TPApril

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.

Making sure to get this right. New plan, effective date 1/1/22, adoption date 12/1/22; 2 HCE's & 2 NHCE's. Startup costs - Because adopted prior to 12/29/22, they only get 50% of startup cost credit, or $500 in this case/yr, for taxable years 2022-2024. Say startup cost in 2022 was $2,000, then $500 credit in first two years only to equal $1,000, or 50%. Contribution credits - plan is still eligible for credits on NHCE PS contributions (< 50 ee's); up to $1,000 at 100% for 2023 (2nd year of plan); 75% for 2024 and so on.

Gotcha and much thanks. As I recall, key catchup is excluded.

Non safe-harbor 401(k) plan (integrated discretionary PS plan design) has become top heavy. The key employees defer > 3% 401k. (great NHCE participation so they never fail and thus no safe harbor provision) If I recall correctly, even if they do not make a nonelective PS contribution, they still need to contribute the 3% top heavy for non-key (as indicated in adoption agreement) just because of the key ee 401k contribs?

Can an ongoing FSA prorate new employees to the maximum allowable FSA for the year? Ie new employee is eligible 3/1, so their limit is 10/12*Full limit? Am currently waiting for copy of the SPD/Employee Benefit Guide.

Er terminates plan 12/31/21. All assets distributed by 3/31/22 Company wants to start new plan as of 4/1/23 for 401(k). Question 1: is there an issue with adopting it prior to 4/1/23 (ie within 12 months of distribution of assets in prior plan, even though plan won't be effective until after 12 months) Alternatively Company wants to adopt the plan after 3/31/23, but make PS effective 1/1/23 Question 2: Being adopted after 12 months, then calculating back to 1/1 - does that violate the successor plan rule?

great reminder justanother... this is a textbook case for why not only are TPA's invaluable, but even a Financial Advisor who has at least a scant knowledge of retirement plans. In this case they just went online and started a plan at a super cheap provider.

Gilmore - I'm curious what you ended up doing. I'm looking at a plan with 0% NHCE ADP and trying to determine the MDO as well. HCE ADP is also 0% btw so no test failure.

So.....the company in question is not a client of mine...and they have informed me that they plan to just terminate the plan through current provider and wait two years. They don't want to pay the cost of missed deferrals and delinquent 5500's (for starters).

I had a feeling. looks like missed deferral opportunities, though NHCE ADP was zero since no 401(k) contributions have been made since additional employees were hired.... So..we can start new plans retroactively, seems we can now amend a PS contribution retroactively, I'm wondering if this plan can be restated retroactively to 1/1/22? It was interestingly restated in Cycle 3 on time. Either way, they intend to add in 21/1 eligibility for future employees. Here's an uninformed (on my part) question - what makes a 'Solo' 401(k) plan a solo plan? Is that more of a trust side term? I see that the terms of the adoption agreement are not necessarily geared towards a company with employees, but it does not seem to indicate the plan is limited to owner and spouse.