BG5150

Do I have to file a 5500-SF for a plan that was effective 1/1/23 but not adopted until May 2024?

But the match rate changes mid year.

403(b) plan has a Discretionary Match, allocated per payroll, no true-up. Match formula is dollar for dollar up to 5% of pay. Participant makes $700,000 per annum. 2024 Comp limit is $345,000. Should they stop the match when it gets to $17,250? (5% of $345k) Or stop when their compensation hits $345k? Or continue the match and we will use $345,000 as comp in the ACP test only? And there is a wrinkle: They changed the match starting August 1 to be only up to 2% What would the annual max be then? Would it be 3.75%? Or $12,075? That’s (7/12)*.05 + (5/12)*.02 : 7 months of 5% and 5 months of 2% averaged. I know it’s a lot here. Just trying to point them in the right direction if/when to stop. Keep in mind these are payroll matches, not annual.

If we amend a plan to allow for Federal disaster relief distributions, is that semi-permanent? Can they remove that provision without a cutback of benefits? Like age 59 1/2 withdrawals?

For the “evicted from principal residence” category, would an uninhabitable house qualify? I have a participant whose septic system needs repairs. Without a septic system, the house will be considered uninhabitable and they will have to move out (albeit temporarily).

Is there specific guidance anywhere that says Employers should not stop payroll matches when the employee reaches the max compensation during the year? For example, plan matches dollar for dollar. I don't see why the Employer should stop (testing reasons notwithstanding). Or, maybe someone started deferring in March with a 50% of deferrals no more than 6% of comp (for a cap of $10,350 on $345,000 in comp). They hit $345k in September, but hasn't hit that match cap yet. We know they are supoosed to keep going until they hit a cap, but is there anywhere that says it outright?

When these self-certification plans get audited by the IRS in a few years, will they be looking for proof? Who gets in trouble if someone self-certifies a hardship that has nothing to do with one the safe harbor rules? (I need a new car. Not safe harbor reason. But, participant my reason it thusly: I need a new car to get to my job. Without my job, I can't pay my rent and I'll get kicked out.) Will there be a steep penalty tax on the participant if they mis-interpret the rules and they get caught? How does it affect the plan? How so, then?

Plan calls for SC for loans with balance over $5k. So, if the balance is $6,500 and they want a loan for $3,000 I still have to get SC, right?

Company has to give people "retro pay" going back to 2022. Do they need to take deferrals from those? Do they need to include that income for the 2022 and/or 2023 ER contributions? It's a 403(b) Plan, and the document excludes all post-severance compensation. But it this post severance pay? It should have been paid way back when. It's not like a trailing commission or a bonus that was genuinely paid post-severance. Your thoughts are apprciated.

Does that highlighted section above get the employer out of matching contributions, too? All the other correction methods, be they with a QNEC or if none is required, the employer is still on the hook for any match that would have been made had the proper deferrals been made.

In our version of the 403(b) Plan adoption agreement (Volume Submitter), there are these options for post-severance distributions. The one's with X's were the ones chosen. The second one seems to eliminate any 401(a)9 issues. (X) Lump Sum Installments only for RMD (X) Installments Ad Hoc (partial) Custom

MoJo, where in the Relius doc is that provision?

I'm no too keen on adding something like that to a pre-approved document. I'm surprised no one ever had this situation come up before.

403(b) Plan allows for installment payments to terminated participants. No other partial withdrawals are allowed. Participant started installments two years ago and wants to stop. What are his options? Must he now take the entire amount? He can't just stop right? Otherwise that would be a loophole around no partial withdrawals. Document is silent on stopping installments.

Get a POA. call and ask for a supervisor.

true. i guess I'm just used to throwing those in with the rest of the reports in our annual "compliance reports"

402(g), 415.

Consult an ERISA attorney.

Automatic Enrollment question: Plan is starting ACA at 3% for all new EEs plus anyone who is currently deferring less than 3% of pay. How do you treat those who have chosen a dollar amount instead of a percentage?

An initial corrective QNEC must be applied no more than 12 months after the year of deferrals. In this case (I'm guessing), it's the 12/31/23 plan year. Therefore the deferrals in consideration are from 2022. The QNEC must have had to have been applied no later than 12/31/2023. However, if you wait until 2025, you are in EPCRS correction and can therefore apply a QNEC again. (Keep in mind, though, correcting under EPCRS, you cannot test otherwise excludables separately; they must be included in the test and might increase the QNECs substantially.

I see no problem with it if the DRO otherwise satisfied all the conditions to make it a QDRO. And make sure there is no ambiguity to which plan each provisions refers.

As long as no HCE has a higher rate than any NHCE then the test should pass on a current/contribution/allocation basis.

Plan excludes Union employees. January 2022, non-union employee, Tim, takes $10,000 loan for 5 years. May 2024 Tim becomes union employee and is now in an excluded class in the plan. What happens to the loan?

But if it's after 4/15, it's not a distribution of an excess anymore, right? It's just part of a 'regular' distribution.

Participant defers $30,000 all Roth across two plans in 2023. Age 35. ($15k each plan, say) It's too late to take out the excess. So does that mean the earnings on the excess will stay in there and get earnings on top of that and come out tax free in 40-50 years?