AlbanyConsultant

Guess we got the official answer! I'm just not patient enough.

Are we all agreed that the rule is $145K of FICA wages to be a Highly Paid Individual (or High Earner or whatever your favorite acronym is) for 2026? I thought I heard something about it being increased for cost-of-living from 2024 to 2025 and that might make it $150K, but I don't see anything official on that. Thanks.

Talking to a potential plan, and there are two f/t employees and 10 who are 'half-time'. Assuming that these people really do work only half of a f/t schedule, do the rules really let us treat this as 2 + (10 x 50%) = 7 and therefore exempt from the mandatory automatic enrollment? I realize that it might be safer to just include it for many reasons, but if the client is really against it... it's OK, right? Thanks.

Thankfully, this plan is not going to cover the union employees. So while I understand the possible issue with putting that on a union employee when it's not in their contract, that isn't my problem (at least, not today). I came to the same eventual conclusion - if nothing says I can't count them, then I have to count them, even if they're not eligible for the plan. I suppose it is similar to having a class exception (that meets 410b) - they are still employees even if you're not offering the plan to them. Thanks!

I'm not seeing anything specifically on this, so maybe that's my answer, but... Company with 7 regular full-time employees and 5 full-time union employees. Are they considered "normally employing" enough people to trigger mandatory automatic enrollment, or do we get to not count the union employees (presuming their retirement benefits are properly subject to their collective bargaining agreement)? Thanks.

That is something I literally never even considered. I will raise it to the UK company, but given that they intend to terminate the plan and pay everyone out in the next six months, I don't think that they are going to take this step.

Thanks, Peter. It was a stock purchase, so the UK company has all responsibilities. I know I don't know anywhere near enough law to know what that entails for the UK co to operate in the US. The UK people have been making all the decisions (for the plan and otherwise) since they made the purchase. At least functionally, they are as much in the know as any other US-based client. I am quite sure that all of my clients fully review the 5500s that I prepare for them and scrutinize every response to ensure that they are knowledgeable enough to sign the 5500. Yep, that's what I'm going with. LOL

US company was purchased by a UK company and we're winding the plan down. The US people are all gone - at least anyone in any management capacity. Can the person who is handling the plan at the UK company sign as Plan Administrator (and/or Plan Sponsor), or does that have to be a US citizen? All I can find is that it has to be signed under threat of perjury, which makes me think that the signer must be subject to US law... Thanks.

I have a very similar situation (though less fowl-based)... but the HCE owners do intend to participate. They also, unurprisingly, don't want to cover the visa employees. I suppose they're out of cluck?

Thanks!

A CPA that I work with asked me this question. I don't do 457b plans, but here's what I think is the correct response - figured I'd get the experts here to check me on it. He picked up a personal tax client who is a participant in government 457b plan. The person is an attorney who also owns 50% of a law practice. He is maxing his 457b deferrals ($30,500 in 2025). The law practice has a 25% Keogh (I didn't realize anyone still had a plan called a "Keogh plan"). Is there any interplay between the contributions that has to be considered? From what I can see, no; in fact, he could get a max employer allocation under the 457b plan (if allowable by the plan document), and then get his 25% under the Keogh. Can I get a confirmation or a correction? Thanks.

I've got a MEP that allows for self-certified hardships. A hardship request will go from the participant to the recordkeeper to us (TPA) to the MEP sponsor and then back to the recordkeeper for processing. Fairly standard. Found out today that the MEP sponsor will reach out to the adopting employer to say something like "hey, Participant is looking to take a hardship, maybe you want to talk to them about it", and sometimes they do and they arrange for a bonus or company loan so that the participant doesn't have to reduce their plan balance. I don't think I like this. I don't like that it introduces a possible level of unfairness (does every participant get spoken to?), maybe it blurs the line of investing advice ("don't take a taxable distribution, do this instead"), and maybe even some kind of privacy issue (though I'd think a participant should expect that they are requesting a hardship is pertinent plan administration information). But I can't say for sure if this is actually black-and-white wrong, or if it just feels icky. Thoughts? Thanks.

I think LTPTE determination starts on the employee's date of hire or 1/1/21, whichever is later. Kind of like plan eligibility: if you work a YOS (or whatever) before the plan starts, then you are eligible for the plan on the first day of the plan (ignoring amnesty dates and such).

Unfortunately, we're getting closer to the 1/1/26 buzzsaw of required Roth catchups for the Highly Paid Individuals (or High Earners, whatever). I get that it's allowed to not make these participants complete a new deferral election form if they have elected pre-tax deferrals - the plan sponsor has the authority to cut them off at the base limit and then take any additional deductions as Roth. And for especially large plans, that might be the most practical method. But what about smaller plans? Does it "feel" better to allow the participant to sign off on something, or is just a note telling someone "hey, this is what's going to happen" sufficient? I'd really rather not make this a 'case by case' thing because it's already enough of a pain to deal with. Thanks.

OK - all the usual pitfalls with insurance. Got it. Thanks. Well, the plan came from a low-cost, "do it yourself" kind of platform, so I'm sure that everything was properly reviewed and tested. *eyeroll*