austin3515

Well if the main transfer of assets hits on 9/15/2025, then my merger effective date based on the language I proposed above would be 9/15/2025, and the residual "income" would belong to the surviving plan.

More typically in my experience, Parent buys Child. Child begins participating Parent's plan on 1/1/2026 (for example). Child's plan merges over a few months later (after a short cooling off period and blackout notices etc). Obviously the possibilities are endless but this seems to be the fact pattern I keep running into. For the reasons I explained above I tend not to have a merger effective date of 1/1/2026. But perhaps that is where we are differing. Probably you guys are merging the plans in on the same date Child begins participating in parent's plan (1/1/2026 in my example). I am treating the merger as a different event on a different date.

Just to clarify what does AA/PA stand for?

But I also agree with David Rigby? I am trying to have the merger agreements coincide with the asset transfer? I see a lot of merit to that approach. Perhaps I am on an island alone in that belief, but I am just trying to have the merger effective date coincide with the movement assets. So my question is does my proposed language meet that objective? Maybe there is something I am missing here, but what you guys are saying I agree with 100%.

It is relevant from an administrative perspective. I want Merging Plan;s 5500 to be based on Merging Plan's trust/custodian reporting. I want Surviving Plan's 5500 to be based on Surviving Plan's trust/custodian reporting. The merits of that approach can be debated but what is beyond dispute is that I prefer it this way, LOL. For starters, iff Surviving Plan is audited, the auditors probbly do not have to worry as much about that stub period since it will not be included in their financial statements (Reviewing SOC1s as an example, testing distributions for another).

A lot of participation agreements include a space for you to enter the merger effective date of a participating employer's plan (e.g. in the event of the acquisition of another entity's stock and the merger of their plan into the main plan). The challenge that is always there is we don't necessarily know exactly when the assets are moving (at least not in time to execute relevant documents). My preference has always been to have the merger effective date be coincident with the transfer of assets to simplify reporting and to not commingle the plans with 2 recordkeepers. Would an effective date of "Coincident with the transfer of assets from the trustee or custodian of the ABC 401(k) Plan, which is expected to take place on or about September 15, 2025." be sufficient?

For sure if that happened to me I would also let it lapse. Perhaps now that the IRS has been DOGE'ed that won;t happen...

I absolutely track my CPE but it is self-reporting the total number of credits in the cycle. Are they really expending a lot of entry reviewing the 300 of us who still have it? Seems like it would be a ridiculous waste of resources. [I am sure it is more than 300 but I assume not by much since they closed it off to new applicants.]

Great tip! I'll definitely sign up for these!

No, I used to work for a TPA but not anymore...

This one seems like a nice option. $199 a year. Not a ton of courses but I assume it gets refreshed. https://my-cpe.com/continuing-education/erpa

I of course know about the ERISApedia and JH free webinars. I need more than I've been able to get through that. I do try and do the ASPPA spring/winter virtuals as well. Any other suggestions out there? I need this for ERPA designation.

NoT to change topics but for a time I was asking clients for 125 premiums to reduce comp when calculating contributions. But I knew no one else was doing it. And someone pointed out the irs doesn’t even mention this in publication 560. This feels so much like that, where being a literalist leads to ridiculous outcomes (that is people who sign up for medical benefits get penalized, more so if they cover their family).

But that’s ridiculous to say that the plan is the provider. I know there is a thing about this but this cannot be something that gets enforced even if true. The outcomes are preposterous. Someone is in some junky 2.5% variable annuity and the sponsor is stuck. It defies all logic…

Provider is telling us that we cannot change the investment provider mid-year. So for example, let’s assume it is February and the pan sponsor wants to move from Fidelity to Charles Schwab (neither Fidelity nor Schwab are involved here they are just an example). We are being told nope not an option you can’t leave us until January 1 next year. I believe it has something to do maybe with form 5305. Even if there is something that is technically true about this it just seems bizarre that a sponsor would be hamstrung from making a change for better pricing / service because of a technicality. Have others heard of this? Are they being too literal or risk averse? This would basically mean the sales process for SIMPLEs is shut down for the first 7 or 8 months of the year…

415 limit is not pro rated. Pretty sure basic plan docs always say the 415 is never prorated for a new plan but don’t quote me, look in your BPD. In earlier posts I mentioned using an effective date of 1/1 but that was mainly for the comp limit. Not everyone agreed with that approach. Note that ALL DC plans are part of 415 limit so SIMPLE deferrals and Er counts towards 415.

Not that I have heard. We’re still waiting for guidance on mandatory Roth catch-ups which affects 100% of all plans basically. I guess the guidance team was DOGE’ed…. Plus isn’t there some policy that they have to remove like 3 regs for every new reg or something like that? my hope is that when ADP and Paychex and the rest called their people at IRS they told them what the final reg would say about how to apply the limits. Would be really messed up if different providers took different approaches because they can’t exactly re-reprogram their systems. sorry to change topics!

In my view the only way to roll is: Each pay-period, run the following test on a YTD basis: (using 2025 limits) Have they exceeded $23,500? If yes, Do Roth deferrals = or exceed $7,500? If yes, deferrals = whatever the participant elected (may of course be 100% pre-tax, 50/50, etc) If not, Deferrals are 100% Roth (well at least until Roth is 7,500 YTD and then whatever the standing election is. [I will note that of course applying and reviewing calendar year-to-date limits is completely within the scope of their skill sets]. My "apply as a year-to-date limit calculation" method has a real nice side benefit: If the only reason someone's deferrals are "overridden" to Roth is based on this YTD Limit calculation (performed programmatically), their payroll deduction contributions will revert back to their standing election on the following 1/1, which in my view is an enormous consideration that is often not discussed (i.e., what happens on 1/1 after being reclassified). This is no different than someone electing $3,000 a pay-period 1/1, having their deferrals stop when the max is reached, and then resume the following 1/1 automatically as the standing election. I think this is a reasonable implementation of the fact that "catch-ups are the last contributions of the year." It just seems a bazaar interpretation that someone who contributed $23,500 of Roth in the first 9 months is barred from pre-tax for Q4 because of a literalist reading of the statute that disregards any sense of practicality. I think it is somewhat akin to capping the match at X% of the max comp amount, regardless of your YTD comp when the match is being funded. [edited for a reversal in my bullets]

It is a bit hard to justify that you can do almost anything to fix a mistake as opposed to doing a prospective amendment. Sometimes I have wished clients had not asked me a question, and just done it wrong, and then it would have been obvious that a plan amendment to accomplish the objective was available... but that is an important distinction here, EPCRS corrective amendments versus well thought and planned amendments.

Merger documents says Plan B merged into Plan A as of 12/1st 2024. The money from Plan B's provider was wired over to Plan A on January 15th. A) My personal "best" interpretation here is that Plan B no longer exists on 12/1/2024. The merger agreements say that Plan B is now a part of Plan A. To me that means the money held by the Plan B provider is now a part of Plan A. B) The other interpretation is that in spite of the fact that the merger agreements indicate that Plan B is now part of Plan A, that that's not really so because the assets have not yet moved. So I continue to file 5500's (and in my case get an audit) for Plan B until the assets are down to zero. What do you guys think?

I shudder to think how common this type of thing is.

The practical problem I see here is that the participant is unlikely to say the right thing. That's where forms are helpful. They are checking a box next to a statement that says the right thing. "No contriubtions for me please" is probably not specific enough for benefits records even if anyone knows what was meant.

I mentioned bankruptcy because unless the business is bankrupt or the owner (who is a fiduciary) is bankrupt (unless the corporate veil is pierced which is something I know nothing about beyond the term), I don't see how you get out of funding the contribution.

I had a client once that went bankrupt. The Plan is simply a creditor. When assets are liquidated they get a piece just like every other creditor. Closing the doors is different than a bankruptcy liquidation. They should definitely be talking to a bankruptcy attorney. As the saying goes, you can't get water out of a stone. Sure they owe the money but if the well is dry, yada yada. If the 100% business owner has money outside the business that is clearly where the exposure is.

I would be curious to know how many employees there are. If this is a big company with hundreds of employees, you just can't do something like this. You must assume that what you did will become known. And then the client is exposed to accusations (perhaps) of all sorts of motivations for benefitting one employee and not the other (I assume you can use your imagination for what someone could conjure up).