Belgarath

The DB experts here will give you much better advice, but I'll toss in a thought, going from memory WAAAY back. I do seem to recall that it was possible to have a NRA earlier than age 62. I believe a determination letter is required for this, and there would obviously need to be pretty solid evidence that the age chosen was representative of the industry. Just for example, I think it is likely that the IRS would approve such an age if the plan was sponsored by a professional sports team. Probably a stupid example, but you get the idea. Likely this is not the case in your situation, but I think it is at least possible.

Thanks Bird. That's the "common sense" answer I was coming up with, but it seems like there's a little gray area on this, so I appreciate your opinion!

The question is - if an employer using a 5305 model SEP hasn't contributed for the last three years, and hasn't contributed anything this year, can the employer establish a 401(k) for this year? IRS instruction doesn't truly address this. Terminating a SEP Plan Do I need to amend my SEP for the new law before I terminate it? Generally, the IRS has not required employers to amend their SEPs for new law prior to termination. Check with your plan professional. Do I have to fund my SEP in the year of termination? SEPs can be terminated at any time. You can stop funding your plan once it is terminated. What are the notification requirements when a SEP terminates? When you terminate your SEP plan, it is a good idea to notify the employees that you are discontinuing the plan. You may need to notify the financial institution that you chose to handle the plan that there will be no more contributions and that you will terminate the contract or agreement with it. Do not notify the IRS of the plan's termination.

Barring additional guidance/technical correction, this falls under the "life ain't fair" exception to life.

Yes, there is a Santa Claus!!!

Time. It takes longer (perhaps depending upon automation capabilities) to do an amendment/SMM than it does to perhaps have a "canned" paragraph or three that can be used to communicate the change in a less formal manner.

I'm a little puzzled by the date by which a discretionary amendment must be adopted, and the real life effects of this fun stuff. First, my understanding is that adding Roth is a discretionary amendment, and as such, should be eligible for amendment by the end of the year in which it is operationally implemented - so in this case, by 12/31/2004. CB, why is it that the NHCE wouldn't have the ability to make a Roth election, if it is operationally implemented and communicated as of 1/1/2024? I'm missing some crucial piece here. Thanks! (P.S. - it would certainly be nice if the IRS would opine that you could do this operationally and make it part of the SECURE/2.0 amendment by 12/31/25...) Excerpt from RP 2016-37: 04 Except as otherwise provided in sections 15.05 and 15.06 of this revenue procedure, the deadline for the timely adoption of an amendment for any pre-approved plan is determined as follows: (1) In the case of an interim amendment, an employer (or a M&P sponsor or VS practitioner, if applicable) is considered to have timely adopted the amendment if the plan amendment is adopted by the end of the remedial amendment period described in § 1.401(b)-1(b)(3) (determined without regard to the extension under section 15.03 of this revenue procedure). See section 2.07 of this revenue procedure. (2) In the case of a discretionary amendment (that is, one that is not an interim amendment described in section 15.02), an employer (or a M&P sponsor or VS practitioner, if applicable) is considered to have adopted the amendment timely if the plan amendment is adopted by the end of the plan year in which the plan amendment is 21 operationally put into effect. See section 8.02(1) of this revenue procedure for examples illustrating this deadline.

2024 increases to $7k. Suppose plan currently uses 1K. Can the plan operationally go ahead and use the 7K for 2024, or must it amend to 5k, which then increases to 7k? The latter seems absurd, but an interesting question...

Yes, can exclude until 21. But you can allow them in at regular age if you choose. One of the many decisions that will have to be made shortly re the LTPT.

Depending on the amount of the desired loan, a bonus of that amount may not be feasible, but I've seen a lot of employers take that route if the amount is small. I've also seen employers actually loan the participant money instead. As to the amendment, I'm usually on the conservative end of the spectrum for these things, and you've gotten valuable input already. I absolutely would not recommend hiding it so that only this employee can take advantage of it - as Cuse said, just because you CAN do something doesn't necessarily mean you should - a lot depends on the size of the plan. If it is a small plan, perhaps notify employees in advance that this loan window will be open only for a couple of days? Most people won't take a loan anyway. I don't know the dynamics of the situation. Remember that if you modify the hardship withdrawal provisions to include non safe harbor reasons, you can't rely on self-certification for a withdrawal of other than the safe harbor reasons.

Ok, thanks! I was just curious.

I'm going to say that it would only be for active employees. The statutory and regulatory language refers to "employees" rather than "participants." So I think if terminated, just a regular withdrawal, and premature distribution tax, if otherwise not exempt, would apply.

General question for you attorneys out there who deal with health insurance claims and "clawback" of expenses paid, if a legal settlement is reached I was talking with someone a few weeks back, who had sustained some significant injuries in an auto accident that was the fault of the other driver. Her health insurance had paid significant amounts for medical bills. She was in the process of suing the at-fault driver. I have heard that many health insurance policies require repayment if the injured party receives a settlement, but I don't know anything about it. I asked her if her attorney had mentioned any such thing, and she admitted she didn't know. So I have two general questions: 1. Is it in fact a common clause in health insurance policies to have some sort of "clawback" or repayment clause in the event of the injured party receiving a settlement? 2. If her attorney DIDN'T mention it, if there is such a clause, would this likely be some sort of legal malpractice? I mean, if the settlement is completely or nearly eaten up by clawback and legal fees, why would anyone go through the agony of a lawsuit? Again, I freely admit I know nothing about all of this, so I my be asking stupid questions here, in which case, my apologies!

Makes sense to me! Naturally barring further guidance. With all the other garbage that we have to deal with before this issue, I thankfully can't get too concerned yet. With luck I'll be retired by then!

To be very nitpicky, the 415 limit is based on the calendar year limit in which the limitation year ends, right?

Not a lot of information to go on here. Perform the testing that should have been done. If everything passes, you shouldn't have to do anything (assuming all other disclosures, 5500's amendments, etc., etc. were done correctly). If there are errors, correct under EPCRS and/or specific document provisions, possibly taking into account the more "relaxed" standards potentially available under SECURE 2.0. I might also recommend you discuss with your supervisor/mentor - whoever. A lot depends upon specific results/problems. Good luck.

I must say I hadn't yet even considered this aspect. I don't know if there's a firm answer or not, but thank you for bringing this to my attention!

I'm missing the point of why this would be desired. If one person owns 100% of both businesses, it is a controlled group. If no employees, why would he want the two plans? One 415 limit, so he can't "double up" on contributions/deduction maximums - he can max out, up to the deductible or 415 limit in the 401(k) plan, including catch-ups if eligible. But if there's some other reason I'm missing, yes, if he uses a non-model SEP, it might be possible, depending on the language in both documents.

Yeah, that's what I'm talking about. So you potentially have a new SPD (or SMM, or multiples) due within 210 days after the end of the plan year - so you have one due in 2024, one in 2025, and one in 2026. Blech...

Yeah, one of the more obnoxious provisions in the law. P.S. - different subject, but what are your thoughts on SMM's? The number and variety of potential SMM's, what with different provisions in different years, for different clients, is terrifying.

I just want to make sure I haven't missed any updated guidance on the following specific items only. Thanks. 1. Only contribution REQUIREMENT is to allow the eligible LTPT to defer. 2. IF the employer chooses to contribute match, PS, SH, (mix and match), to those who are SOLELY eligible due to LTPT rules, these people may still be excluded from coverage, ADP/ACP, and 401(a)(4) nondiscrimination testing. 3. For top heavy purposes, their account balances will be included in the determination if the plan is top heavy or not, but they are not required to receive a top heavy contribution. 4. No gateway required, even if employer chooses to give them profit sharing.

We deal primarily with smaller plans, and I'm a huge fan of self-certification. I realize things may be different for large plans. I've never really agreed that the Plan Administrator should have to be the policeman for hardship requests. In terms of "leakage" - and this is speaking purely from experience with our book of business - our experience is that nearly all of the hardship requests are from people with small account balances. The sad fact is that if these folks retired with $15k in their account, it will make very little difference in their retirement, so if they spend it now, (some possibly fraudulently) so be it. It is probably because I'm getting grumpier in my old age - with the continuous onslaught of rules and regulations that fall upon qualified plans and the administration thereof, I'm very glad to see something like this that actually works to relieve some of the burden.

I agree, and I want in on that bet. I expect the "may" is meant not to decide WHO is allowed to do a rollover, but more WHAT rollovers may be accepted. The Plan Administrator has the right to reject a rollover request if, for example, it would jeopardize the tax-qualified status of the plan, or if there's no evidence that the rollover is from acceptable qualified source, etc., etc.

Agreed - and thank you both. No other admin expenses, apparently. Allocating as a credit seems like the most viable solution to me. And then either a renegotiation of revenue sharing, or the plan should be amended to ditch the term'd participant fee, or a combination of both.

Looking at a plan, and it doesn't seem right to me. The plan charges a fee to terminated participants who leave funds in the plan. $100 per ppt per year. The recordkeeper also pays revenue sharing to the TPA. The Revenue sharing now equals or exceeds the TPA fees, and the $100 per ppt per year charge is being put in a "forfeiture" account, and the client is being told to offset required match contribution by the balance in the forfeiture. As Archie Bunker once said, "I smell something stinko in the city of Denmark." This fee doesn't seem to qualify as a "forfeiture" as that term is defined. So, what can be done with these amounts? Maybe I'm being unnecessarily conservative in my viewpoint. What do other folks do?