is not a multiple of $500 shall be rounded to the next lower multiple of $500. In the case of a year beginning after December 31, 2025, the Secretary shall adjust annually the adjusted dollar amounts applicable under clauses (i) and (ii) of subparagraph (E) for increases in the cost-of-living at the same time and in the same manner as adjustments under the preceding sentence; except that the base period taken into account shall be the calendar quarter beginning July 1, 2024.

you could ask an ERISA attorney if an exclusion like this would work. You would uncheck the HCE exclusion box in the Safe Harbor section and instead say in the "Other" box: "The Employer shall determine each year, on a discretionary basis, which HCE's (if any) shall receive an allocation of Safe Harbor Nonelective Contributions. The Employer may further determine each year the amount of each HCE's allocation of Safe Harbor Nonelective Contributions, provided the allocation does not exceed 3% of Compensation for any HCE." This does not get you out of any top-heavy minimums mind you. There is no checkbox for the above which is why you would want to check with ERISA counsel. You might even submit it to Relius and see what they say. I think they'll give you a pretty good answer. There is nothing legally wrong with what I wrote as far as I know. Curious to hear what Belgarath would say!

I don’t see why you couldn’t do that but not sure how you do it without names. CFO and CEO might be the same as names anyway. Again the normal approach is profit sharing. Maybe the reluctance is vesting though.

If this a calendar 2025 plan year end it’s not too late to add the provision.

Just don't forget that counting hours generally means tracking LTPT which is no bueno. I caution clients in the starkest of terms away from dealing with those rules. They are absolutely impossible to comply with. I dont care who you are, what recordkeeper, etc. They are 100% infeasible. It's laughable they even wrote it into law.

Is everyone in their own group for profit sharing? That would be the typical method of accomplishing this.

Well that is one heck a gigantic loophole, isn't it? I suppose you have to be 59.5 to take advantage generally but holy moly.

I honestly can't tell if you guys are answering the direct question I posed, which is does mandatory auto enrollment automatically make an otherwise ERISA exempt plan subject to ERISA? You have provided a lot of great information but I just don't think you have answered that question directly (at least not that I saw). So Peter for example, you definitely asked my quetion more eloquently and thoroughly than I did, but I don't think you suggested an answer?

you would have thought but it's not in the proposed regs I don't think. In fact the Employer has to have some "policy or procedure" in place to prevent this before it can use the in-plan Rth conversion correction method. I can't think of anything practical to do that.

hmm I really thought that anything to do with state law was pre-empted. I remember for Florida there used to be some stupid stamp tax that ended up going away when it was clarified that ERISA pre-empted. There are some lawyers on here though who might be better to clarify...

If a new 403b is subject to mandatory auto enrollment, can that plan still qualify as ERISA exempt? I know the question has been asked -- has it been answered?

I think this section of the proposed regs ius pretty relevant because I believe it must be followed to use the "in plan roth conversion" correction method? 1.414(v)-2(c)(3)(i). (3) General correction requirements —(i) Practices and procedures. For a plan to be eligible to use either of the correction methods described under paragraph (c)(2) of this section with respect to an elective deferral that is a catch-up contribution because it exceeds a statutory limit described in § 1.414(v)-1(b)(1)(i), the plan sponsor or plan administrator must have in place practices and procedures designed to result in compliance with section 414(v)(7) at the time the elective deferral is made. As part of these practices and procedures, the plan must provide that the elective deferrals of a participant who is subject to the Roth catch-up requirement under paragraph (a)(2) of this section, but who has not made an affirmative election to make catch-up contributions as designated Roth contributions nor made designated Roth contributions equal to the applicable dollar catch-up limit earlier in a calendar year, are automatically treated as designated Roth contributions after the participant's pre-tax elective deferrals made during the calendar year equal the section 401(a)(30) limit on elective deferrals for the taxable year that begins in the calendar year. Similarly, the elective deferrals of such a participant who has not made an affirmative election to make catch-up contributions as designated Roth contributions nor made designated Roth contributions equal to the applicable dollar catch-up limit earlier in the limitation year must be automatically treated as designated Roth contributions after the participant's pre-tax elective deferrals result in the participant's annual additions for the limitation year exceeding the section 415(c) limit for the limitation year.

I get it, if a "Highly Paid Individual" goes over the 415 limit but NOT the 402g limit, their catch-ups need to be coded as Roth. 1) What happens if the discretionary profit sharing that puts them over is deposited after the end of the year? Is the only option the Roth conversion correction? 2) Does anyone have any ideas for how to handle a plan that is contributing 15% of pay throughout the year, where they will hit the 415 limit during the year well before they hit 402(g)? I almost wonder if we should tell these Highly Paid Individuals to contribute $7,500 of Roth first to avoid any issues. These seems like it's going to be a real challenge for some plans. Obviously it is few and far between, but when it applies I think its going to be a pain. Curious if others have any grand ideas.

Maybe I missed it above, but I always point to the uncomfortable scenario where even a 50 year old taking out a 30 year loan might be a tad unrealistic since they will be an octogenarian by the time they are done. I don't know about y'all but I'll be living near the beach sipping Pina Coladas at noon long before then if everything goes according to plan 😂

Follow up: How do you guys feel about a participant whose vested account balance is $0 (0% in profit sharing only) on a recordkeeping platform where the forfeiture has not been processed. Terms of the plan say this participant is "Deemed to have received a distribution which triggers the forfeiture." I say they are not counted. Exhibit A in my legal brief is that if this was a pooled/trustee directed plan we wouldn't even ask the question, so using a recordkeeper should not change the answer.

5500 Instructions for Line 6g. Enter in line 6g(1) the total number of participants included on line 5 (total participants at the beginning of the plan year) who have account balances at the beginning of the plan year. Enter in line 6g(2) the total number of participants included on line 6f (total participants at the end of the plan year) who have account balances at the end of the plan year. For example, for a Code section 401(k) plan, the number entered on line 6g(2) should be the number of participants counted on line 6f who have made a contribution, or for whom a contribution has been made, to the plan for this plan year or any prior plan year. Defined benefit plans do not complete line 6g. A Safe Harbor Nonelective receivable is a "contribution that has been made to the plan for this plan year or any prior plan year." The rub here is that it doesn't specify WHEN you determine if the the contribution has been made. Is it implied that it is as of 12/31/2024? I think that is one reasonable interpretation personally. Note that they could have specified but did not. Worth noting that a safe harbor nonelective contribution is not due to be funded until the last day of the next plan year. So the funding theoretically might not even be done by the time the 5500 is filed, let alone by the last day of the plan year. Let's say the Plan indicates that the Safe Harbor is discretionary for the HCE's and that decision is made on December 15, 2025 (calendar year plan). What would I enter for participants with account balances as of the last day of the Plan Year for 12/31/2024 when I file my 5500 tomorrow, even if I wanted to count "receivable only" people as participants? My logic here assumes that the participants with account balances reported at the end of the year and the beginning of the year are the same. So really the counts of participants with balances is the count as the ball drops in Times Square (if you are on the East Coast). And I also use logic and ask myslef, is _____________actually counting receivable only participants when they are doing a cash basis 5500?? (Fill in the blank with any number of large plan providers out there.). I mean the answer is just for sure no. I've never asked ________ but I'm reasonably confident of the answer, which I guarantee is more based on systems limitations than a divine understanding of the 5500 instructions.

So you think that provision creates a balloon payment on the loan, and that is basically synonymous with a provision that says you cannot continue to repay your loan after you terminate. So the only reason to NOT have that provision is if the RK is repaying loans through ACH debits. this definitely sounds right!

Maybe once upon a time I knew the answer to this question but I wanted to ask because it just came up as a question on a call. We use the Corbel PT formatted Adoption Agreement and thre is an option for loans that basically says "all outstanding loans will become due and payable in their entirety upon severance of employment..." Can someone please explain to me why I have been checking that box on all of my plans for 20 years 😂 It doesn't change when it's taxalbe. I assume it doesn't affect a loan offset? Or maybe that's it.

Yes Kelsey I'm sure made it to the very last page, read the commentary and everything!

I am not ashamed to admit I did not make it to page 63 😂😂😂

https://www.thebenefitofbenefits.com/2025/09/clarifying-confusion-over-effective-date-for-roth-catch-up-contributions/ Apparently there were some articles out there with bad info...

My understadnign is no. W2 reportinb (Box 1) is completely unchanged. The participant is eligible to claim a deduction on their 1040. Same for overtime. I realize not all plans use the W-2 definition of wages but the same logic applies. This is solely a new deduction for people to claim. it is does not eliminate income.

I've misread that rule the same way you did, LOL. 9.5 months after the end of the year is October 15th. I've definitely fallen into the trap of "oh half way through the 9th month is 9.5 months." 9.5 months is ALL of September and half of Octboer. I assume you are talking about the deadline for missed deferrals on a plan with auto enrollment, correct? As for lost earnings, I think the easiest and adequate approach is plan rate of return. I wonder if your client and a client of mine had the same payroll systm. Literally the exact same thing happened to my client. It was bazaar and I kept asking how could this be?? But it be. It was a big correction for me, spanned a few years. Real nightmare. Had to recalculate the match too.

I agree with justanotheradmin. If the 100 hours is required in the first 12 months, you need to be careful because your document likely says "or else 1,000 hours in a plan year" and that's when the LTPT stuff will kick in. Please clarify.