30Rock

I am revising my question. I have Plan A merging into Plan B 12/31/23. Plan A has 4 year graded vesting - less than 2 years 0%, 2 years - 30%, 3 years - 60%, 4 years - 100%. Plan A will merge into successor plan B which has 5 year graded vesting - less than 1 year 0%, 1 year - 20%, 2 years - 40%, 3 years - 60%, 4 years - 80%, 5 years - 100%. For contributions accrued as of 12/31/23, I have to give participants with 3 or more years of service the right to elect to remain on the old schedule correct? What about participants with less than 3 years - can the old schedule continue to apply to accrued benefits even though the new schedule is better at year 1 and year 2? I am looking at the IRS example where they recommend a graded 3 year schedule even for a 0% vested participant in the accrued benefit. Please let me know your thoughts! Change in Plan Vesting Schedules | Internal Revenue Service (irs.gov)

Thank you very much I like your response and cites!

Under the IRS hardship distribution "safe harbor reasons", one safe harbor reason is for "Burial or Funeral Expenses". Payments for burial or funeral expenses for the employee's deceased parent, spouse, children, or dependents. What is the definition of children - for examine is it limited to biological and legally adopted children. Or would a stepchild qualify. Assume the stepchild is not the primary beneficiary. Is there a distinction between your stepchild and your biological child for this purpose? I am not sure if they are a dependent but I can look into that because it would seem a dependent would qualify. I appreciate any input.

I just want to confirm what the 415 limit will be for a plan year than runs from 7/1/23-6/30/24? It seems to me that it is based on the limit for 2024 but I do not have that yet. Thank you!

I guess since the plan document has the involuntary cash-out provision, how do you operate in compliance with the document? You are saying it is too late to comply with the plan and cash-out these small amounts?

I have a plan that is freezing on 3/4/23 with 100% vesting of all account balances as of that date, and then terminating on 3/31/23. There are small accounts $5000 and under for terminated participants that have not been cashed out yet and the recordkeeper informs us that there is no time to do the normal cash-out process where a distribution package is mailed to the terminated participants (with normally a 30 day period to respond or the account will be automatically rolled over to the IRA) and therefore the non-vested amounts cannot be forfeited. My question is - can we forfeit the non-vested amounts prior to the 3/4 freeze date without a corresponding cash-out process? They will get the termination package after the 3/31 termination date. Issues/comments? Thank you!

Thank you!

Thanks for the response. One tax exempt will become the plan sponsor and the other a participating employer, so each will have obligations to fund based on their financial strength. I think from a plan document perspective, we are ok to merge since plan years do not have to match?

I am looking for thoughts on merging 2 457(b) top hat plans when the plans have a different plan year end - for example one plan has a plan year end of 12/31 and the other plan has a plan year end of 9/30. In the qualified plan world, you cannot merge 2 plans if they have different plan years. I feel this is not really an issue in the non-qualified 457 plan context where there is no Form 5500 filing or testing requirements. Does anyone have any comments? Thank you!

Thanks!

The transition period will end on 9/30 for both plans, but not sure that is a concern - any thoughts on the 3rd option?

What if I merge Plan A into Plan B on 9/30 which coincides with the end of its plan year? Are there any issues? Both are safe harbor with the same basic match formula. THanks!

What if I merge Plan A into Plan B on 9/30 which coincides with the end of its plan year? Are there any issues? Both are safe harbor with the same basic match formula. THanks!

My question involves the merger during the 410(b)(6) transition period of 2 401k safe harbor plans with the same safe harbor match but Plan A has a plan year ending 9/30 and Plan B is a 12/31 calendar year end plan. The goal is to consolidate into Plan B by 1/1/2023 since the coverage transition period ends 12/31/22. What is the best way to accomplish this? Options I see are 1. freeze plan A 9/30 and adopt Plan B on 10/1 (transition period ends but does it matter?) so participants will be in Plan B with mirror safe harbor match, and then 12/31/22 merger Plan B into Plan A, or 2. change the plan year of Plan B to a short plan year from 10/1-12/31 and maintain safe harbor status, and then since both Plan A and Plan B will be calendar year plans they can merge on 12/31/2022. This option creates 2 5500's as well, a plan amendment and also the need for new safe harbor notices for the 10/1 short plan year, so it appears more burdensome. I do not think create a short plan year violates the transition period rule? I appreciate any comments, thoughts, help since I have not really had this issue post-transaction. Thank you!

I think the window is now 3 years?

Or did the plan rules change to anniversary year at some point and Fidelity was correct, she was not fully vested. Just poor communication? In which case I can see why they want to pay her outside the plan since it may not be a plan error.

I believe this will require BRF testing as well - benefits rights and features if the match excludes compensation. Thanks!

A number of new hires do not have an assigned social security number due to social security offices in the area being closed. What is the normal method to set up a retirement account in a qualified 401k plan for these employees? I assume they are resident aliens. What is the recommended procedure for a recordkeeper and payroll department? Thanks!

Was the ADP/ACP deadline this year Friday March 13 or Monday March 16? Does anyone recall the statutory cite for this? Thanks!

Participant is living in her car due to being evicted last week. The plan uses the IRS safe harbor hardship standards which list a hardship may be taken to "prevent eviction or foreclosure". Is there a way for the participant to qualify for a hardship on account of an eviction that has already occurred? She received a Court order of eviction for a date in the past - last month - but is just now applying for the hardship. Of course now she does not have rent, but needs money to live! Is there any way she can get a hardship at this point? Thanks!

Is another alternative to set up an after tax basis source?

What is the pricing on EBG?

Yes the plan I am assuming has less than 1 year eligibility so there will be participants with safe harbor match fully vested in 2019 and then start accruing the QACA match with the 2 year vesting in 2020. Is this ok?

We have a 401(k)(12) ???? harbor 401k plan with the basic match that we want to restate to a QACA safe harbor match 401(k) plan under 401(k)(13). Can the QACA match have a 2 year vesting schedule not just for new hires but also for existing participants with a traditional safe harbor match account that is 100% vested? Our document sources these accounts separately- there is a separate definition of QACA match in the document. Any thoughts would be appreciated!

Sponsor deducted final deferrals from the wrong payroll file, and thus many participants who had increased their deferral elections were missed. The IRS EPCRS guidance states if corrected within 3 months no QNEC is due for the deferrals, a QNEC for the missed match if any must be made and there is a notice. However this is not their concern, they want to know how to correct for the missed deferral deduction opportunity? Is there a W2 or accounting method they could use to fix this like offset some of their pay from the 1st payroll in 2019 so they can make 2018 deferrals? I have not had this issue come up before so any thoughts would be appreciated.