Mleech

We're a TPA/recordkeeper who works almost completely in conjunction with 3(38) advisory firms to provide plans. As it stands we don't do anything in regards to investment lineups on the plans, that's chosen exclusively by whatever advisor is the 3(38) on that plan. We're toying with the idea of creating a very stripped-down, basic 401(k) plan to sell as a "plan in a box" of sorts for very small companies unable to afford our standard tier. One of the issues is that such a plan would require an investment lineup, and having an advisor with a bps fee on the plan doesn't seem ideal for this structure. We absolutely don't want to take on 3(21) / 3(38) liability, which is why we've never thought about this before. However, I've heard recently from some sources that 3(21) responsibility is triggered only if it's plan-specific advice given to a sponsor. Supposedly, I've heard that some record keepers are able to essentially say "here's our standardized fund line-up, you as a sponsor can either adopt it or choose your own funds to use" and in doing so, the plan sponsor remains the fiduciary for 3(21)/3(38) purposes. Anyone have any further insight on this?

Just to clarify, you're saying that the plan document describes a New comparability formula (employee individual group allocation), but the sponsor wants to do a pro-rata spread?

Recently I was lucky enough to receive the PenChecks NIPA scholarship to go for either a AKS or APA designation. I don't currently have any official designations so it's a very exciting thing. I know NIPA and ASPPA both do similar things but in different ways. My firm has never really invested in continuing education but I've convinced by boss to invest in it as I really would like to start getting official recognition. That said, memberships to ASPPA and NIPA are expensive and required to keep a certification, and I'd hate to end up in a sunk cost fallacy sticking with NIPA if ASPPA might be more useful. A couple questions: I know NIPA offers a kind of equivalency system for designations from some other institutions (for example, ERPA qualifies you for AKS 1, 2, APA 1-4). Does ASPPA have anything like this where a AKS or APA designation would be able to be converted to an ASPPA designation in the case we chose to switch? What's the cost difference look like between being a NIPA member and obtaining CE credits each year for their qualifications vs at ASPPA? We're a relatively small firm and it'd be at least somewhat of a consideration. Any insights would be very helpful, thank you.

A plan sponsor is looking to adopt a retroactive amendment effective 1/1/25 to change their safe harbor match plan to be a safe harbor nonelective (3%) plan, primarily because of the gateway test benefits for their profit sharing. Are they legally allowed to reclassify the safe harbor match contributions they made from 1/1/25 to now as non-elective, essentially using it as a kind of credit when they true up at the end of the year? That would result in everyone having gotten a 3% contribution for the plan year. On one hand, my instincts say that adopting the amendment as of 1/1/25 would mean the safe harbor match provisions would no longer have been in place, so it wouldn't have to stay as match, but on the other hand it feels like it could be sketchy as it was made under a different contribution source structure. Anyone have insight on this?

I've been working for a TPA/Recordkeeper for a good 6 months now and I'm absolutely loving it. I'm definitely learning a lot as I go from my boss & coworkers, and I'm quite knowledgeable about the plans we work on, but we have a fairly narrow scope. Currently we only ever have done DC 401k & PS plans, most of them safe harbor, all of them quite similar in the grand scheme of things. That said we're running into more and more instances where it would be nice to have a good understanding of other types of plans and various fundamentals outside our usual operations, and I'm also someone who likes to really invest in what I do and become an expert. Are there any good books out there that break down the ins and outs of anything related to the retirement planning industry or DB/DC plans, or otherwise good resources written in human-readable language?

We're still straightening out the details as both the prior TPA and the client are... well, not the most informed on how things work, and aren't getting us all the information. That said, this is the first plan we've ever seen money purchase pension assets in and it's for many people, so we're fairly certain it was merged.

We have a 401(k) plan converting to us from a different TPA/Recordkeeper right now. In their plan, they have some money purchase pension plan assets that were rolled over into the 401k plan at some point. Do these assets need to be included in top heavy testing? What should we make sure we do to classify these correctly?

It's my understanding that profit sharing is limited to 25% of your plan compensation. Is this limit for specifically profit sharing, or all employer contributions? Specifically, does safe harbor count towards that limit? I have a client who has a solo K plan and made about $100,000 and maxed out deferral. Her document is a 4% Safe Harbor NE. Can she contribute 4% as a safe harbor contribution and then 25% as profit sharing, or can she only do 21% profit sharing to hit a limit of 25% comp as employer contributions?

I was looking through the plan documents on ASC and I'm seeing language in a few places that we don't use about offset- mostly relating to employer contributions and safe harbor contributions offsetting them. I also see language for this in a few spots within Relius. How exactly does offsetting a source work and why / when would you use it?

So, with this plan, which is a SH NE 3%, the eligibility for profit sharing / employer money is more restrictive than SH. Does that mean everyone who got a 3% NE contribution needs to get another 2% for gateway, even though they aren't eligible for profit sharing?

I'm working on testing a plan right now. It's a newcomp / cross-tested plan. With our proposed profit sharing to max out the owner, it fails general nondiscrimination testing. I'm in over my head here with the correction methods for this; My understanding of the failsafe coverage provision is that, if elected, it provides a rigid method for who to allocate contributions to in order to pass testing, and if NOT elected, an 11g amendment must be made in order to pass testing. That said, the plan document says that all employer contributions are discretionary... Can they allocate money to employees otherwise ineligible for profit sharing because it's discretionary? Another note: Who needs to recieve a 5% gateway allocation in order to use cross-testing? My instinct would be that it's only employees eligible for profit sharing, however our testing software seems intent on putting anybody eligible for the plan as a whole (including people eligible for deferral but not profit sharing) on the minimum allocation gateway test.

When I first started working at a TPA/Recordkeeper a couple months ago I was so frustrated with the terrible layout of the software and lack of documentation, and I refused to just take "I'm not sure how to do it so I'll do it manually" as an answer, so in my first two or three months I opened I think about 50-60 tickets asking for documentation 😂. It actually got so bad they have my tickets being automatically forwarded from their "off-shores" team directly to two of their head support members here in the states because my questions are always too in-depth for the offshores people. Those two have been great to work with; it's such a shame they have people who know the system but route most people to the team that knows how to copy-and-paste from manuals they don't understand.

I've heard good things about the ASC software; we actually use them for documents and are quite happy with it, but for some reason I was under the impression that they had sunset their recordkeeping software. Is that not the case? I'm aware Relius is theoretically being sunset, that's why we're looking at other programs in the first place. I figure if we're going to have to switch anyway, we may as well take the opportunity to see if there's something out there better than Relius. Based on the things I saw and heard and Randug as well as my personal communications with Relius the past month or so, I highly doubt the system is actually going to be sunset on their given timeline, we're definitely some time out... Crystal reports is a good point, I use it heavily as well, it's a lifesaver especially this time of year for Safe Harbor Match auditing and the like. Given that it's software that is independent of Relius (not developed or owned by FIS) and it's used by plenty of other industries for reporting, all it needs is access to a database. I'd be curious if you could just license a personal copy of Crystal Reports and use it with any other software.

See, that's the thing, we're a TPA/Recordkeeper, so we really do use Relius on a level I think a lot of other firms aren't... We don't want to lose functionality but we're also sick of carrying 20 years of duct tape and superglue on a clunky system. Honestly I'm shocked there's no modernized, good software alternative in this day and age.

Our firm has used Relius for a very long time and we're... Unhappy, to say the least. I've heard a lot of good things here about Datair. Does anyone have any experience with both programs with any notable differences in your experience? Also, I really have no scale of how outdated and clunky Datair is, and Relius is incredibly outdated and hard to use. Would someone mind sending me just a screenshot or two of the general Datair interface (with any firm-specific details blanked out, obviously)? It'd be greatly appreciated. Thanks!

I've just signed up for RVUG, waiting on being confirmed but it looks like an awesome resource, thanks. I've heard about them sunsetting the system. A few folks from my firm were at Randug this year and attended some presentations about it and we're not exactly impressed... it sounds like it's going to very quickly accumulate the same extensive issues Relius has with less useability in some areas and a higher cost. Unfortunately it seems most other software options are nearly as clunky, outdated, and overall unworkable... Honestly, with my mild knowledge of programming I get closer and closer to just creating my own competing software every day 😂

Well, that makes this a world easier (and less legally sketchy), thanks!

I started working at a TPA/Recordkeeping firm this past fall, I'm completely new to this industry as a whole so it's been quite a process. One thing I found very quickly was that the firm I work for was doing lot of manual data entry, as well as other things manually. I've spent a good portion of the last few months learning all the ins and outs of the system with things like automating things in Job queue, setting up file imports / exports for balancing, distributions, ACH Pulls, etc, and custom reports. It's such a small industry I really have no reference online for what other people are doing, so I'm curious, how many of the extensive features of Relius do you actually use?

I'm (attempting) to create a kind of decision tree / flowchart to easily figure out what tests need to be run on a given plan. That said, it's quite nuanced and I'm by no means an expert. I've added a picture of my progress so far. My company works exclusively with DC plans, over half of which are safe harbor. This is my first year doing testing so I very well could be mistaken about some things. Generally I've had my boss looking over things with me and helping me with what plans need what tests on a kind of case-by-case basis, but I'd love to just have a nice algorithmic way to figure it out. Any thoughts? Things I have wrong or need to add?

Is it possible to retroactively amend the plan document for that? My assumption was that you can't amend a plan document after the plan year has ended but I'm fairly new to this industry as a whole, hence me running anything questionable by the smart folks here when I can.

I've run into an issue testing one of the plans that came on with us this year. I don't know who wrote their plan document but they absolutely should be a safe harbor, but they aren't. It's just 5 people , three of which are owners (one of them is the owner's son who didn't actually work at all or make anything though). Anyway, the ADP/ACP is... bad. The two owners deferred 23k and 12k (40% and 23% respectively I believe) and as such the ADP is roughly 17.5% vs 1.06% for the NHCEs. The options are either a QNEC, which would be roughly 7.5k in order to pass, or returning almost all their deferrals to them. So here's our proposed creative solution: The only HCEs who need money returned are both owners of the company who choose their own pay, and as such the line between their money and the business's money is really just up to how they want to receive it. Because it's only the two owners, we want to do a "corrective distribution" on paper so they pass ADP/ACP, then use that money to do a profit sharing contribution to give both the owners that exact amount back (obviously, we'd discuss this with the owners before actually doing it). As the plan is new comp / cross tested and there's only 2 NHCEs, the cost they'd need to give to them would be far less than a QNEC and the owners would still get to keep the money they put in. So, my questions: From a legal standpoint, is this iffy? It seems fine to me as it's no different than distributing that money back and then the employer "deciding" to do a year end profit sharing, except we don't actually buy and sell those assets. Second: One of the two owners is over 50. The IRS page on ADP ACP corrections says that "If the Plan provides for catch-up contributions, the refund may be recharacterized as a catch-up contribution (up to the catch-up limit)". How would this rule factor in / be utilized to solve this? And yes, we're already in the process of writing an amendment to make them a Safe Harbor NE for this year, we just can't retroactively do that.

I'm doing testing right now and a plan of ours fails the top-heavy test. Normally, my understanding is that the correction is a 3% employer contribution to all employees eligible for salary deferrals. However, I've run into an interesting scenario: This plan is not a safe harbor plan, and they don't allow salary deferrals at all under the plan document, it's only profit sharing, with eligibility of 1 year and 21. It's pro-rata. Essentially, everyone who is eligible for for profit sharing (and therefore the plan as a whole technically) has gotten a 3% employer contribution. Do they need to make a corrective 3% contribution to the employees not eligible for profit sharing?

Thank you!

We have a participant who just took a full distribution for termination and she had an outstanding loan balance. She wanted us to withhold taxes for the outstanding loan balance as well as her distribution so she wouldn't have to pay them. What we did is put the distribution in at Schwab with the total gross balance as the entire vested balance plus the outstanding loan, then calculated federal and state taxes based on that number, then put the outstanding loan balance in "less loan balance" to offset the actual payment amount to be correct. The partipant's accountant is asking whether the loan balance, which is now a distribution and being taxed, is going to be taxed as a part of 2025, when this total distribution happened, or as 2024, when she took out the loan. Will it be a seperate 1099 for 2024 with the loan balance or will it all be part of the 2025 distribution?