Belgarath
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Everything posted by Belgarath
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Determination letter for defined benefit plan
Belgarath replied to Belgarath's topic in Governmental Plans
Good luck to both of us! We work with an actuary that does governmental plans, and she was not aware of any companies doing what we are looking for. She inquired of an ERISA attorney about a fee to draft a document (for this 8-person Governmental DB plan) and was quoted $30,000. -
Thanks. Very helpful.
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We have not encountered this - first time for everything! I am, however, unsure of the exact process. So, our client joins a MEP with someone else effective (X) date - let's just say November 10. Assets will be liquidated from current investment provider, and transferred into the MEP - exactly how, not sure we care. My question is re the 5500 SF. Is the 5500 SF filed as a "final" showing the transfer on Lines 13(b) and (c)? Or would it be a full year 5500 SF since the plan isn't being "terminated." And would it be filed as a short plan year as of the date of transfer of the assets? It appears that no 5310-A would be required. Just not sure of the process. Would it just be the new MEP that would file a 5500 for 2024, and we wouldn't file a 5500 at all? It'll be driven by the new TPA anyway, but I'd like to get a better handle on how this typically is/should be handled. Thanks!
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Determination letter for defined benefit plan
Belgarath replied to Belgarath's topic in Governmental Plans
Got it. Thanks for the input! -
Determination letter for defined benefit plan
Belgarath replied to Belgarath's topic in Governmental Plans
Thanks Carol. ASC sponsors a pre-approved governmental DB plan in an AA format, but I have not yet compared provision-for-provision to the current IDP DB document to see if it would "fit" onto the ASC frame. Now I don't recall - will the IRS accept a 5307 in this situation, if the changes are not too drastic? Problem is we have a couple of small "legacy" governmental DB plans that are far more trouble than they are worth, but for various reasons just getting rid of them isn't a good option... Thanks again for any thoughts. -
Let's assume an individually designed governmental DB plan received a determination letter at some time in the dim and distant past. I believe post 2017, such a plan could no longer apply for a D-letter, absent a plan termination, merger, or some other unusual situation that I can't recall. Has that changed?
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This is absolutely not intended to sound dismissive or snarky, but on a personal level, I find it hard to care at this point. There are so many immediate and difficult technical and administrative issues to deal with, and this particular issue doesn't take effect one way or the other for many years. Given recent legislative history and trends, there will be lots of tinkering before then anyway...
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Yup, you should be good, assuming you otherwise satisfy the requirements of that section of the Rev. Proc - (Notice requirement, timing of starting correct deferrals IF the employee notified the employer of the error).
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Well - depends upon what you mean by "there's no current match." Suppose at the end of the year, a match is made based on all deferrals for the plan year. (I'm assuming from your comment that they don't match per payroll.) In that case, they would be entitled to the match on the missed deferrals.
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Depends upon the timing. Take a look at Rev. Proc. 2021-30, Appendix A (.05)(8) - that'll give you the information you need.
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SECURE 2.0 2025 auto-enrollment applying to LTPT employees?
Belgarath posted a topic in 401(k) Plans
It doesn't seem to me that the guidance specifically addressed whether the 2025 auto enrollment requirements must apply to LTPT employees? In the absence of a regulatory dispensation, it seems like the safest procedure would be to have auto-enrollment apply to them, as ridiculous as that seems. Thoughts on this issue? -
COVID loan reamortization
Belgarath replied to thepensionmaven's topic in Distributions and Loans, Other than QDROs
This might be of some assistance? https://www.irs.gov/pub/irs-drop/n-20-50.pdf -
I wonder if this question is/was addressed at the ASPPA conference?
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I've never seen a truly bullet-proof answer to this question. In my prior life, we had a couple of plan terminations rescinded, where no distributions had taken place. This was done on the advice of ERISA counsel, and 100% vesting was retained, but counsel opined that there wasn't an anti-cutback violation re the distributions. (This was a very long time ago, and some of the details have undoubtedly escaped my memory.) I also wonder - if a 401(k) termination is rescinded, then does the employer have a liability for missed deferrals/match? I'd almost think so. RBG has an interesting idea.
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So, Employer A acquires Employer B mid-year. Employer A sponsors a safe harbor 3% 401(k) plan. Employer A credits all service with Employer B for all purposes. The result is that all employees of Employer B are immediately eligible. What gets strange is that Employer A calculates and deposits the 3% SH each payroll (not by document provision, just by administrative choice). But for the former Employer B employees, not intentionally but through administrative error, the 3% was not deposited until after the end of 2023. (They corrected this for 2024, and everybody gets the deposit each payroll.) The difference, due to the relative number of employees, would easily pass either a 70% test, or a benefits/rights/features test. Document doesn't specify a particular timing requirement. Yet I can't shake the feeling I'm missing something. Any thoughts on this?
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We have them contact their insurance agent.
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Good points. Thanks for the response.
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Just general discussion re the reality of actual administration. Seems to me that if an employer chooses to offer this, requiring employee self-certification of the 5 required certification elements, annually, would be the way to go. Is there any particular advantage to going with the registering the loan with the employer, or registering with a third party service provider? I'm also wondering about the realities of what happens when the certification is incorrect, or the loan itself doesn't qualify as a QEL in spite of the certification. According to Q.E-4 of Notice 2024-63, if the certification turns out to be incorrect, the match does not need to be corrected. So does this really amount to a "get out of jail free" for the employer, or are there other ramifications? The initial determination of whether there is even a Qualified Education Loan (QEL) in the first place can be fairly complex, and I'm not sold on the ability of most participants to accurately make this determination. And I sure as heck don't want to deal with it at the TPA level. Are you seeing a lot of demand for it? We've only had a few inquiries, but it is coming... Any discussion is welcomed.
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Secure Act 2 amendments: must stay in plan?
Belgarath replied to BG5150's topic in Retirement Plans in General
Well, just off the cuff...I wouldn't see any problem with eliminating the special loan provisions, since participant loans are a "right or feature" that isn't a protected form of optional benefit. As to the actual distributions, I'd say that this could be eliminated prospectively, but would be a protected benefit as to the accrued benefit up to the effective date the option is removed. Haven't really given it any thought... -
Well, you might want to consider facts and circumstances. It isn't unknown, for example, for an owner to take zero compensation for 1 or more years. Same could hold true for the spouse - if it can be reasonably demonstrated that she actually worked 1,000 hours (might be tough, as noted above) then she should be eligible to enter, or might have already entered, even if not formally acknowledged. For what purpose is this being considered? Is she now being compensated? If not, and she still has zero compensation, then it likely won't matter anyway? It could matter for vesting if she is is entering/has entered and now has compensation.
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Disaster relief - 404(a)(6) deadline
Belgarath replied to Belgarath's topic in Retirement Plans in General
Thanks. Like I said, I'm nervous when something seems perfectly clear. Probably a holdover from Nixon "Let me make this perfectly clear..." -
With all the disasters going on, I'd like to confirm the following scenario. This seems straightforward to me, which always scares the heck out of me and makes me assume I'm missing something. Suppose a client is in an officially presidentially declared disaster area. Client had already obtained an extension to October 15. The disaster declaration postpones the business tax filing deadline to (whatever date.) Plan is not a pension plan subject to minimum funding deadlines. Since 404(a)(6) allows a contribution and deduction for prior year if done by the tax filing deadline, including extensions, then the disaster filing extension presumably also extends the CONTRIBUTION deadline, and not just the actual filing of the business tax return?