Bri

The first year or two my wife's company had her plan, (insert payroll company name here) prepared the 5500 with a 2/1 effective date since that was their recordkeeping date, although the actual signed document said 1/1. Once I became my wife's "administrative functionary" (sorry, I love that description from a different post), I changed that to 1/1 in year two or three, and the IRS/DOL never seemed to blink an eye / notice.

It's within 5 years from the valuation date for the first segment, so 5.000-19.999 typically get segment 2.

I'm pretty sure any reference to 20.5/12 comes from projecting a 1/1 valuation date through the 9/15 MRC due date the next year. But has nothing to do with the FT formula itself. You're not crazy.

Just kind of thinking out loud here - Ever have a client ask if they can add a DB plan when they already have a SEP, and then you have to tell them the 5305 Model SEP document precludes a second plan? A lot of times these sole proprietors have NO idea what sort of SEP documentation they set up years ago - so I was wondering it might be "obvious" that a custodian like Fidelity, Schwab, Merrill Lynch, etc. would or would not clearly be using a proprietary SEP document. So I wonder - is there a reasonably accurate list anyone maintains that would say "THESE guys definitely use their own SEP documents, but THIS custodian issues its customers the 5305, so be careful?" --bri

I believe it matters whether or not the plan is holding true shares of the mutual fund, versus being invested in an insurance company's pooled separate account. The pooled separate account might be nearly wholly invested in a specific mutual fund, essentially meant to mirror the fund itself, but would not be the fund itself.

If you're testing together, then the fact that they get safe harbor means they're going to need to get gateway. So if your plan document won't automatically provide gateway for anyone who fails under its normal allocation provisions, you may need an -11g amendment to increase their benefits. Fun to tell the sponsor, surprise, your one-year wait provision is basically moot.

All of those employees sound like statutory exclusions for 2022, and none of them have met the PS eligibility. Sounds like they'll just get their safe harbor, and like it. Unless you're not testing separately. Then you'd have to hope the document allows for an automatic increase/override to the allocation to cover gateway as needed. Or, if your group of statutory exclusions includes HCEs you have to test against.

The problem there is that only some of the weekly interest between 12/28 and 1/4 has actually accrued by 12/31. Does anyone get that crazy figuring it out or do we just say "close enough" and just use the remaining principal balance as of either payment line of the schedule?

If it's small enough to cover a final admin invoice, that's not atypical since the plan may reimburse the sponsor's direct payment of those expenses.

On both a 5500 and an SF, the opening wording to question 4 or 10 (and their a through i or n subsections) says, "During the plan year:" So I don't think you're properly answering the question if you obtain it after the year-end but still suggest it was covered (unless retroactive). And as for the "part of the year" scenario - I think it's reasonable to say that "the plan year" does not specify the entire plan year. Meaning, if you got your coverage on December 31, then the answer of "yes" is a true answer because during the year it was indeed covered. Heck, I'd suggest you get to leave "yes" as your answer if your policy expired on December 30. (Recall on the SF, you're asked if the plan had loans, even if the they're all paid down to zero by 12/31, so you still admit there were loans, even if it wasn't all year long.) As for the dollar amount, I'd use the largest amount of policy in effect during the year. Or if the plan just uses an inflation guard, I'd use the 10% BOY amount.

I'd think there had better be a compelling alternative reason not to follow the plan's terms. I suppose "may" buys you some leeway, but as to how much.....and more importantly, why? They obviously signed a document presuming folks would come with rollovers ahead of their plan participation, so why don't they like the idea now?

I think what that's less-than-simply saying is, if the plan doesn't make its "computed more frequently than annually" match by the end of the next quarter (as we normally see required with pay period match computations), then by failing on that timing provision, the plan is essentially falling back into an annual computation and the true-up would be required. (Which makes sense because the plan would have bailed on its obligation as a pay-period calculator....and an annual calculation is what then leads to needing true-ups in the first place.)

A plan doesn't have to fully vest account balances upon Early retirement age (as opposed to NRA). Will there be a noticeable number of participants who might not be getting vesting credit each year? If you require 1000 hours a year for vesting credit, but everyone works that much anyway, then sure - anyone getting to the 5th anniversary of plan participation will have earned 3+ years of vesting credit. But if you have a good number of part-timers, you might have folks who don't typically vest in their match contributions - that would make the ERA definition more important, in terms of requiring years of participation to it. Typically in a DC plan I see the only "benefits" of naming an early retirement age are (a) possible waiver to allocation requirements for the year of termination, (b) possibly having in-service withdrawal ability tied to an ERA, or (c) getting less-than-65ers a faster track to 100% vesting. If terminees already can get distributions upon termination of employment, it's not as though the presence of an ERA speeds up their ability to receive benefits.

Technically speaking, can something be an "eligible rollover distribution" if it's not an eligible distribution in the first place? If the guy kept the cash, then that probably eliminates the potential to hold "your rollover is ineligible" over him, I suppose, in an effort to get the funds back.

So he turned 72 last year which means his RBD was 4/1/23, right? So his minimum at that point was still zero due to nonvestedness. Now we have an increase in the vested accrued benefit, which typically you have within 12 months to adjust to the payment stream, I think.

When's the RBD? Did he JUST turn 73 or did he JUST become vested in the accrued benefit? (Making sure the RBD hasn't already passed but with a $0 payment due earlier due to it being a year he was still nonvested)

Plan's been frozen so no new benefits after June 30. Plan's staff contribution credits tend to suck so bad that they always have to do an -11g amendment to pass 401(a)(26). (Annual $500 bucks each, allocated formally as $125 for each quarter they're active during, and then the -11g stuffs more into Q4 as necessary for folks.) Well now they're only going to be getting $250 for the most part. But is there any "accepted practice" for whether it's appropriate to measure the 0.5% benefit level relative only to the compensation through the freeze date? Otherwise everyone's going to be at HALF their typical accrual rate, if it's expected to be measured on full year's pay. --bri

Agree with Belgarath - use already-plan money to pay the premiums as an "investment transfer."

It's not just fixable as 415(c) excess?

Isn't the easiest technical fix just to allow Roth as a benefit for NHCEs only? Adjust the "universal availability" to make it easier for sponsors.

Hey, that top heavy paragraph (ii) hints that you can include (not electing to exclude) the LTPT balances in the top heavy ratio, but wouldn't have to make a THM or increase vesting if applicable for them. Seems best of both there - maybe the LTPT drop you from 61 to 59% and nobody gets a THM. But if they still leave you at 61 while including them, they don't get their 3%.

Will small employers' advisors drive their sponsor clients to these pooled arrangements? Wouldn't they prefer more of a finger in the pie, teaming with a local TPA/advisory firm to something more tailored?

I would think it's okay - I mean, you'd typically budget a normal cost for someone who then doesn't hit 1000 hours in the upcoming year, but it was the actuary's best guess as of the val date. You could consider a turnover decrement for people scheduled to hit 7/1/23 that "might end up turning out differently" as well, right? I realize this is just my gut but it "feels" acceptable.

Might they be able to get the -11g amendment executed prior to 3/15/24 rather than 10/15/24, and then they could do a 412(d)(2) election for it?

My "7-10 Split Plan" is just to roll it hard and hope for a bounce across the lane.