Santo Gold

Church or government agencies are exempt from being required to have auto-enroll starting in 2025. Maybe I'm just reading too much into this, but is the exemption applicable to a plain old non-denominational church that wants a 401k plan? They do outreach programs and such, but it all centers on their church. They would prefer not to have auto-enroll and I think this would fit the exception to the rule. Any comments are appreciated

Thank you for the replies

I'm not sure if this is the correct message board but here goes: Company A buys Company B and each have their own 401k plan. All Company B employees now participate in Company A;s 401k plan. No new entrants or contributions to Company B's plan. They will terminate company B's 401k plan, but have not done so yet. Can Company B employees, now working for Company A, take distributions from B's 401k Plan? Have they had a distributable event? Thank you

If an individual was in 2 different retirement plans, both of which permitted after-tax employee contribution, could the individual contribute say $50,000 after-tax into each (assuming compensation is high enough, passes testing, etc)?

Medical professional #1 runs a stand alone business. No employees, only the owner. She has a solo 401k for herself. Medical professional #2 also runs a stand alone business. No employees, only the owner. She also has a solo 401k for herself. #1 and #2 form a separate company to handle administrative work for both companies. Assume 50/50 ownership. They plan to hire 1 individual to handle the admin duties that pertain to the other 2 companies. With 50/50 ownership I don't see a controlled group here. But this would appear to be an Affiliated Service Groups ("ASG"). If an ASG, what are the 401k plan implications: (1) Assuming full time employment, will the employee of the new company eventually be eligible to participate in one or both of the solo 401k plans? (2) Can #1 and #2 still maintain separate plans, different benefit structures, etc if they start the new company? is there any required aggregation? Thank you

Great replies. Thank you very much

Wife and husband own 100% each of 2 different businesses, unrelated to each other. The one has about 10 employees and has a 401k plan. The other is spouse only and started a solo 401k for herself, well under $250K. Neither performs any work for the other's business. I do not see in the instructions that this would cause the solo plan to file a 5500EZ. Would you agree? Thank you

Currently prime rate is 8.50%. Moodys Bond rate is 6.17%. We have a new plan that wants to allow for loans and was questioning whether they could base the plan loan interest rate off of Moodys. Any thoughts whether that would be acceptable, given the disparity between Moodys and Prime? Thanks

The plan did not have a TPA and handled everything in house. And the person who was responsible for everything, most notably the bi-weekly employee/match contribution deposits, was the individual who passed away. Ongoing deposits after her death continued for everyone just fine. But unfortunately, that included contributions on her behalf, which were just coming from the employer account and not being reconciled with the bi-weekly payroll withholding and match. By the time someone was permanently assigned to this role, it took some time for them to realize the mistake. The mistake is somewhat easy to understand. And now I was told that the money never left the deceased participant's account. It is still held in the plan. Which should make things easier to resolve. I think the easiest solution is to have the excess money moved to the forfeiture account and use to offset future employer contributions. Do you see any problem with that? The plan sponsor would also like to consider whether this could be returned to the plan sponsor as a Mistake of Fact ("MOF") contribution. That seems...a little more involved. I have not been involved with any MOF $$$ returning to the contribution. Would anyone recommend pursuing this course of action? The threshold to meet a MOF return to the employer is a pretty high bar and from what I've researched, even though was a literal mistake having the $$$ deposited, I do not think it meets the MOF requirements. Thank you

I think I should have added to the initial post, for at least the SHMatch, would the plan sponsor be able to tap into the forfeiture account (there are non-vested assets from other money sources) to use as an offset to the ~$8000 extra match that was deposited/paid out to the deceased participant? Since the excess 401k contributions were also coming from plan sponsor account, could the forfeiture $$$ be used to also offset future SHM contributions?

Participant (NHCE) passed away in mid 2022 but the company payroll dept continued to send her regular 401k amount for deposit into the mutual fund account. It wasn't withheld from any pay; it just kept coming out of the company bank account, along with the match. This went on for over a year, spread across 2 plan years. Roughly $10,000 in 401k and $8,000 in SHMatch was deposited that should not have been. The deceased participant's account (100% vested) was paid out to the beneficiary, including these excess 401k and match amounts. Is the only course of action to go back to the beneficiary to reclaim these amounts? The plan sponsor is reluctant to push too hard from the beneficiary but there is no other way, correct? If the beneficiary does not pay it back and the plan sponsor does not pursue it further, is there an amount the plan sponsor owes to the plan to make up for these excess amounts? Thank you

Wow, thank you all for that information. It is a D profit sharing plan, not a DB.

I realize that the answer to this question is "in the plan document", but I've read it and still am unsure how to proceed. Any basic guidance on this is appreciated. A 1 life plan has life insurance in it as well as other investments. The owner is getting close to retiring. He would like to terminate the plan but maintain the policy outside of the plan. In this case, is it common for him to pay the cash surrender value of the policy into the plan and then have the policy moved out of the plan and retitled as a personal life insurance policy, which would avoid any taxation on the policy at the time of the transfer? Is there any other way for him to continue the policy outside the plan, not pay the CSV into the plan and not be taxed on the CSV at the time of transfer? If he just took ownership of the policy and did not pay the CSV to the plan, he would be taxed on the CSV of the policy at the time of transfer, is that correct? FWIW, its the insurance guy who sold him the policy that is asking this questions :)!!! Thank you

Any advice is appreciated. This may be loan administration 101 but I am not clear on what happens when a participant stops making loan repayments, mostly centered on what happens after a loan is deemed to have been distributed. Example: A participant has $100,000 account balance and takes a loan for $20,000. She repays $5,000 but then stops payments. The loan goes into default and triggers a deemed distribution. The participant is still employed. The outstanding balance (lets say that is $16,000) is taxable in the year of the deemed distribution. But there is accrued interest of $2,000 remaining on the loan at the time of default. I keep reading that the deemed distribution amount plus accrued interest must still be accounted for after the deemed distribution. But when a distributable event does occur, the accrued interest is used to offset the participant's non-loan account balance. Is that correct? So if a few years after the deemed distribution, the participant terminates and now has $200,000 non-loan account balance. She also has an additional $2,000 in accrued interest from the loan. Is it the case that the participant is paid $198,000? Thank you for any advice.

We submitted a VCP correction back in February, 2023 for a 401k plan that had about 60 missed deferral opportunities. We followed the recommended calculations to determine the MDO amount, the corresponding match and then the lost earnings. We deposited these amounts into individual participant accounts where the plan account balances are held. Its been 4 months and we have not heard back from the IRS. These affected participants are getting antsy, some of whom are terminated and want to take their money out now. We'd prefer to wait until the IRS says everything looks good. Checking whether everyone would wait until that final OK or would anyone move ahead with allowing distributions from these deposits (for terminees) since we feel we did an accurate job with the calculations. Thanks

Any thoughts are appreciated: A participant in a 401k is a US citizen. Her spouse is not a US citizen and does not live in the US. She wants to name her 2 children as beneficiaries for her 401k account. Would spousal consent be required to do so in this case? Thank you

At least the problem was discovered very early on....... This is a new start up solo 401k plan eff 1/1/23, only 2 months ago. The owner is a sole prop. While his compensation to be used for the plan was supposed to come from his sole prop business, a miscommunication somewhere resulted in him believing he could use income from other sources that would not be eligible for use in the plan. He already made a few deposits in 2023 (not sure whether they were to be 401k, roth or after-tax). But at this point, all parties involved just want to "walk away from the plan". IE, take the money back out of the plan account and pretend it never happened. Given that he is the only participant and there have been no government filings, is this acceptable or is there a better way to handle this? What about earnings in the account? If there is no tax deduction being used for any of the deposits, I would assume any earnings that were associated with the deposits would just be non-retirement earnings, just like it came from savings account or something similar. Any comments are appreciated.

Thank you. The replies are very helpful.

Is it permissible for match contributions to be structured in a way so that different groups receive different match? This is a non-profit and there will not be any HCEs. The organization would like to give a match 100% match up to 6% of pay for Group A. For Group B, in year 1 they get 0%; year 2 50% match, and year 3 100% match. Is that acceptable? Thank you

Appreciate the replies.

In a plan merger, are the balances of prior terminees also transferred into the new 401k plan? These terminees can take their money out of the original plan at any time. but if they do not and their balance is over $5,000, they have to be rolled into the new plan, is that correct? Thank you

The plan does not have QJSA or QPSA. Lump sum only distribution option. The plan does require spousal consent to name a beneficiary other than the spouse. Benefits had not commenced at time of death. I looked at ERISA 205. Am I correct then that the reasoning behind the new spouse being beneficiary is that he never waived his right to the benefit, even though he was never named as beneficiary (and even though the ex spouse still has a beneficiary form on file)?

A participant in an ERISA 403b plan passes away. She named her spouse as beneficiary and son as contingent beneficiary. Years before her passing, she divorced then remarried, but never changed the beneficiary form. Is the beneficiary form with the ex-spouse still applicable under ERISA? This is taking place in New York, which has a divorce revocation statute, which would seem to no longer permit the ex-spouse to be a beneficiary. But would NY state law take precedent over ERISA if ERISA would call for the ex-spouse to be the beneficiary, since the form was never changed? And if the ex-spouse is not the beneficiary, would the contigent beneficiary (the son) now be the beneficiary would the current spouse be the beneficiary? I am not sure if a QDRO was ever produced after the divorce. We are having an attorney look into this but I was hoping for any comments on this as we go along. Thank you

Thank you very much. Appreciate the replies

Its January, 2023 and we realized that there was a minor mistake on the 2018 5500-S/F filing. The client would like to file an amended 5500-S/F. EFAST will only allow back to 2020. Can we still file an amended return for 2018 on a 2020 form, or is there no way to file an amended return at this late date? Thank you