Belgarath

Agreed. See 1.401(m)-2(a)(6)(ii).

Most of you probably get the BenefitsLink Bulletins, but if not, see the following. I expect a huge sigh of relief from many places... https://www.irs.gov/pub/irs-drop/n-22-33.pdf

Without attempting to elaborate on the already fine points made by many folks already, I'll just say that I like Luke's suggestion: "just add crypto to 408(m)." Problem solved.

Thank you - yes, this can all get tricky. I do believe that the for-profit, (and it turns out that they do NOT currently sponsor any plan) if it does implement a 401(k), will only do deferrals and match, and not profit sharing. This would make things a lot easier. But all is in the investigation stage at this point.

Is your answer the same if a Governmental non-ERISA plan, which is not subject to 5500 filing requirements, files a 5500, but files it "late" - you can't turn a Governmental plan into an ERISA plan by filing a 5500. So suppose a penalty is imposed. Is that the IRS reviewer "correct" that since a form was filed, and filed late, a penalty is imposed as mentioned in prior posts? Seems counterintuitive, but maybe that's the way things work.

Thanks M. A couple of things - this IS the first for-profit entity, fortunately. As to the ABPT testing in the 401(k) plan, essentially the ABPT is stand-alone for the 401(k) plan, right? So no more difficulties passing than if it was just an unrelated business? Or am I missing something else? Muchas gracias!

Without doing any research, I would agree with you, and I think the IRS person is full of (something). I'd ask to speak to a supervisor. But, I may the one who is full of it...

I've never actually run into this situation before, (wish I hadn't now...) and I'm struggling with the implications. A 501(c)(3) non-profit (let's call it Loquacious Lumberjacks) intends to purchase 100% of the stock of a for-profit corporation (let's call it Anteater's Anonymous). Clearly a controlled group under 1.414(c)-5(g), example 1. LL sponsors a 403(b) plan, that includes a match. AA sponsors a 401(k) plan, about which I know nothing at this point. Now, LL can continue to satisfy the Universal availability requirement of 403(b) by excluding employees of AA as permitted under 1.404(b)-4(ii)(B). However, when it comes to coverage/nondiscrimination testing, I'm not 100% sure how it works. It appears that under 1.410(b)-6(g)(3), for coverage testing, AA is permitted to treat the employees of LL as excludable employees, as long as they meet a couple of requirements - (1) no employees of LL are permitted to participate in AA's plan, and (2) at least 95% of AA's employees are permitted to participate in AA's plan. Let's suppose they meet these requirements. And under 1.410(b)-7(f), for AA's purposes, contributions to LL's plan are disregarded if AA makes profit sharing contributions (although oddly, the reverse does not appear to be required). LL does not make PS contributions, so that leaves only matching contributions. For the matching contributions under LL, it would seem that nothing in testing would change, since AA's employees are excluded for Universal Availability purposes, so cannot receive the match. I'm not at all certain that I'm not missing something. Any comments would be VERY appreciated.

Hah! Now I've got that stuck in my head for the rest of the day! An enjoyable little ditty. Better than some thing that they played on the radio while I was driving into work this AM - some oldie called, if I got it right, "She made toothpicks of the timber of my heart." It was charitably described as a "song."

Thanks Cuse.

I haven't seen any official guidance on the following situation, and I wondered if there was something that I missed? Suppose a plan excludes "truck drivers" for all purposes. They are excluded even if they have satisfied the plan's 1 YOS/1,000 hour requirement. Plan passes coverage with flying colors. Now skip ahead to 2024 (*or possibly 2023 if SECURE 2.0 further complicates things). Must the LTPT truck drivers be allowed to defer? It seems like the grossest type of stupidity if they must be covered, while excluding people in the same employment classification who satisfy a 1 YOS/1,000 hour requirement. If there hasn't been any official guidance I've missed, anyone have a pipeline with some IRS folks for "unofficial" conversations that they might have had?

Not quite sure what you mean by 2 years. For example, was a deposit made to the SIMPLE = > 2 years ago, but nothing during the last 2 years? In that case, the rollover could be made. If the participant has never participated in the SIMPLE, or if that participation is less than 2 years from the date of first deposit to the SIMPLE, then no, he can't roll his 401(k) to the SIMPLE.

Thank you both.

Thanks Bri. Yes, I know this, but when I said last minute, I literally meant last minute. So to be more specific, suppose you can't send out the statement on or before 10/15, then which option do you use? I KNOW we will have a few of these (thankfully very few).

Curious as to opinions on this - suppose you have pooled plan, annual valuation only, and the client (on extension) doesn't get you data until the last minute. (Naturally, no one else has any such clients...) I guess you just have to send them late. Only other alternative is to send them out with duplicate of 12/31/2020 statements, with some sort of disclaimer, but I don't much like that option. Other alternatives/thoughts? This is preying on my mind, with a lot of folks on extension this year... Thanks.

Thanks Peter. Precisely as I thought, but it is always comforting to get confirmation from someone else!

Stupid question, but I just want to make absolutely sure I'm not missing something - not applicable to 457 plans, right? Gracias.

FIS pre-approved documents also modify the SPD if the election in the appendix is made.

New Cycle 3 document that we use defaults to the automatic revocation of spousal designation upon divorce. There is an OPTION in the Appendix to choose not to apply this automatic revocation.

Purely playing Devil's Advocate here, because I have no idea. Is it possible that particularly on some of the older annuity contracts that were used to fund these 403(b)'s, that the specific contract language contains such a requirement? There's a lot of wackiness in the 403(b) world.

For me, yes. I don't file many Determination letter requests these days.

First question - not too much - varies a bit year by year - maybe 3-4% on average. Had a huge VCP project several years ago that required more like 10-15, but that was an anomaly. As to your second question, I have no idea, and no way of even guessing.

RBR - yes, the 3% is required. The real question is whether you want to revert to ADP/ACP testing or not, and whether to preserve the top heavy exemption. Since due to an asset sale, you have the option to pay the required 3%, and preserve the safe harbor status for the short year, preserve the top heavy exemption, and avoid ADP/ACP testing. (I'm assuming no other contributions that would otherwise invalidate the top heavy exemption anyway.) If you don't choose this option, then you still have to pay the 3% for the short year, but you must test for ADP/ACP, and you lose your top heavy exemption since now it isn't a safe harbor plan.

I'm not sure if I'm understanding the thrust of your question correctly. In my experience in the industry, the vast majority of in-plan Roth conversions are, in fact, from pre-tax funds. The "mega back door Roth" is a niche used by a far smaller number of plans. But at any rate, the answer is yes, you can have a provision in your plan to convert pre-tax contributions, and many do.

I wouldn't report it regardless, but even if I were otherwise inclined to report it, I REALLY wouldn't report it when you don't even know if there's a PT involved. Just my 2 cents worth.