Santo Gold

A 403(b) plan for a non-profit has only a single participant with an account balance. The participant terminated long time ago. No one else currently uses the plan and the organization wants to terminate it. The terminated participant does not reply to any contact requests. The account is held on a platform at a large national insurance company. Their instructions were for the non-profit to send a letter of instruction saying the plan is being terminated. The account would stay at the insurance company as a 403b account but would no longer require an employer signature. But if it is still considered a 403b account....can we really say that the plan is terminated? Could we file a final 5500 with $0 assets at EOY if the account is still a 403b account? Thanks for any thoughts on this.

We have a plan sponsor who created a new 401k plan for the business effective 1/1/2023. Auto enrollment starts 1/1/2025, but they have only 6 participants, so they can be exempt from the automatic enrollment requirement. However, if/when they exceed 10 participants sometime after 1/1/205, would they then be required to offer auto enrollment? That would seem to be bulky in a plan document/SPD to have this entire auto enrollment section but include a blurb that its not effective until the company exceed 20 employee. Thank you

This is confusing and I do not have all of the facts, but hoping for some thoughts on whether this would fly Owner has a small business and has a 401k plan. Owner is also the exec director of a non profit. Exec director wants to start a 403b for the non-profit. She also wants to move her business 401k into the new 403(b) as she wants to have her business payroll run through the non-profit. Based on this alone, could we move the merge the 401k into the 403b and could the business employees participate in the new 403b plan? I need to confirm if the business is being dissolved or will the owner still have the business. And if the business is still around, the business really cannot be part of a 403b plan, correct? But about the idea of running the business payroll through the non profit? Is that a valid work-around to have the business employees participate in the 403b? Thank you for any comments.

Thank you for the replies. There is a non-profit organization that runs the company, not "owners". it is a deferral + company match. Participant count: 135 participants with account balances on 1/1/23. So no relief there.

Any thoughts on this one is appreciated. We have a large 403(b) Plan, over 100 lives. They have filed as a large plan previously, along with the required audit. A new ownership group took over; 2023 plan year is their first one involving the plan. After much foot dragging, I finally received their 2023 employee data, 6 weeks before 10/15. After stressing that they need to take action since the audit is needed and those take time (and money), I finally heard back today: "They do not believe the audit is needed". They want us to finish the 2023 form 5500 and they will file but without the audit. Reasoning and pointing out that an audit is needed whether they want to engage that or not has gone nowhere. I can document how they are wrong on this, but otherwise, would everyone just prepare the 5500, indicate the audit is not attached, and let them get "caught" by the IRS/DOL a few weeks from now? Should we as the TPA file the 5500 for them knowing it is not complete? Thanks for any comments.

Thanks everyone. The plan sponsor is a local church, not controlled by a different entity

We have a non-profit church that wants to start a 401k plan. They will have more than 10 employees. Are they required to have auto enrollment starting in 2025? There is an exception for "church" plans. This is a plan with a church as the plan sponsor. I do not think that these carry the same meaning and that this 401k plan will need to offer auto enrollment. Any comments are appreciated.

A 401k plan is going through the correction program to make amends for not giving quite a few individuals the opportunity to make 401k contributions. When calculating the associated match on the MDO, is it required that the match be 100% vested even if the plan uses a 6 year graded match vesting schedule? Thank you

We have a calendar year 401k plan that through 12/31/23 had a 1 YOS/1000 hours requirement to enter the plan, with immediate entry upon satisfaction. Effective 1/1/2024, the eligibility was changed to 1 YOS/500 hours with monthly entry. This is small plan and through 2023, several employees hired in 2021 and 2022 did not meet the 1 YOS/1000 hours in any year (or calculation period). But they did have over 500 hours in those years. Ignoring the LTPT aspect for now, would they be "regular" participants as of 1/1/2024 (since they previously met the new 1 YOS/500 hours requirement) or would they still have to meet the new requirement (1 YOS/500 hours) in 2024, and become eligible 1/1/2025? I think it would be 1/1/2024 entry since they met the new requirements on 1/1/2024. Thank you for any replies

So you're saying it may be iffy? 😀 Thanks for the replies

The trustee wants to invest a portion of the plan assets into the purchase a home for himself, keeping it as a plan investment. In relatively short time he will then sell the house and put whatever earnings there are back into the plan to be shared by all participants. I do not deal with real estate in plans enough but this doesn't sound right. Is this a PT? Assuming the plan permits real estate investments and he has it independently valued annually, can he really his own house and keep it as an asset in the plan? Thanks for any replies

I think your comment at the end of the first paragraph is what I was hung up on. I was thinking there would be a statement saying that unless indicated otherwise in the adoption agreement, all service is counted and none is disregarded. But that statement would not appear necessary if we are not using the rule of parity/1 year hold out. Thanks for replying.

An individual met the 1 YOS/1000 hours requirement in the past and was employed for 15 years. He did not contribute to the plan and has never had a balance. He leaves for 2 years (has 2 BIS) and then returns. The 401k plan does not use the rule of parity and does not use the one year hold out rule. He would be eligible to re-enter immediately, is that correct? Can we ever disregard YOS for eligibility in a situation like this? What if he left after 3 years, was not 100% vested (he did not have a balance regardless), has 3 BIS and then returned? I've checked the document and it is confusing. This has to be addressed in it but without having anything specific to point to that says "disregard the following service..." I do not think we can ever disregard any eligibility service. Any comments are appreciated.

This 401k plan uses for a PS allocation individual groups - one group per participant. The plan has 3 HCEs and 1 NHCE. The desired allocation is for the owner to hit his 415 max (he makes $330,000). But, he wants to give a lot to the others. It just so happens that the owners PS contribution rate is 9.03%. The other 2 HCEs and the NHCE is 28.83%. The plan passes the non-discriminatory classification test and the average benefits test, but only on a contribution basis, not on an equivalent benefit basis. 401(a)(4) rate group passes as well. Because of the plan's allocation method in the document, do we have to pass the average benefits test using the equivalent benefit basis, or can we rely on the contribution rate passing, even though this is a cross-tested plan? Thank you

We have an owner in a 401k plan, turns age 73 and has Roth, 401k, and profit sharing money in the plan. Is the RMD calculated based on the entire account balance or just the 401k and Profit Sharing? Thank you

Yes, the plan does switch to calendar year after initial eligibility period.

An over age 21 employee is hired 3/1/23 and works between 501-999 hours in the 12 months after her initial date of hire. She then works between 501-999 in calendar year 2024. Lets say she reached 501 hours on June 1, 2024. Am I correct then that her LTPT plan entry date is 1/1/25 and not 12/1/24 (6 months later) since not only is the LTPT eligibility period 12 months but if she goes over 1000 hours later in 2024, she would be eligible to enter as a "regular" participant on 1/1/25 and would not classify as a LTPT? Thank you

OK Thank you for those replies.

Is it required that a profit sharing contribution be deposited before the business tax return is completed? The same question with form 5500; is it required that the deposit be made before the form is filed? Thank you

We are working with a machine shop that has two unions plus office staff. Benefits are collectively bargained with the 2 unions. One union allows the employees to contribute to that unions 401k plan. The other union however does not have a union 401k plan. But regardless, since all benefits are collectively bargained, both unions can be CBA excluded for the 401k plan for the office workers. Even though the one union does not have access to a 401k plan. Do you agree?

And after asking more questions, there is no ownership overlap, so no ASG. Thank you for all replies

Thank you Belgarath.

I should have also added: Do I need to exclude this individual as a class of employee in the plan document or, since the document excludes Independent contractors already, no further exclusion is needed?

This is a new one for me. I have a small size financial employer: owner and spouse plus another employee. They also have what he is calling another individual as a "statutory" employee that I honestly have never come across before. A had to look this up that a statutory employee is an independent contractor with the distinction being the business pays half of SS and Medicare and the individual pays the other half. If this meets the definition of a statutory employee, then can we not only not provide 401k entry to the individual and do they NOT count against any testing? I.E., with 2 HCEs and 1 NHCE, am I at 100% for 410b or 50%? Thank you

Thank you Is that the case even if the ASG is not participating in the plan?