401QUE
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Thank you so much!!!! Now comes the fun part of having the giant record keeper properly implement it, by way of creating a new Match source for the terms. Have yet to see how the SPD lays this all out... The responses are much appreciated!
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Can an employer amend their tiered-vesting match to give immediate 100% vesting to only actively employed participants' balances? Put another way, can an employer make all match balances for only active employees 100% vested, while keeping termed participants on the existing tiered vesting schedule? Note this full vesting would be on existing balances as well as future match contributions for active employees. I'm a bit rusty on protected benefits but don't immediately see where any accrued non-forfeitable benefits are being reduced in any way. Any insights and guidance are most appreciated, as always!! Thanks!
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Austin, thanks for the (delayed, but) good laugh!
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Maybe this: https://www.irs.gov/Retirement-Plans/401k-Plans-Deferrals-and-matching-when-compensation-exceeds-the-annual-limit
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Might this be what you're looking for: https://www.irs.gov/Retirement-Plans/401k-Plans-Deferrals-and-matching-when-compensation-exceeds-the-annual-limit I'm actually searching for answers to whether the per-pay-period match accrual must stop when Year-to-date pay hits $265,000. The IRS addresses that deferrals may continue after 401a17 is reached (absent the "first" 265k reference in your document), but the above link does not address the stoppage of match upon reaching the 265k mark during the year. Any thoughts?
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Thanks, Lou S!
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Greetings 401k Board, I am hoping for feedback and guidance regarding an unusual situation. Employer A is about to acquire Employer B. Both parties agree that Employer B will terminate their Safe Harbor plan prior to acquisition (closing in less than 30 days). Is there an exception to the testing requirement for the current year (because of elimination of the SH) due to plan termination? They will have made 11/12 months worth of SH accruals, and there will no longer be a plan for the final month. They will be able to timely issue a "NO 2016 SH" notice, for what it's worth. As an added complexity... If the deal falls through after after 11/30, can Employer B re-issue an updated SH notice to re-institue the 2016 SH contribution? It will certainly be an employee-friendly change, and be done with some time to allow employees to consider the elections for 2016. That's what the 30 day period is intended for if I'm not mistaken. Any observations, questions, input are appreciated! Thanks!
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Auto Enrollment and Immediate Entry Date and Administrative Lag
401QUE replied to CO Bank's topic in 401(k) Plans
The reason for the "Administrative Lag" would be the required 30-day Auto Enrollment notification. Common is auto enroll plans that have immediate (or rapid) entry to participate. Probably often takes up to 45 days due to the TPA's online system (guessing here). -
I am assuming that non-profit organizations have no individual owners. I have a possible new client the founder (HCE) of which has a daughter also working in the organization. The daughter does not and has not earned over $115,000 in any years, yet they are both treated as HCEs on the TPA's discrimination testing. Is the TPA somehow viewing the founder as an owner and then attributing that "ownership" to the daughter incorrectly? Thank you!
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Sorry, DC 401k plan. Not trying to argue, nor take sides, just sort of feeling sorry for the acquiror. I always believed the party responsible for adopting the plan is the one responsible for terminating, hence my "trustee/officer' reference earlier. Can he/she/they be made to deal with the old plan, if specified in the agreement? Even still, these are people that often remain in the new subsidiary so there's all kinds of other external, political, organizational factors to consider.
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So... even though the acquired company (Subsidiary) did properly terminate their plan prior to the deal, [disillusionment setting in] there is really nothing to be gained by the Parent Co either way. The Parent Co either faces the hassle factor of having to do a formal plan merger for the hassle factor of back-stopping the acquired company's plan termination and administrative shutdown responsibilities.
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A plan sponsor was acquired via stock sale. They were told that terminating their plan before the deal closed was advisable to provide more freedom of choice to their plan participants (a distributable event allowing more distribution choices, rather than face a plan merger under the successor plan rules). The acquiring entity also did not want to take on the liabilities present in an active qualified plan with operational defects. I don't have any details on the purchase agreement between the 2 parties, unfortunately, but will guess that not much was stated regarding the retirement plan. So now we have a terminated plan that still has a number of steps to fully shut down, including current and future compliance testing, tax form filings, potential refunds, distributions, etc.. Question 1: Am I correct is thinking the acquiror has every right to insist that those tasks (and costs) be handled by the acquiree? Question 2: Does the acquiror somehow inherently own the liability for the acquired company's plan anyway, absent anything in the purchase agreement specifying that the plan trustees/officers of the acquired co. are personally responsible until the plan is shut down and beyond? Thanks for any comments and observations!
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On the IRS website, I spotted a "Rev.December 2013" Form 5330 today, FYI.. (we were previously using Rev. April 2009). It doesn't look like much has changed upon first glance.
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Here are the basic facts: Start up Plan effective 10/1/2012 One employee that owns >5%, was hired 8/2/2012 (deferring 10%) - the only HCE for 2013 No other employee owners No Employees had comp over $115,000 in 2012 If the 2013 ADP test is run using Otherwise Excludable method (using statutory entry date of 7/1/2012), are all employees excluded - even the HCE? I cannot seem to find anything in Tripodi, or from the TPA (yet). Thank you!
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Unfortunately, the VS document they are on does not allow for anything more than Pro Rata and Integrated allocation methods. I believe the SH NEC upper limit is 25% - at least that's the range given in the plan doc.. I appreciate your comments and suggestions, JMH!