Belgarath

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?

Peter, you are doing rather well. Some of what I remember about YESTERDAY is dimming...

Hi Peter - I did a quick internet search, and this was the first item that came up: https://hunterbenefits.com/wp-content/uploads/2023/03/Hardship-Self-Certification-Form-1.pdf I expect there may be others...

Not knowing the situation, all this seems like a lot of time and expense just to allow one participant to get access to funds. Is there a loan provision? Hardship withdrawal provision? Employer contributions where the plan could be amended to allow in-service distributions of employer contributions at earlier ages?

Just saw a brief article from Fred Reish on this. I'm wondering why an employer would want to get involved in this, if approached by a recordkeeper, etc.? Seems like yet another possible fiduciary issue, yet another possible complication or item that may bring up questions, etc. From my viewpoint, a participant has been notified about the cashout. They haven't responded, so account is rolled to IRA. Period. No further involvement - wash your hands of the whole thing. The participant then can do anything they want with the IRA. Don't know what other thoughts folks might have?

Hi KayJay - yes, the successor plan rules apply if the employer terminates 403(b) and establishes a new 403(b). See 1.403(b)(10)(a)(1).

Hi Tom - are you saying that 401(k) Roth account distributions (starting in 2024) will be a FIFO ( no tax until all contributions are withdrawn) treatment for distributions, just like Roth IRA's? I didn't see this (or maybe I just skipped over it) in SECURE 2.0. Could you let me know what section? Or maybe that's not what you are saying? Thanks so much!

A common problem in 403(b) plans. Technically, the RK/Custodian should only allow distributions as permitted in the document, but this rule is flung down and trampled upon routinely. Many of them operate on the , "Damn the torpedoes, full speed ahead" principle. When we did the last round of restatements, we bowed to the inevitable, and used lump sum for a default (unless the plan sponsor wanted otherwise) but utilized the provision that any distribution method allowed ender the investment arrangement documentation was acceptable. We had no employers balk at this. You should also check your document very carefully, as such a provision may be buried somewhere in the boilerplate, or appendices, etc.

Thanks. That's precisely where I'm coming from. Plus, FWIW, I seem to recall, at some time way in the past in one of EPCRS iterations, that there was a specific reference to a change in the provisions where it wouldn't be a QNEC and vesting provisions could apply, but I think it was way back in RP 2013-12 or something like that. I'm too lazy to look back over all the changes - but to me, it seems supremely logical that a non-safe harbor match correction like this should be able to apply the vesting schedule. So no, no disagreement from me! (That must mean I'm not a disagreeable person, in spite of what my wife might say...) Maybe I'll take a look back at it after all to see if my memory is completely off base. I'll post if I find anything. Hah - look what I just found - from RP 2013-12 Revising Appendix A, section .05, and related examples in Appendix B to provide that, in some cases, a matching contribution owed to a participant may be made in the form of a corrective employer matching contribution, instead of a QNEC, so that the corrective employer matching contribution would be subject to the vesting schedule under the plan that applies to employer matching contributions

I assume he hasn't filed taxes yet? Should be ok.

How 'bout vesting on this? Say the employer matching contributions (not a safe harbor plan) have 6 year vesting. Say the participant subsequently terminates at 60% vesting for matching contributions. Is the "nonelective" contribuition subject to the matching contribution vesting provisions? Or is it automatically 100% vested like a QNEC, even though it isn't a QNEC? The "nonelective" contribution would just be deposited to the match account? I'd apply the vesting schedule, but maybe I'm all wet.

Thanks to all - the information and discussion is very helpful. If this employer is like most, (of our small employers, anyway) they will drop this whole idea rather than pay attorney fees. We'll see where it goes.

I'm only speculating - seems like the relaxed hardship standards might be a combination of legitimately making it easier for participants and plan administration, AND, whether openly acknowledged by Congress or not, a Revenue raiser. But I'm very cynical about Congress these days, and attributing this possible motive may be an absurd thought.

Thanks. In this case, it is a percentage of th4e overall fund balance. So if you have 10% of the plan assets in your account, and the overall investment fee is $10,000, then your share is $1,000. Where I'm particularly uneasy is if the employer is contractually obligated to pay this fee under the agreement with the recordkeeper (and I don't know if that's the case) then charging it to the participant is relieving the employer from paying this fee - possible PT?

One reason why I love self-certification! Barring further guidance/regulation, of course. The participant is signing off, and there's no reason for the Plan Administrator to question what it is for! And no reason for the participant to tell the PA what it is for. If it ain't legit, and the IRS comes after the participant, so be it - not the PA's problem.

Thank you for the response! I'll look into it. I was basing my initial basic "investigation" more on DOL guidance - specifically including FAB 2003-3 - see excerpt below. At BEST, the whole thing is a very tricky area, and if the Fiduciary wants to proceed with this, we'd recommend ERISA counsel. I'm not at all confident that investment fund fees are necessarily an expense for "administration" of the plan, so input/opinions from the gurus here are very helpful in separating the wheat from the chaff. Accounts of Separated Vested Participants. Some plans, with respect to which the plan sponsor generally pays the administrative expenses of the plan, provide for the assessment of administrative expenses against participants who have separated from employment. In general, it is permissible to charge the reasonable expenses of administering a plan to the individual accounts of the plan’s participants and beneficiaries. Nothing in Title I of ERISA limits the ability of a plan sponsor to pay only certain plan expenses or only expenses on behalf of certain plan participants. In the latter case, such payments by a plan sponsor on behalf of certain plan participants are equivalent to the plan sponsor providing an increased benefit to those employees on whose behalf the expenses are paid. Therefore, plans may charge vested separated participant accounts the account’s share (e.g., pro rata or per capita) of reasonable plan expenses, without regard to whether the accounts of active participants are charged such expenses and without regard to whether the vested separated participant was afforded the option of withdrawing the funds from his or her account or the option to roll the funds over to another plan or individual retirement account.