Belgarath

I generally would agree with BG, but I'd be a little careful. The IRS generally assumes all terminations are involuntary, but that's a rebuttable assumption. So if the employer can prove to the IRS' satisfaction that these were in fact voluntary terminations (and not in response to some employer action) then yes, shouldn't be a PPT.

Thanks, and thank you for your patience.

Thank you both. But I'm trying to understand - ESOP, I get it that a S-corp CAN allow a stock distribution. I'm struggling with the concept, however, of how this is possible, even for "1 second" if the plan language clearly states that if the corporation is a S-corp, that distributions must be in cash? Even if the participant signed (incorrectly?) a "put" - isn't the put meaningless? What trumps what here?

Interesting question arose from out in the wide world, and I don't know much about ESOP's. Suppose you have an S-corporation, where the document clearly states that all distributions must be in cash. Seems straightforward enough. So if the corporation RETIRES shares (as opposed to repurchasing them) when someone terminates employment, there's still no share distribution to the participant, right? So that no NUA calculation would apply, even if there is a lump sum distribution? Isn't the net effect (to the participant) the same, whether shares are retired or repurchased - i.e. the participant never receives ownership of the shares, so there is no "put" option, and the participant just receives cash, as required under the terms of the document?

Are you talking about a PENSION plan, or a purely discretionary Profit Sharing Plan? At any rate, I think you want DOL regulation 2509.94-3, (c). P.s. - the (c) is if it as a PS plan. If you are actually talking about a DB plan, then it would be paragraph (b). But as to whether a CD could be considered "cash" - I'd opine, for what little it is worth, that it's verboten. I lean towards conservatism on such issues. Ultimately an ERISA counsel question as far as I'm concerned.

Thanks all!!! Very helpful.

Peter, thanks for the response. One additional question - does moving to a PEP automatically terminate the plan, causing a short plan year, and start a new plan 002? Or does the existing plan simply move under the "umbrella" of the PEP, administered by a PPP, still as plan 001? Gracias!

Couple of questions on this, as we aren't a PPP. We are TPA on a plan sponsored by a corporation, (a controlled group with one other corporation which signed on as a participating employer) where a financial advisor convinced them to move all the funds to a PEP. Fine. This happened a couple of months ago. (Calendar year plan.) We have been asked to complete the plan administration for the 2022 plan year. Is it ok for the PPP to farm out the administration to a TPA like us? In addition, any thoughts as to why we might not WANT to do this admin, or is it just carry on as usual - We've never been involved with a PEP/PPP yet. All thoughts appreciated!

It is a bit of a stretch, but what about a DC Pension plan, that wants to allow in-service distributions prior to age 62? If they can legitimately use an earlier NRA, then such a distribution could be allowed.

This might help. https://www.irs.gov/retirement-plans/choosing-a-retirement-plan-simple-401k-plan#:~:text=Under a SIMPLE 401(k,of each eligible employee's pay.

Thanks. Oddly, traffic was very light this morning. I think people are backing off the physical Black Friday shopping, and doing more of the Cyber Monday stuff. Just my unscientific opinion...

Hope you all have a wonderful Holiday break. Watch out for crazy drivers! There were already a lot of people in a heckuva hurry this morning...

When I was doing some random browsing, I saw something on this that made be do some additional browsing. There are MANY websites out there that say you are a HCE if you had more than $150,000 compensation in 2022. Now, while true, it seems to me that this is very misleading, as some of the charts, etc. would lead someone to believe that the THRESHOLD is $150,000, rather than $135,000, so that if you had, say, $145,000 in compensation in 2022, you would not be a HCE in 2023. Are others seeing this, or getting questions due to this type of information out there?

Thanks to you both.

I'm really not sure about this. Suppose you have a tax-exempt (non-governmental) corporation sponsoring a 457(b) plan. This corporation also has a couple of 1-person LLC's that are "disregarded entities" for tax purposes. Question is - can those employees (1 in each LLC) be allowed to participate in the sponsoring organization's 457(b) plan? (Assuming they otherwise qualify in the select group of management or highly compensated employees.) Common sense (to me) says yes, but does anyone know of anything concrete one way or the other? Or have an opinion? Thanks!

Oh, I agree wholeheartedly! IMHO, a remarkably foolish risk given the potential penalties. If the building burned down, or was washed away in a flood, or in the hospital, etc., then it might be different, but changing jobs, or whatever, doesn't build a strong case as far as I'm concerned.

I'd be very leery of a procedure that would allow $100.00 to be withheld from a future check without a specific participant election. I'd say nothing "extra" is withheld froma future check unless the participant authorizes it.

Box D - didn't paste in well, but see below Form 5500-SF Department of the Treasury Internal Revenue Service Department of Labor Employee Benefits Security Administration Pension Benefit Guaranty Corporation Short Form Annual Return/Report of Small Employee Benefit Plan This form is required to be filed under sections 104 and 4065 of the Employee Retirement Income Security Act of 1974 (ERISA), and sections 6057(b) and 6058(a) of the Internal Revenue Code (the Code).  Complete all entries in accordance with the instructions to the Form 5500-SF. OMB Nos. 1210-0110 1210-0089 2021 This Form is Open to Public Inspection Part I Annual Report Identification Information 0BFor calendar plan year 2021 or fiscal plan year beginning and ending A This return/report is for: X a single-employer plan X a multiple-employer plan (not multiemployer) (Filers checking this box must attach a list of participating employer information in accordance with the form instructions.) B This return/report is X the first return/report X the final return/report X an amended return/report X a short plan year return/report (less than 12 months) C Check box if filing under: X Form 5558 X automatic extension X DFVC program X special extension (enter description) D If this is a retroactively adopted plan permitted by SECURE Act section 201, check here. . . . . . . . . . . . . . . X

An interesting subject. Some discussion of this came up tangentially in the context of a plan termination, where of course the loan can be accelerated even for "parties in interest." But I've always wondered about the "why" of this exception being discussed above. I always just accepted that it was the rule that parties in interest with an outstanding loan wouldn't necessarily have it accelerated upon termination of employment. Never seems to come up in real life. But does anyone's knowledge/understanding of this reach back to the reason(s) for this exception?

This is GREAT advice.

I'm merely speculating that this is a safe harbor plan, and that you are referring to what is commonly called the "30 day notice" requirement. IF that is the case, the law does not necessarily require a notice at least 30 days in advance. The statute requires that the notice be given within a "reasonable" time prior to the beginning of the plan year. For the normal annual notice, the IRS "deems" it to be reasonable if given between 30 and 90 days prior to the beginning of the plan year, but facts and circumstances can override this. For a newly eligible employee, the requirement is satisfied if the notice is given by the employee's date of eligibility. You might want to spend some time reading through 401(k)(12) and (13), as well as 1.401(k)-3(d)(3) if your situation is in fact what I'm guessing, as well as IRS Notice 98-52. If your safe harbor is a QACA, see also see 1.401(k)-3(k)(4).

Thanks, appreciate the thoughts. We don't have anything to do with these plans anyway - just a question that came up out of the wild blue yonder...

You asked this same question yesterday. But yes, the 3% nonelective safe harbor contribution can be used toward satisfying gateway. Mind you, it only counts TOWARDS gateway, it doesn't necessarily eliminate it. For example, if gateway for the plan in question is 5%, then you'd still need an additional 2% contribution on top of the 3% safe harbor.

Thanks!

Thanks all. Chaz - just as an example, what about a Health FSA or a Dependent Care account?