Stash026

Just wanted to followup on this. It would 100% vest the people who were impacted by the partial termination. What about those who terminated in the year prior who haven't taken a distribution?

Good morning! I have a client that hires employees on a 3-month probationary period (though these employees are on payroll). The current document states that an employee becomes eligible on the 1/1 or 7/1 after 1-year of service (1,000 hours). The employer wants to have that 1 year start after the probationary period. For example if someone was hired on 06/20, their probationary period runs from 06/20/21-09/20/21. Can the 1-year wait then start from 09/20, meaning they don't become eligible until 01/01/23 (instead of 07/01/22 if the 1-year started from the original DOH, not the date the probationary period ends). Is that allowed? Thanks in advance!

What if it's someone who terminated 2 years prior to the partial termination? Vesting would still apply to them, correct? Also, this applied to Defined Contribution plans the same way right? Just wanted to make sure. Thanks!!

If someone terminated prior to the sale, would their vesting also be accelerated to 100% due to the partial termination? Or only those who were let go due to the sale?

If she's keeping one person on payroll, would that impact the vesting?

Great, thank you!!!

I have a new client that hadn't funded a required contribution for multiple years. They funded those contributions, with added interest, in '21. The question is, when are these contributions deductible on their taxes (they hadn't been taking the deduction, since the contribution had never been made). 1) Is it deductible in the year it was originally due? 2) Can they take the deduction in 2020 (it was funded in early '21, before the due date of ER contributions)? 3) Is it deductible in 2021, since that's the year it was made? I'm not an accountant, so I'm not sure. Thanks in advance!

I have a client where the owner sold the company, with all of the employees being hired by the new company. The Plan itself is staying open for a few years, as the owner working as a consultant for who she sold to and getting paid through the old company. Basically, all of the employees are terminated except the owner and her son. The question is, in this type of situation what happens to the participant's vesting? I know on a plan termination everyone is automatically 100% vested, but this isn't a plan termination. But in this case, does that still apply? Thanks in advance!

I did. I'm waiting for a response from them still though

Thanks! The document allows for "Equivalent Accrual Rates". Would that basically be New Comp?

I haven't worked on a 403(b) in awhile, but my colleague is out-of-the-office and I'm getting questions from a potential client. How can non-elective employer contributions be allocated to participants? Can cross-testing be used, like in a standard 401(k) Plan? What other formulas are allowed? Thanks in advance!

I work with a MEWA and the association is questioning the 20 employee minimum for the COBRA subsidy. Can someone point me in the direction of the reg that explains how the subsidy works with a MEWA? If an employer that participates in the MEWA has fewer than 20 employees, do they still fall under the COBRA subsidy since they are part of the MEWA? Thanks!

I'm taking over a Plan and working on the Cycle 3 Restatement. What I find interesting is that there are two different sets of eligibility requirements for 401(k) contributions: Senior Managers - 21 and 6 months of service All Other Employees - 21 and 1 year of service To me this seems discriminatory since it's benefitting the managers (upper level) and allowing them to participate sooner, but I wanted to see what everyone else thought. Thanks!

Thanks! The concern was that they had filed their tax return prior to making the contribution. That clearly isn't an issue, so thanks!

Does anyone know where in the regs (or if it does) state that contributions need to be funded prior to the filing of the tax return? (i.e. this year someone filed their tax return in April, but didn't pay their employer contribution until early May since the filing deadline was extended to 5/17). The accountant is asking me if this scenario is acceptable.

I'm pretty sure I'm right on this, but someone was arguing with me so I wanted to confirm: Plan amended eligibility to be 21 & 1 with Quarterly Entry Dates as of 01/01/21 Who does that impact? If someone was hired in 2020, but had not yet gained eligibility, is their eligibility decided by the old rule (21 & 1 with Immediate Entry) or the new rule (where they'd have to wait to the start of the quarter)? Thanks!

It was the NY regional office that sent the letter. I believe it was dated early April, but the scan my client sent cut it off. The plan obviously isn't to ignore the letter, just wanted to get a feel for what's involved in the response.

Got it, so it's not mandatory but will we keep getting letters until we respond? Also, does the fact that this is a multi-employer, collectively bargained plan? We would obviously have to bill the contributing employer for the interest on the deferrals/loan repayments (that's what was deemed "late" by the accountant)

I have a client that got a notice from the DOL regarding potential prohibitive transactions due to there being delinquent contributions during the Plan Year. I haven't experienced this before, so can someone tell me what the fix/response is and what is involved? Thanks in advance, I really appreciate it!

Thanks! I was thinking of just using the VFCP Calculator at: https://www.askebsa.dol.gov/VFCPCalculator/WebCalculator.aspx?_ga=2.83674198.1102150085.1618583545-685162085.1585297162 Would that be acceptable?

What interest rate would everyone recommend using? I don't have all of the earnings for prior years, since we just took over the client. Thanks!

So if someone is not maxing out their Cash Balance, can the Profit Sharing be greater than 6%? What is the calculation to do greater than the 6%? Also, is a SEP also limited to the 6% or is that separate all together?

Can someone please point me to the regulation that limits to the 6% deductibility on the Cash Balance? Thanks! I just have someone questioning me, so I wanted to show them the actual regulation

Good morning! I have a new client that is currently maxing out a SEP, but also has the opportunity to start a Profit Sharing or Cash Balance Plan. I don't believe the SEP has any bearing on the maximum contribution into the other plans, as the companies are unrelated, but I wanted to make sure someone could max out both a SEP and a Profit Sharing (or receive a contribution in a Cash Balance). Thanks in advance!

The client had someone else tell them that since these are Profit Sharing contributions, and not 401(k), that allocating lost interest is not necessary. Is there anything I can cite to back up to them that it's required?