Belgarath

Can you clarify what you mean by an "open enrollment date" - I'm not certain what you mean? Thanks.

Thanks Lou. They do NOT currently use elapsed time, so service spanning rules don't apply at this point.

Interesting question - suppose a plan has an eligibility requirement of (x) hours in the first 6 months of employment, and if not met in the first 6 months, the employee becomes subject to the 1 Year of Service requirement. Now assume the employee works 5 months, then due to Covid economic issues, the employer furloughs this employee (and others) for a period of time - let's say 3 months. What's your opinion on an employer granting eligibility service while furloughed due to Covid, operationally, and allowing them to enter as soon as reemployed? P.S. - my point in all this is to see if there is a way around amending plan to use elapsed time. I don't see that the pre-approved document language is flexible enough to handle an amendment to credit hours of service service while furloughed, other than sideways through elapsed time if they aren't furloughed too long. And FWIW, just doing it operationally without appropriate document language, while "nice" of the employer, doesn't seem like an acceptable option. I suppose it could be submitted under a 5307, and I'd be surprised if the IRS would reject it, but it's a pain, costs more money, and hard to know how long it would take.

Purely playing Devil's Advocate for the sheer heck of it, I could also have PLANNED to offer a lower price, but upon discovering that my competitor charges substantially more, I could raise my price accordingly...

So, is it a 501(c)(3) organization, or some governmental entity, or something else? I'm guessing it is a 501(c)(3), but obviously I don't know. If so, they should be able to establish a 401(k) plan. But your first step is to confirm the entity type. Your plan options will flow from that.

Starting restatements almost immediately. There exists an option to to do a "minor modification" and submit to the IRS on a from 5307, if necessary. Question for any of you who might have a contact at the IRS - is this form and/or instructions going to be revised any time soon? Current version is, I believe, 2014. If no revision contemplated, then I guess we use the current one! (Not that I'm planning to anyway, if it can be avoided...) https://www.irs.gov/forms-pubs/about-form-5307

We are not supposed to discuss our fees on these boards, just fyi.

We'll agree to disagree. I think the IRS has, over the years, made its position very clear - unofficially. Like Bird, I've been conditioned over the years from IRS comments, etc. - yes, I absolutely concede not official guidance - that once you have earned the right to an allocation under the current formula, that's it. Not saying it can't be challenged - just saying I wouldn't do it, and wouldn't recommend that a client do it, unless so advised by their legal counsel.

A lot of good points!

Infinite are the arguments of the mages... From my perspective, one thing seems very clear. The IRS believes you can't do it. Now, if they challenged it and you went to court, would you win? I leave that the the legal eagles. But who wants to fight the IRS on this? Unless it is a large plan with a great deal of money at stake, the court costs alone will outweigh the potential benefit to the owners, and they could lose anyway. I just couldn't, in good conscience, advise a client to pursue this approach. If their lawyer advises them it is ok, then great - go for it!

Hi Peter - maybe someone else could see the benefit in that, but off the top of my head, I can't see how having two plans is better than one in this situation. Maybe it is better and I'm just having a brain cramp...

I think you will really have to go Hmmm... The changes are to the Code. As far as I know, the SECURE Act didn't make any changes/exceptions to the ERISA reporting rules, etc., purely with regard to employees covered by the 'Long-term part time" rules. So not only would you have some "Solo" plans that fall out of solo status, but you might end up with more plans requiring an audit. Of course, if the DOL ever gets it together and changes the participant counting rules on 401k plans to not count as a participant someone who is merely eligible but doesn't defer or receive contributions, this might more than offset the participant count increase for the LTPT employees. Must....grind....out...few...more....years...before....retirement!!!

Thanks Peter! I'll order it.

Has anyone seen a good source or webcast that addresses specifically what changes from Bipartisan Budget Act, SECURE, and CARES apply to 457(b) plans, and what amendments are required, and when? For both Governmental and tax-exempt plans?

In addition to Bird's comment, (with which I agree, without doing any additional research) I can only offer the language under 1.401(a)(31)-1, Q&A-6. This allows the Plan Administrator to adopt "reasonable" procedures. If you read it, unless you determine A-6(b) to override A-6(a), I think you can make a case for this being reasonable, but not required. If the Plan Administrator determines that it is "reasonable" then you don't really have a leg to stand on, short of having the participant go through a formal complaint process/lawsuit/etc. - and good luck with all that! P.S,. - I was assuming that these payments were coming out of a qualified plan and going to an IRA, but as I look at the specific forum title (which I didn't previously) , perhaps that isn't the case. In which case, I don't really work with IRA's and haven't done any research on your question re IRA to IRA transfer, so you'll likely want to ignore my comments!

I believe that possibly the "green book" that he was referring to is Janice Wegesin's 5500 form preparers manual, which was the Holy Grail of 5500 preparation guidance for many of us for years. It had a green cover. Janice sadly passed away recently.

Yes. Assuming that they are not "one-participant" plans eligible for 5500-EZ filing.

I haven't seen a lot of discussion of this issue. That's likely because of at least two reasons: first, in DC plans where most people terminate and take a full distribution on or before NRD, there are thankfully relatively few death distributions, and second, Covid has thrown everything into a tizzy this year. At any rate, recordkeepers are beginning to send out their "default" provisions - so it seems like a good time to think about the subject in more detail. My own preference, from a plan admin point of view, and for most of our clients, is the desire to get such amounts paid out of the plan sooner rather than later. Beneficiaries GENERALLY want the full lump sum amounts ASAP (whether in cash or rolled to an IRA) so I'm really talking about a limited number of situations. Do you plan to allow the full range of allowable distribution options, or restrict it to a lesser time period (for example, the current 5-year limit)?

I've always felt uncomfortable with this approach - that is, the starting a separate plan approach - (I'm a coward at heart when it comes to potential problems with the IRS) in that they might assert a timing problem under 1.401(a) (4)-5. But I can't say I've heard of this happening.

https://www.asppa-net.org/sites/asppa.org/files/PDFs/GAC/ASAPs/11-13.pdf

Thanks Peter. Food for thought! I guess (unless I'm missing something) that there is in fact already a specific rule - coverage/nondiscrimination testing would include such a person, UNLESS there is a specific exception. And I can't find one.

Interesting. Thanks!

Hypothetical question which may turn out to be real - don't know yet if it is 401k plan or ERISA 403(b), but I don't think it matters. Say you have employer A, whose plan has a (pick it - let's say 4 year graded) vesting schedule for matching contributions. (Not a safe harbor plan, by the way.) Let's say that employer A is going to be involved in starting up a new business, that for now at least would NOT be a controlled group. The new business B will have a bunch of employer A's employees transferred to them. Is there a reasonable way to have A's employees who transfer to B, have their vesting in A's plan continue to increase at the normal rate, based on the service with B? Something like: for vesting purposes only, former employees of A who transfer to Employer B will have their years of service with B apply to their account balances in this plan. Or something along those lines. I've never seen this done, but curious if it can be done.

Thank you Brian - this helped a lot!

Does the CARES act provision for changing health insurance coverage mid-year apply to vision or dental insurance? In other words, in a premium only plan, are these coverages considered "health coverage" for this purpose, or does the revocation of existing health health coverage or electing to now be covered, only apply to "health insurance?"