Belgarath

Thank you both for your comments. The A Plan DOES exclude compensation prior to participation, so it simplifies this particular situation. The B Plan is going to be terminated, as far as I know, effective 12/31/25. There was originally some talk between the employers and their advisors abut merging the plans, but they decided against that.

This is a really silly situation, but potentially confusing. Corporation A purchases Corporation B during 2025. Corporation A sponsors a 401(k) plan that has true-ups. Corporation B's plan will be terminated, but effective December 1, the employees of corporation B will transfer to Corporation A. Corporation A credits service with Corporation B, so those employees will be eligible to defer in the Corporation A plan immediately. So, it seems that at least theoretically, there could be a true-up for these employees (fewer than 20) for the 1-month of salary deferrals in the Corporation A plan. Although the Corporation A plan calculates the match on an annual basis, they couldn't use compensation paid from another company while they were not a controlled group. Any disagreement with that? (As an aside - if they became a controlled group in, say, June, could/should the deferrals from that date be used in the calculation of a true-up in the Corporation A plan, even though those 2o employees were still employees of Corporation B?) Then we come to the ridiculousness. The Corporation A HR person is adamant that they don't want to make any true-ups for the former Corporation B employees. If we assume that the deferrals for these former Corporation B employees only start in December and are based only on salary/match in December, the potential true-up is negligible at best. Is there any way to avoid a true-up in this situation, if the calculations require it? It seems like an amendment prior to 1/1/26 could result in a cutback. I'm probably making this way more difficult than it is.

They won't lie, just "creatively describe." 😁

Similar to the 5500 preparer manual that Janice Wegesin used to do?

Thanks Paul. Day of the month, so the "person" is contending due date was May 10th, not May 31...

Brain cramp, and I just want to make sure I'm not crazy. Due to a plan merger, short plan year ends October 10th of 2024. If I'm reading the instructions correctly, for a short plan year, the filing due date is the last day of the 7th CALENDAR month after the end of the short year. This would mean due date is May 31, 2025. Right? Then a 5558 extension would extend the due date to August 15, 2025. Seems simple, but I'm getting some pushback, and I'm always willing to entertain the possibility that I'm a few cards short of a full deck.

Without doing additional checking, I'd say #001 and #002.

Got it! Thanks - it makes sense now.

So, as far as I can tell, an "applicable collectively bargained plan" means maintained under a collectively bargained agreement ratified before 12/20/2019. Does this mean that if the agreement is "re-ratified" - or more recent than 12/20/2019, then the amendment deadline is 12/31/2026, as opposed to 12/31/2028? It would seem so, although that doesn't make a lot of sense to me...

I'd just google it - there's been a lot of press about it. Biggest thing (IMHO) to watch out for is that it is subject to ACP testing, so often doesn't work in small plans, since generally utilized only by HCE's...

When in doubt, there is always the risk/reward factor to consider. Does this amount, if counted as a related rollover, make (or is it likely to make) the difference between top heavy status or non-top heavy? If it does make it top heavy, how much extra employer contribution will be required vs. non-top heavy? Is the plan a large plan subject to audit? If so, what does the auditor think? FWIW (nothing) my inclination is to count it as a related rollover.

I suppose a given funding institution might require or ask for something removing the deceased from their records, but absent that, it doesn't seem necessary to me. I'll be interested to see what some of the legal experts say. I'm not confident in my off-the-cuff opinion being correct...

I respectfully disagree with your interpretation. Basically, I'm assuming that your document is pre-approved language. If so, almost certainly it will have some sort of "fail-safe" language. For example, that if the Eligible Employee does not complete the stated hours of service requirement in the specified time period (in your case, 520 hours in the 3-month period) they will become subject to the 1 Year of service requirement. Which of course, is 1,000 hours. Where in 410(a) do you see anything where the IRS indicates that 520 hours in 3 months is unreasonable or unduly restrictive? As long as the plan is written such that you can't violate the age 21/1 YOS standard (or 2 years if 100% vested) you should be fine. I'm oversimplifying here, I know that...but I don't want to delve into every possible permutation!

Maybe I've got it all wrong, but I don't believe you are required to have Roth to allow catch-ups. It's just that if you don't have Roth, then the HPI's cannot do catch-ups. Am I missing something?

Thanks Peter.

Wow. So, non-profit 457 plan. A participant wants to donate a large sum of money from their 457 account back to the non-profit. Assuming the plan does not specifically provide for this (I haven't read the document, but I don't see how it could) it seems like a taxable distribution to the participant would have to be made, and then donated to the non-profit. I have no opinion on the possible charitable deduction side of things for doing so. Any thoughts on this one?

Thanks Lou. Yeah, I know they wouldn't count towards the 100 for audit purposes, but since eligibility not frozen, then they should be counted on 6a and b. Thanks for the confirmation on eligibility.

So, employer resolution (timely made) clearly stated that the money purchase plan was being frozen. The amendment itself (timely made) did not specifically state that the plan was frozen, but it reduced the formula to zero. 204(h) notice/SMM (timely given) specified that the plan was frozen. Question - although no one could accrue a benefit after the freeze date, do new employees become eligible, even though they will be eligible for a zero contribution? No coverage or nondiscrimination issues. Would you count these people as "eligible participants" on the 5500 form line 6a 1 and 2?? Plan is large enough that an audit is required whether they are counted as participants or not.

I'm pretty sure, but don't have time to check right now, that the proposed regulations specified that if the participant is still alive, distributions from the Roth portion do not satisfy RMD requirements.

Interesting points. Thanks.

Glad you have recovered! I would just call the IRS - I don't recall that this was specifically mentioned in the continuing ed requirements, although I fortunately haven't had to look for it. Seems like there ought to be some consideration given for verifiable medical issues. Good luck! P.S. - I just found this: 6. I was unable to complete the minimum continuing education credits required during an enrollment cycle, due to extenuating circumstances. Refer to Section 10.6(j) of Treasury Department Circular 230 to determine if you meet the qualifications to request a waiver of continuing education requirements.

So, if compensation for qualifying tips or overtime isn't taxable, does that have any effect for qualified plan contribution purposes? These aren't "fringe benefits" so a plan that excludes taxable fringe benefits wouldn't exclude these on that basis. It seems to me that it shouldn't have any effect, but I'm trying to think situations where it might? Any thoughts on this?

FWIW...I'm not sure there is an answer that can be specifically supported by a line in the regulations. IMHO, it would be overly aggressive to give your blessing to this approach. In the absence of a favorable opinion from counsel, I'd say don't do it.

Yup

Thanks all.