Belgarath

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?

If a corporation (A) changes name, entity type, and gets a new EIN for the new corporation (B), is there any reason why (B) can't assume the assets/liabilities of the existing corporation (A) Section 125 plan, similar to what often occurs in the qualified plan world? I don't see why not, although Section 125 and the 125 regs don't appear to address this. But there is some info in RR 2002-32. With all the mergers/transactions going on, I assume this happens all the time?

I'm not a DB person, but a question came up as to required amendments for the past "several" years. These are a couple of plans that are evidently frozen (at what year I don't know) and that haven't been updated, apparently, for 4 or 5(ish) years. They are not cash balance/hybrid plans, not union, not governmental, (but one is apparently a non-profit) and apparently HAVE received IRS approval letters at some point in the past. They want to terminate the plans. I do not know if they are pre-approved plans or not - I'm speculating "not" but I don't know. Looking at the IRS cumulative list, it doesn't appear that there is too much required in the way of DB amendments going back to 2016. Do you agree that this would generally be the case, or am I missing something obvious? Of course, if they are terminating, they would have to also be updated for CARES/SECURE as applicable, but that's a separate question. Just looking for general thoughts. Thanks.

What Bill said!!

Yes, the 3% can be used toward gateway. No, the safe harbor match cannot be used toward gateway.

I agree with David. The SMM for the plan termination amendment can serve as the informational "notice" to employees.

Well, first thing that comes to mind is are there ANY allocation requirements? (hours, last day, etc.) If contributions re made prior to satisfying those allocation requirements, could be a mess. We recommend that if they want to "pre-fund" - they put it into a segregated employer account, then after end of year, when testing can be determined, and they have cooked their books to determine how much they can/want to contribute, move the money then. It's also just a lot more confusing - more opportunities for error either with internal or external payroll, particularly if there is any excluded compensation category, etc. I've seen a couple of plans that utilized per payroll, with NO allocation requirements and a design-based safe harbor flat percentage that worked, and I've seen a couple that were disasters. I certainly would not recommend it.

Thanks MoJo. But maybe I'm asking the wrong question. I'm talking about specifically non-periodic payments. So if eligible rollover distribution, mandatory 20% withholding unless they choose a higher amount. For a non-ERD, 10% unless they elect otherwise. So, if I'm understanding what you are saying, the IRS is saying that if you withhold correctly at 20%, it is "deemed" incorrect by the IRS? Or are you referring specifically to periodic payments/annuity payments, or situations where they want a HIGHER amount withheld? Thanks - sorry if I'm being dense...

What's the penalty for not using the W4-R? For example, using Bird's current methodology, where the participant simply elects a different amount - if there's no penalty, is it a problem?

Great, thanks.

If the disclosure method is only for ACTIVE EMPLOYEES (paper copy to all others) who all have a company e-mail address and accessing it is an integral part of their duties, etc., etc., is the initial notice of electronic delivery required to be in paper format, or can that initial notice also be sent electronically via e-mail? Some confusion on this - it appears that it could be via e-mail rather than paper?

Thank you both!

So memory is that you couldn't have both the carryover(rollover) AND a grace period with regard to a health FSA. Then Covid/CAA/etc. came along, and I'm not sure now whether the temporary allowance of rollover if you also had carryover expired, or is it permanent? Or maybe I'm completely off-base anyway... Thanks.

Riley - completely off-topic, but rough start for the Yankees. They are perfectly capable of taking 4 out of 5, but Houston is tough. As a Red Sox fan, I'm unable to seriously root for the Yankees without holding my nose, but I confess to being an Aaron Judge fan. From anything I've seen or heard, what's not to like? Handles himself with class, and doesn't engage in the childish stupidity which runs rampant on the baseball diamond these days. He's cast in the Derek Jeter mode. Of course, maybe he'll come to Boston as a free agent... which would be appropriate revenge for the Babe Ruth trade.

Actually, IMHO, this is optional. The older regulations (from whatever years, I can't remember off the top of my head - maybe late 80's and early 2000's) required that these amounts be included. But now see 1.401(a)(9)-5, Q&A 3(b). Possible that your plan language will specify, but most of them probably just refer to the regs, or actually use that specific language from the Q&A referenced above. I don't know whether there's a lot of consistency on which method is used.