WCC

here is the regulation cite if helpful. Treas. Reg. §1.401(m)-3(j)(6)

No, they do not. HCEs don't receive any special treatment when it comes to deposit timing. Are you asking about self employed individuals? If so, then this thread may help.

Unless the plan documents says otherwise, this paragraph from the preamble to the 415 regs is what I have relied on when this question comes up. You are not required to count compensation on a FIFO type accounting basis. https://www.federalregister.gov/d/E7-5750/p-111 "As noted above, the final regulations provide that a plan cannot take into account compensation in excess of the section 401(a)(17) limit. In addition, the final regulations provide that elective deferrals can only be made from compensation as defined in section 415(c)(3). However, in applying these two rules, a plan is not required to determine a participant's compensation on the basis of the earliest payments of compensation during a year."

Can't you just force them out to an IRA due to plan termination under Treas. Reg. §1.411(e) regardless of the existing threshold?

Asking about employer contributions such as match, profit sharing, etc.

Is anyone aware of a tax change (effective 2024) requiring employers to pay FMLA and unemployment taxes on employer contributions for the year the contribution is made for residents of Massachusetts only? Google searching did not result in any answers to confirm if this inquiry is indeed accurate. Thank you

I will attempt to answer this. The participant loan is a plan asset and earns interest which just happens to be paid by the participant. The interest is a plan asset since it is earned on a plan asset. In this case, the loan is part of the participant directed account so the participant is choosing how the funds are "invested" and the participant is earning interest on their loan asset. When payments are made to the plan, the cash buys shares of the TDF. So in your example the $1800 of interest buys shares of the TDF in the participants account. it is similar to any other investment in the plan. If you own a mutual fund that pays dividends, those dividends are reinvested in your account and they buy more shares of the investment.

Traditional 401k plan has an ACA feature with auto escalation (not EACA nor QACA). Plan is a calendar year plan but auto escalation occurs on July 1 to coincide with pay raises. Plan provides annual ACA and escalation notice between 30 - 90 days before the beginning of the plan year. Question - since the escalation takes effective later than 90 days after the annual notice is given, is a second notice required to be given later in the year? I have searched the EOB and these boards, but can only find notice references when the escalation occurs on the first day of the plan year. I am thinking a second notice should be given, but am getting push back to prove it. Thanks

I am having trouble finding guidance on this and hoping someone can point me in the right direction. Participant took a $100,000 CARES Act distribution in 2020. Proceeds came from: Roth deferral = $50,000 Pretax deferral = $25,000 Match = $25,000 Participant makes a repayment of $100,000 in 2023. In to what sources are the funds deposited at the time of repayment? Roth = $50,000, Pretax = $25,000, Match = $25,000? Or Roth Rollover $50,000, Pretax Rollover $50,000? Some other method? Thank you

If the error had not occurred, would she have received match? If so, then she should receive 100% of the match that she would have received had the error not occurred. (Rev Proc 2021-30 Appendix A Section .05)

5 year clock starts the year the first Roth contribution and/or conversion is made in the 401k. Keep in mind if he satisfies the 5 year rule in the 401k, then rolls to a brand new/newly opened Roth IRA, the 5 year clock starts over.

Hello, As we know, SECURE 1.0 and SECURE 2.0 increased the RMD age. Let's say a DB plan kept their distribution age at 70.5 and continues to pay mandatory distributions at 70.5. Let's assume a participant turned age 70.5 in 2023 and the DB plan will pay the first "RMD" by April 1, 2024. Can a participant roll that payment to an IRA and avoid taxation since the plan is forcing the distribution sooner than they otherwise are required to? Does by virtue of the plan keeping the RMD age at 70.5 make this an RMD? Or does the participant have any individual choice to roll it since it is paid before 73? Thank you for your thoughts.

I am not a fan of filing without the audit, but I may be in the minority. Below is a great discussion of this question.

Please consider the following: Calendar year DC plan with a non-elective discretionary employer contribution. The plan document is written with the following allocation condition to receive the non-elective: "To be eligible to receive such Non-elective Contribution, the Participant must be employed by the Company on the date the Company makes the Non-elective Contribution." The plan administrator will fund the contribution on March 1, 2024 for the 2023 plan year to only eligible participants actively employed on March 1, 2024. This is a new one for me, I was under the impression that you could not have an allocation condition beyond the end of the plan year. Am I wrong? Do the regulations allow for this type of allocation condition? Or can the word "makes" be interpreted differently (e.g. "makes" means the plan year to which it is allocated, or does it mean the date money is deposited to the plan)? Thank you!

Are you suggesting they remove the class exclusion for both deferrals and match? If so, those working <1000 hours will be eligible to receive the match once they meet the 3 month eligibility condition and reach their entry date. If participants become eligible for deferrals and match under the 3 month elapsed time rules, they are not LTPTs. If you are suggesting they amend to allow all employees to defer after 3 months elapsed time and keep the 1000 requirement for match (e.g. dual eligibility or allocation conditions), then I think you have to test the plan as you would any other plan with dual eligibility or allocation conditions.

If they had less than 100 participants on the first day of the plan year, why would an audit for 2022 be required? I am a bit hesitant and confused because Bill is always right, so I must be missing something. Or is this question related to the 2023 audit requirement?

What was the participant count as of the beginning of the plan year?

similar discussion here:

Thanks for the responses. This is a 401k plan with a discretionary match, no profit sharing, individual account balances, daily valued. The plan allows in-service distributions from all sources at age 59.5 or upon termination of employment.

This is in relation to a DC plan, deferral and match sources. The HR individual inadvertently entered a termination date for an active participant. Participant receives a notice from the recordkeeper stating you are eligible for a distribution and participant cashes out 100% of the balance. Participant was 100% vested, age 35, not an owner, not a Key, not an HCE, all funds in the account were correctly calculated. Do you think the SECURE 2.0 overpayment rules are cut and dry to let this distribution go without any action by the administrator? Or do you think we are waiting for guidance and should consider following the prior rule? Or maybe would you say this is not the definition of "overpayment" as defined by EPCRS? Thank you

This is the text from the link justanotheradmin posted. Notice 2016-16 doesn't say "or vice versa" in the final bullet point below, but the commentary on the website does. Prohibited mid-year changes The Notice provides the following list of “prohibited mid-year changes” that may not be made to a safe harbor plan, unless the change is required by applicable law or court decision. A mid-year change increasing the years of service for the vesting schedule for a safe harbor plan consisting of a Qualified Automatic Contribution Arrangement (QACA); A mid-year change to reduce or narrow the group of employees eligible to receive safe harbor contributions; however, this does not limit the ability of the employer to amend a plan mid-year to change eligibility service crediting rules or entry date rules for employees who have not yet become eligible to receive safe harbor contributions; A mid-year change to the type of safe harbor, for example, a change from a traditional safe harbor to a QACA, or vice versa;

Maybe I should not ask "why", but here it goes: Is there a reason ages 73 and 75 were chosen for the RMD age? Was it based on: data around life expectancy, such as a specific life expectancy table a specific report that shows employees are working longer and delaying retirement anecdotal evidence balancing act with the budget and those ages just made the 10 year projections workout nicely moving from age 72 to 73 is the easiest change the drafters favorite numbers Thanks for any thoughts/comments.

It's based on what she elected. See Rev Proc. 2021-30 Appendix A .05(5) and (9).

No, not unless the document says otherwise. Yes Yes Agree, terminated participants are not eligible for the match and/or true up if they have a last day allocation condition. Be sure to check the document as it may provide an exception to the allocation conditions for termination due to death, disability or retirement. A pay period match with a last day rule is a poorly designed plan.

Assume a 401k plan currently allows pretax, Roth and catch up deferrals. In theory, can a 401k plan allow pre tax deferrals, Roth deferrals, and only Roth catch up deferrals for all employees regardless of pay and SECURE 2.0? (Ignore document restraints for this question and ignore that catch ups were accidently deleted) My answer is 'no' based on the following: 414v allows for catch ups, that section defines “deferrals” under 402g(3), which defines deferrals under section 401k, which says a plan cannot only allow Roth deferrals (1.401(k)-1(f)(1)(i)). Since a catch up is a deferral, I am not sure how a plan could only allow catch ups as Roth. Thoughts? Thank you