Belgarath

And all the wonderful memories...

What's the difference between true love and retirement plan paperwork? Retirement plan paperwork is forever...

Is a plan amendment required prior to 1/1/2026, or does this just fall under the general SECURE/2.0 amendment deadlines - in other words, it can be handled operationally as long as amended by the deadline? Recognizing, of course, that notification will need to be given to the HPI's as well as participants who will now have a Roth option if they didn't have it before, etc... Bleah.

Thanks all for the comments.

Self-check due to severe brain cramp - so, suppose a plan has eligibility requirements of 3 consecutive months with at least 250 hours. Let's make it easier and say age 21. The plan also excludes part-time employees. Part-time employees are DEFINED as per diem employees - they are not defined by hours. All the "part time" employees work <1,000 hours in a year. So, since the LTPT rules do not permit an exclusion category as a "proxy" for avoiding the LTPT rules based on an age or service condition, it would seem that this exclusion class is not valid for avoiding LTPT deferral eligibility if such an employee satisfies the 2 consecutive year/500 -999 hour/age 21 requirements, although it should be ok for employer contributions, subject to testing. Or, if someone satisfies the "normal" eligibility of 3 months/250 hours, even though they are excluded, do they NEVER become LTPT, because they have satisfied the less stringent normal eligibility requirements?

Depends on the plan document. All of them that I've seen (or remember) do have a spot for this. Usually either early on in the Adoption Agreement, or in an Appendix. In our documents, for example - the 401(k) doc it is on page one of Appendix A, whereas for the new Cycle 2 403(b), it is on page three of the Adoption Agreement. I'm sure you'll find it if you look through the AA and/or Appendices.

Any chance the document was SIGNED prior to 12/29/22? Assuming not, then assuming plan and fiscal year are calendar, I agree with your effective date - that is, applies the first plan year that begins at least 12 months after the close of the first taxable year with respect to which employer normally employs more than 10 employees. If any of these employees are part time, then you get into a pro-rated calculation depending upon hours worked - for example, an employee who works 6 hours counts as 3/4 of an employee, 2 hours counts as 1/4 employee. As I recall, IRS came up with this calculation methodology from the COBRA regs. Great fun.

I believe this was for "regular" DC plans, not 403(b) plans. Have I got that wrong? Sorry if I didn't make it clear my inquiry was on a 403(b) plan.

Is this even possible? I didn't think the IRS did any Advisory letters for "pre-approved" plans that early. Have NOT seen the actual document or IRS letter to confirm what the audit firm is saying...

I'm sure the rest of you have similar problems, but I find that the majority of situations are only communicated to us AFTER the fact, (sometimes LONG after the fact) which contributes greatly to the potential difficulties. Fun, fun, fun!

Yeah, I understand how you feel! ASG situations give me a dull pain behind the eyes. Of course, we tell them to consult their legal counsel - in more years than I care to count, I think I've seen them do it only a few times.

If I remember correctly, without looking it up, probably not. Assuming there is only one class of stock, and no option attribution, etc., then there is no attribution between Father and Son - the key point being that neither owns MORE than 50%. Now, you might well have an Affiliated Service Group (ASG) depending upon type of businesses and facts and circumstances.

I believe FIS is tentatively planning to have a SECURE/2.0 amendment available late 3rd quarter of this year. The amendment for tax-exempt 457(b) plans is slated to be available sooner. Of course, it ain't over 'till it's over. As we saw in the massive choke by Duke...

Interesting question. When referring to a 401(k), the word "establishes" is used, whereas that word is not used in the context of a 403(b). The truly conservative route would be to wait until the 2-year period has passed. This has another potentially larger advantage - if you interpret the statute as allowing the rollover within the 2-year period without penalty, then those rollover funds remain subject to normal distribution restrictions, whereas if you wait until after the 2-year period has passed, then roll the funds over, most 401(k) and 403(b) plans allow a withdrawal of rollover funds at any time. This flexibility may be attractive to employees - they tend to get cranky if they are told they can't currently withdraw rollover funds.

I am not a lawyer, I'm a TPA. From my perspective, you need a lawyer. If the amount of money is substantial, then you REALLY need a lawyer. Don't mess around. Now, others here may have a more informed opinion.

*Hi Paul - one question - I believe that this permissive aggregation is solely for top heavy purposes, correct? In other words, permissive aggregation isn't allowed for normal coverage/nondiscrimination testing? *Never mind - not eligible for permissive aggregation. Thanks.

No. They can terminate effective 12/31, and then have them participate in the 403(b) for 2026. Secure 2.0 allows for mid-year terminations, but only if the employer establishes a safe-harbor nonelective 401(k) to replace it. Won't help in your scenario.

Thank you both!! As it turns out, by a happy chance, the plan in question turns out to be a 403(b), so top heavy doesn't apply, and the eligibility is such that LTPT will never apply. Woohoo! It's about time we caught a break on something...although, preliminary info appears to indicate that coverage and nondiscrimination were NOT disaggregated. I don't think it is likely to make any difference in coverage, but might affect the ACP test.

We virtually never get a plan that has union employees, so I'm a bit rusty on this. I can look it all up, but thought perhaps someone who works with it would know in a snap right off the top of the head. As I recall, for a plan where there are both union and non-union employees, even if all have identical coverage or not, mandatory disaggregation of union employees for coverage and nondiscrimination testing, and the union employees' "plan" is deemed to pass both. Top heavy treatment does not disregard the union employees. And if there is more than one collective bargaining unit with employees participating in the plan, each unit is considered a different "plan." Is my recollection correct? Thanks!

While I typically try to avoid politics in retirement plan discussions - looking ahead, with the current Congress and administration, there might well be in the near future. However, I wouldn't dare to predict something like this - just take it as it comes, if it happens at all.

As with many services/providers, some are excellent, some couldn't be trusted to - well, never mind. I think there are certain payroll companies that generally handle things well, yet fall short on the qualified plan end of things...and to be fair, sometimes the clients make life difficult for the payroll companies, similar to what we sometimes have to deal with... We've never actually received a request for something like this. Is it a common request/procedure? Just curious.

Monday brain cramp (although the cramp is likely permanent...) A lot of angst here over a small amount of money, but the question has come up if the death benefit can be directly rolled over to a trust for the benefit of the minor, or can it be designated as a beneficiary IRA? I'm really not sure on this one, due to the fact that there was no "designated beneficiary" by the participant. I believe it has to be under the control of a guardian/Trustee until age of majority regardless of rollover status. Thoughts? Thanks! Update - after having done some additional research, this seems to get complicated even further. It seems like it will be ultimately governed by state law, since ERISA doesn't appear to specify specific handling. So we'll need to tell the Plan Administrator and client to consult legal counsel. Seems like the legal guardian (and there is one) can make it easy (on the advice of counsel) by either setting up a UGMA trust/custodial account, or direct a rollover to an inherited IRA set up for the minor beneficiary?

Congratulations! Enjoy!

BRILLIANT!!!!!!!

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