TPApril

I have a different understanding. A 5500-EZ eligible filer in a controlled group does not get an out if assets are under $250K and must still file the EZ For clarification, it is combined assets you are looking at. It is quite possible the individual filer must still file EZ even though that one plan has assets under $250K.

I'm curious, for plans that set up auto enrollment, is this generally set up with immediate entry, or a longer period, say 3 months? Do participants feel like they are getting a pay decrease when this happens?

Professional office with a 401k safe harbor cross tested plan is being sold to larger company, with sale date set for 9/1. All employees will become part of purchasing company with immediate participation in new owner's 401k plan. Both plans are calendar plans. The plan itself is not part of the sale and is intended to be terminated, rather than merged. Both plans also have 1000 hours and last day worked requirements. So there will be no employer ps contribution in seller's plan since no 12/31 eligibility, though they will be making their 3% safe harbor. The new company (I have not seen their plan doc) has informed their intent to provide a ps contribution based on 9/1-12/31 compensation, honoring hours worked all year, but not pay. How is this usually resolved that there seems to be no PS contribution for 1/1-8/31? I note that this info has been provided to my company, we have not been involved in any discussions until now.

I understand the missed deferral is treated as a QNEC. I'm unclear if that is just from the ER's perspective and it needs to be deposited into a source named QNEC, or can be put into the 401k source, since it will be 100% vested there etc. Also, the missed match, I think it can just be deposited into the match account, not a QNEC account. (Lost earnings included in above).

When a plan designates someone else such as the custodian of the assets as a directed Trustee, would that entity be the one signing plan documents as Trustee, even though the Plan Sponsor/Administrator theoretically still also has the additional role of Plan Trustee? Or am I just too confused here?

Participant hasn't terminated and remains on the books but only does minimal consulting some years. He hasn't earned over $1000 for over 5 years, so clearly hasn't worked at least 1000 hours in that long. But he does defer 401(k), even when he only works one day in the year. Would this participant continue to be considered active and therefor share in top heavy minimum for the years he does receive some income? (Plan has just become top heavy).

That's it - so no issue then for plan that offers other employer contributions than safe harbor.

My memory is failing me here. I recall that 401(k) and safe harbor plan eligibility are best kept with the same eligibility requirements. I can't remember the drawback to having them different.

Sending it all to PS to a nonvested terminated ee/participant is then essentially a contribution to the forfeiture account, though I know it must go through ee account.

thanks all for your input. looks like there's a missed deferral opportunity going on too. ee was given safe harbor, but never given opportunity to defer. 401k and safe harbor eligibility are the same.

They are fine to keep it 20, it's a small family business with limited employees going in and out. I'm just uncomfortable with the retroactive amendment now that the plan year has ended. We get to start plans now retroactively now, but I'm not clear to what extent we can amend existing plans retroactively.

EE who was under eligible age (21) was given a PS allocation last year (by small plan owner who thought they understood the plan). This has just been discovered upon annual TPA review. They have already filed their taxes and do not want to 'take money away' from that ee. Must it be an 11g amendment, or possible to change eligibility age from 21 to 20 retroactively for prior plan year?

Plan has standard eligibility for ER contributions of 1000 hrs/1 yr of service. If 1000 hrs not reached in 1st 12 months, determination period switches to calendar year. Question --> Let's say an employee works a couple months, makes (immediate) eligibility for 401(k), but not for ER contributions. Couple years later (< than 5), ee is rehired. I'm wondering if that first period of employment means determination period must switch to calendar, or if plan calculates from date of rehire. Example EE works 5/1/20 - 7/15/20 EE rehired 8/1/22 and works over 1000 hours in 2022 Eligibility for ER either 1/1/23 or 8/1/23

Okay - I see I didn't write my comment very clearly. Determination period in the C3 plan doc is 'each pay period'. Actual calculation and deposits are by pay period. So based on that, no true up?

Paul1, RBG - thank you for your input. Auto enrollment: N/A Match is based on payroll period; plan doc implies that a true-up is optional. If we were to offer this option to them, I would imagine we would continue whatever they choose for the first year - to true up or not to true up - continually. My personal preference is to recommend a true-up as it prevents a penalty of sorts to those who varied their deferral rates, or even reached their maximum during the year and ultimately did not receive a true 3% or max match on their total 401(k) for the year.

Brand new 401(k) plan, effective 1/1 of the last year, adopted the year before so 401(k) able to start on 1/1. It's not a safe harbor plan. Took them awhile to get going with the admin of the 401(k) so they started 2/1 and only matched based on comp from 2/1. Match was done on a payroll basis. The definition of comp is full year, so I believe the participants who contributed greater than the minimum required for the 3% match have been undermatched. Advisor disagrees. Curious of thoughts.

I'm curious if someone can confirm. Generally, you will use the applicable ADP rate (HCE or NHCE) to calculate the rate of the Missed Deferral which is then used to calculate the MDO and Missed Match. If the correction is being made during the current year, do you rely on the prior year's ADP? Alternatively, if the plan has Auto Enrollment, I'm thinking you ignore the ADP and use the rate of auto enrollment that the participant would have been assigned.

cathyw - thanks much Getting to the nitty gritty of the 45-day notice requirement, curious for thoughts on what would be treated as the start date of the 45-day period (date withholding actually begins): First day of effective payroll period Last day of effective payroll period since 401(k) is being first deferred as of this date Actual pay date, since this is the date of the transaction (or formal deferral by employee) Working with actual dates for example: Payroll period is 3/1-3/15 Paycheck date is 3/20

making sure I grasp the ability to give 0% missed deferral opportunity for a plan with auto enrollment. Employee rehired in 2022, and therefore eligible per plan doc to reenter plan on rehire date. EE deferrals not started until after completing new hire requirement of 3 months worked, in early 2023. I believe then that because deferrals were started w/in 9.5 months of failure, due to the auto-enrollment feature, no MDO required (ie 0% MDO).

Participant taking RMD's died. Spouse was taking Participant's RMD's, by subtracting 1 each year from the life expectancy in year of death of Participant. As Spouse there was no 10 year distribution requirement. Spouse has now died, so grown children will now be receiving the RMD's. I believe the factor continues to be subtracted by 1 each year, and then fully paid out within 10 years of Spouse's death. Question is - the factor is pretty small due to older age at death, so, after taking the current year RMD, can the remaining balance be fully rolled over to an IRA to avoid such large RMD's?

I wonder how that's being interpreted. I'm a long time VT in 2 different pension plans and neither one of them sends benefit statements. Incidentally, why the need to send them to VT's? Unlike A's, their benefit doesn't change.

Thanks, Lou! For that once every 3 year rule for DB plans, does that apply to term vesteds as well, or just actives?

For term vested pension plan participants who receive a copy of their benefit statement at or about termination, is there some kind of minimum that the Plan Sponsor is supposed to provide them with benefit statements when asked, like say once per year or 3 years? Is it fair for their prior employer to charge them for multiple requests?

Lou: plan is mainly for owner tax deduction, the 3 are NHCE, the plan will be safe harbor NE and top heavy. they were recommended for immediate entry for all, then setting up a future 1-year service requirement. The startup credit issue though likely decides the issue.

Startup Plan has owner and spouse, both employed over 1 year. Their 3 employees have less than one year of service. I'm curious which of these approaches is preferred: Immediate eligibility for all 3 Immediate eligibility only if already worked one year of service, so that the 3 employees will not be in the plan for the first year.