Belgarath

We have them contact their insurance agent.

Good points. Thanks for the response.

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. 

RBG and all others down there - keeping our fingers crossed for you! My cousin lives in Sarasota, and Helene left 3 feet of water in his house, and he was luckier than many. It doesn't sound good for this one. Be safe!!!

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.

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 filing 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?

FWIW - I think you can continue to use the exclusion, BUT, it cannot serve to exclude (from making deferrals) those students who work the 500-1,000 that you mention.

Penchecks is popular.

I must say, such a question does seem a little over the top. But CB's response seems astonishingly informative for a simple, concise and readable summary of the pre-USERRA stuff, and there is a wealth of information out there on USERRA provisions, etc., so your research path should be clear. 

For all you folks who may be impacted, here's hoping you come through it with minimal effects. Best of luck!!

Well, we all know that complete disqualification (the death penalty) is not likely, so I'd drop that fear down to second place.

However, employees blaming their employer, at least initially, is very likely. Since taking personal responsibility is apparently considered anti-American in our society, the first course of action is to blame someone else. The fact that as an employee I didn't read the communication(s), or didn't question it if I didn't understand it, etc., is immaterial. (All right, I'm done with that rant.) And of course, there will also be many situations where the employer did not enroll people when they SHOULD have been enrolled.

14 hours ago, austin3515 said:

This will not go well, I promise you.

Truer words wuz never spoke! It'll be ok for many employers, and others will botch it badly. Retirement looks more attractive all the time...

Agreed - we discourage it as well, and actually have very few plans that use it. But, we have one plan, for example, that has over 150 part timers who work less than 500 hours, and dealing with all of them as eligible to defer is more of a pain than dealing with the rare LTPT (about 1/2 dozen) exceptions to the exclusion. 

IMHO, extending this to 403(b) plans was one of the more obnoxious provisions (among many) of SECURE 2.0.

Thanks Peter. I should have specified that I was talking only about ERISA 403(b) plans. You provide interesting discussion!

So, I've seen various opinions on this.

One is that for purposes of DEFERRALS ONLY, (not employer contributions) the "less than 20 hour exclusion" is no longer valid at all, and therefore all employees must be allowed to defer under the universal availability rule, absent another valid exclusion category.

Another is that the "less than 20 hour" exclusion is still valid for deferrals, EXCEPT for LTPT employees. In other words, someone who works only, say,  6 hours per week could still be excluded for deferral purposes.

I'm not 100% sure which is correct. From a practical standpoint, since most plans (of ours, anyway) don't use the 20 hour exclusion anyway, it isn't a giant problem for most small plans regardless.

Thoughts?

☠️

12 minutes ago, Paul I said:

I do not recall ever seeing a plan penalized for a late distribution of s SAR, nor have I seen an explicit corrective action other than to send out the most recent notice.

Yeah, I've never EVER even SEEN a SAR distribution date even questioned. Doubtless I just jinxed myself...

I have come to really dislike RMD questions. However, here goes:

Participant dies in 2023. Already taking RMD's. Spouse, who also works at the same company and is a participant, took his RMD in 2023, and then "moved" the balance of his account to her account in the plan. She is younger - late 60's. As I understand it, she can treat this money as her own, and no further RMD's are required until HER RBD. Have I got that right?

It seems to me that a governmental entity can't be part of a controlled group? I haven't actually done any research on the question - just my assumption...

20 minutes ago, CuseFan said:

Mistake or not, the participant's actual election was executed, so I say have them fix it going forward and deal with it. Why is it always the collective "we" - plan sponsors, advisors, TPAs, RKs - that are asked to bend over backwards to accommodate a participant's mistake, poor judgment, or lack of attention? When is the participant held accountable for not doing what (s)he is supposed to and then months or years later comes looking for help on situation (s)he could have rectified almost immediately had (s)he paid the slightest attention? I'm sorry, but if I intended to make a PRE-TAX deferral from my pay and my income tax withholdings remained the same, I would have noticed and said something - if not after the first pay period, certainly within a few.

YES, YES, YES!!!

14 minutes ago, Basically said:

What I struggle with is if he puts off his 1st RMD (the 2026 RMD based on 2025 YE Bal) until  4/1/27 (the following year) and then he needs to take another one for 2027 based on the 2026 YE Bal, he is going to have 2 RMD payments hitting his personal account in 2027...  a lot of taxes to come up with.  Am I overthinking this?

You are correct, and you aren't overthinking it IMHO. But it has always been this way, just utilizing younger RMD ages prior to these new age changes. The "two in one year" issue is one that many people have avoided (and can avoid) by not postponing the first RMD. 

Hi Peter - hard to say - I never see the plans where everything goes well - questions only come to me when there's a problem, so sometimes my perceptions are a bit skewed. If I had to guess, I'd agree with Bri most of the time - maybe 80% we find it, 20% they find it internally. And the ones who discover it internally are usually the ones who have been through it and received our assistance with appropriate correction before!

Leaving aside the investment advisor, most of our small plans have either one or two Trustees. Just at a ballpark estimate, I'd say about 20% have only one Trustee, the other 80% have two or more. And no, for the 1-Trustee plans, I'd say there is no other fiduciary who would call attention to a breach.