Belgarath

Seems correct to me. Of course, the employer can't deduct the 50,000 contribution, so the ACTUAL net benefit won't be quite so high as 50,000. I'm sure some clever CPA's somewhere will do a chart of the "net" benefit at different brackets compared to the benefit from taking a deduction instead. Also, I have no idea if taking these tax credits will adversely affect other deductions/credits that might be available for other items/purposes. Again, that's a CPA issue.

Gracias. That makes me feel better.

Revenue Procedure 2021-30, Appendix B, Section .05(9) provides a special safe harbor correction method for plans that did not necessarily contain a automatic enrollment/increase feature. An "Employee Elective Deferral Failure" is defined for these purposes in Section .05(10), which includes a failure to implement elective deferrals correctly, "...including elective deferrals pursuant to an affirmative election or..." and then goes on to list the Automatic Contribution feature and the improperly excluded employee situation. Section 350 appears to confine this special correction to plans with Automatic Contribution/Escalation provisions, or failure to afford an eligible employee the opportunity to make an election by improperly excluding them from the plan. Try as I might, I can't get to a reading of this that covers this other currently allowable special correction. Section 3 says no QNEC required if the requirements of (2)(B) are satisfied with regard to a reasonable administrative error described in 2(A)(i) or (ii) - and neither (i) nor (ii) appear to cover the special fix for the situation I'm considering. Other thoughts/interpretations? Agree/disagree?

I think what you may be looking for is 1.410(b)-7(d), 1.401(a)(4)-9(a), and 1.401(a)(4)-1(c)(4). And possible subsections for special situations, cross references, etc...

Ah - yes, I didn't read OP carefully enough. My bad.

It is a damn good question, and here's what is probably a damn poor opinion... I'd say it is risky to assume that this is a reasonable business classification when everyone is in their own group. I believe the IRS opinion is that everyone in their own group is tantamount to "enumerating by name or having the same effect" - and therefore is by definition not a reasonable classification - so that would automatically preclude the ABT for coverage. Yes, my answer changes if you bring in one or more persons via an 11(g) amendment, if that allows you to pass the ratio test. Once you pass the ratio test, you can then move on to your rate group testing, because once you get to the rate group testing, the "reasonable classification test" does not apply under 1.401(a)(4)-2(c)(3)(ii).

Boo! Hissss! Absolutely awful! Tom, nice to see your return. Hope all is well.

Hmm, interesting question! Just off the top of my head, I'd guess that the contribution calculation will remain the same, but the DEDUCTION on the 1040 will be reduced by the amount of "employer" Roth profit sharing/match contributions made on behalf of the self employed owner/partner. Obviously not sure - I hadn't even thought about this question. Some of the CPA types on this board are likely to have a much more informed opinion!

Suppose you have two non-governmental tax exempt employers, each of whom sponsors a 403(b) plan with, for all practical purposes, identical provisions. Both are calendar year plans. Are there any particular problems with permissively aggregating them for coverage and ACP testing, if one fails, but permissive aggregation would allow them to pass? I'm not seeing any, but perhaps I'm missing something. It occurs to me that the original post left out the fact that they are a controlled group - a rather important piece of information! Gracias.

Too much detail, not enough time, and too few functioning brain cells remaining. I'm getting too old for this stuff!

Yeah, me too. I missed this little detail entirely. So Gilmore - looks like you had it right! I did send this question to ERISApedia for their Q&A session (late February) just to see if they concur.

Re-upping this. In ASPPA webcast yesterday, the presenters had a discussion after the slide on this subject was shown. What I understood (or misunderstood) them to say was that pre-2023 eligibility service was not ignored for 401(k) - only for 403(b), so that for 401(k) purposes, someone who had 500 hours in, say, 2022 and 2023, but not in 2024, would enter on 1/1/2025. Did anyone else watch this, and if so, did you hear the same thing?

I'd resign regardless of whether they ultimately decide to correct or not. Life is too short to deal with this type of client. We would certainly seek counsel re our obligations to report or not report, etc. Rock - TPA - Hard Place.

Yes, because it is reportable, and the IRS needs to get their information.

Very confusing, as you all know, to follow "insert comma after x, add the following text after y, delete the words z and b" etc., etc. Do you know of a source where all this has been done, and there is final updated text of all the updated provisions?

Thanks.

Effective for plan years beginning 2024, this also was changed by Section 315 of SECURE 2.0.

Ours (IRS pre-approved) specifically states that it is due for the plan year beginning AFTER the end of the plan year in which the document was adopted. So, assume calendar year plan, adopted in 2021, it would be due for the 2022 plan year. If adopted in 2022, then need to do one for the 2023 plan year.

I assume the LTPT rules will override the 20 hour exclusion (for deferrals), thereby making the 20 hour provision even more difficult to administer than it already is? (As an editorial comment, I despise the 20 hour rule anyway, but that's a separate issue.) Anyone have any particular observations on this issue?

Also worth noting that effective 2024, the community property attribution rule is changed. See Section 315 of SECURE 2.0.

I swore I wasn't going to think about 2.0 today, but when I let my guard down, things pop into my head. Curious as to thoughts of others. Many plans revert to calendar year for service counting after the initial eligibility period. If you handle the LTPT employees the same way, then they could come in even faster than strictly required? Suppose DOH is 11/1/2023. From 11/1/23 - 12/31/2023, works 100 hours. From 1/1/24 - 10/31/24, works 600 hours. So if service counting reverts to plan year, then employee would have two years of service crediting, and enter on 1/1/25. Alternatively, if plan uses anniversary years, this employee likely wouldn't end up being eligible until 1/1/26. I'm not clear as to whether the plan can "carve out" these employees via the SECURE 2.0 Amendment, and use anniversary years just for LTPT? I'm assuming the answer is no, but I haven't done any analysis on that question. Assuming it is not possible (or even if it is possible) would you change your plan (or LTPT portion of the plan, if permissible) to anniversary date service crediting? I wouldn't... too complicated, and these people generally aren't going to defer regardless, so if they end up entering earlier than strictly required under the law, big deal. Of course, I'm on a seriously overloaded 2.0 circuit at this point. I shouldn't think about this garbage on a Friday....

Suppose a plan that is participant directed merely adds another mutual fund as available. Doesn't change any of the alternatives already available. Is there a 30 day advance notice requirement before the new mutual fund can be available?

There is some good stuff, but also a lot of crapola. I agree that some of it is absurd from an administrative standpoint. What I hate about this type of thing is that there are always a few clients who insist on one of the useless options, and there are always "advisors" who try to puff up their importance by convincing a client that they simply must have one or more ridiculous provisions, and "Why didn't your TPA advise you to do this?" Etc., etc. - while recognizing that transition is always difficult (remember TRA 86, EGTRRA, et al) there is still an inordinate amount of garbage here. Why doesn't this legislation help ME retire?!!!

How much money is at stake? Might make a difference in the extent of the investigation/effort. Is the beneficiary form a legitimate PLAN provided beneficiary form? If yes, is this form available on a website for just anyone, or are the controls such that it would at least be very difficult for a criminal to obtain it? Is the website able to determine the IP address of the computer that was used to request the beneficiary form if requested on-line, assuming it was requested relatively recently? (I'm just tossing out random thought, as I'm a technological dinosaur, so I don't know what information can be legitimately gleaned.) It may sound silly, but perhaps start with the return address on the envelope, if it was sent by mail? If it is a legitimate address for the same person who is claiming to be the beneficiary, perhaps a search of public records could be initiated by a commercial service, to possibly find out if there is a relationship? Any way to check to see if the beneficiary's SS# is a legitimate #? Is there any basis for filing an interpleader request? Basically, I'd refer this to ERISA counsel anyway, so I'm no help!

A tax-exempt entity eligible 457(b) plan is "unfunded" promise to pay. The employer, if they so choose, can never contribute a dime of the required nonelective contributions until it is time to actually make a distribution. Since the employer "owns" the funds, then unless held in a Rabbi Trust, the employer can deposit or withdraw funds from a corporate account that, while used as setting aside 457 funding, is nevertheless owned by the employer and can be used for any purpose. In my limited experience with tax-exempt 457(b) plans, most employers utilize your method of contributing to a "segregated" account, with various interest crediting methods, etc. But there's no deadline for the employer nonelective contribution deposits, although I believe it would be reported on the W-2 Box 12 for the year "allocated." You'd want to double-check that, as I'm not certain without checking myself. Perhaps some 457 experts on this board can provide you with additional (and/or better) information.