WCC

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

excellent, thank you. I heard this from someone but I hadn't seen anything written yet, this is very helpful. Thanks

Section 603 ELECTIVE DEFERRALS GENERALLY LIMITED TO REGULAR CONTRIBUTION LIMIT This is the section that refers to Roth catch ups for those making $145k. This section states the following: (b) CONFORMING AMENDMENTS.— (1) Section 402(g)(1) is amended by striking subparagraph (C). Question: isn't that the subsection that allows catch up beyond the 402(g) limit regardless of compensation? If that section is stricken, what remaining section allows catch up beyond the 402(g) limit? I am curious if this has the unintended consequence of eliminating all catch ups - is that what this does? (If it does, I am sure it will be fixed so this isn't a fire drill question) Thanks

Is this a stock purchase or an asset purchase? If a stock purchase, then the concept is correct. If this is an asset purchase then there are other considerations that I won't try to address.

I realized my answer may not have been very helpful, so I will try to add more as I have seen this many times. I think you have a couple options: 1. If you keep the Fidelity system exactly as is, then Workday needs to be coded in such a way to add deferral and catch up to get your total deferral rate then the system calculates the match each pay period. Then once an employee reaches 402g, the system needs to know to only use regular deferral to calculate the match. This route may be the best as it is just an admin coding change. 2. Keep the elections and payroll as is and amend the document to add a true up. 3. implement one election at Fidelity that continues until you reach the limits. Workday then just calculates the match based on one total election. The problem with this is how you handle all the existing catch up elections. These are just ideas to further investigate as each has its own set of challenges.

This discussion is not exactly the same, but may still be helpful. The payroll system should be adding both "regular" deferral and "catch up" deferral to calculate the match until the deferrals actually become catch up. D. Lewis provided the reasoning. This is exactly the reason I don't like separate elections for "regular" and "catch up". If you have one election then the payroll system just continues to withhold until deferrals reach 402(g) for non catch up eligible or 402(g) plus catch up for catch up eligible.

Sure you can have auto enrollment if your plan document allows it. No, you can't take the start up credit for a 401k plan where the only participant is the owner - see Code Section 45E(d)(1)(B): (B) Plan must have at least 1 participant Such term shall not include any expense in connection with a plan that does not have at least 1 employee eligible to participate who is not a highly compensated employee.

My concerns revolve around participant education. I think the payroll vendors can figure out how to code their systems to allow deferrals to continue similar to age 50 catchups, but it will come with time, expense and plenty of mistakes for stopping a deferral when they should have continued. Some recordkeepers currently allow simultaneous elections (1) "regular" deferral (Pretax and/or Roth) (2) "catch up" deferral (pretax and/or Roth) that are withheld that the same time - I don't like that programing, I prefer one election that just continues if you are catch up eligible. So in this programming instance there will potentially be four elections (1) "regular" pretax (2) "regular" Roth (3) Age 50 catch up Roth (will an existing catch up pretax election automatically switch to Roth?? or is a new election required??) (4) Age 60-63 catch up Roth. Or for recordkeepers that just have one election on file, participants need to be educated about how to make a deferral election of non-catch up pretax/Roth and catch up Roth and the payroll systems need to be smart enough to handle it. I think this can be overcome, but from a participant election perspective, just sounds confusing and that will lead to mistakes.

Hello, I want to ask for your thoughts on Secure 2.0 Section 109 Higher Catch-up Limit To Apply At Age 60, 61, 62, and 63. Am I understanding that at age 64+ the higher catch-up amount is no longer allowed? Seems like that is exactly what the wording says, but just seems odd. Is there a reason for only allowing a 4 year window? If you are age 64+ in 2025 then this has no impact on you? Or am I missing something? Thank you

Side note: if the individual owns existing pretax IRA's, the conversion outside the plan may not work out as planned due to the aggregation rules.

I actually called them on an overpayment last week. To my surprise someone picked up on my first call and the individual was very helpful. In my scenario the agent told me that they will send a letter to the sponsor with instructions on how to request a refund. I have no idea how long it will take, but she was confident that was the process to request a refund.

Once you file timely (without the audit), the filing is deficient not delinquent; therefore DFVCP is no longer an option. At least that is how an EBSA agent explained it to me a while back. Curious if everyone agrees. Maybe the IRS is catching on and sent this letter quickly knowing they can't remedy this via DFVCP and are now subject to IRS penalties??

Filing the 5500 without the audit and just attaching the coming soon letter has always bothered me because of this statement on page one: Caution: A penalty for the late or incomplete filing of this return/report will be assessed unless reasonable cause is established. Under penalties of perjury and other penalties set forth in the instructions, I declare that I have examined this return/report, including accompanying schedules, statements and attachments, as well as the electronic version of this return/report, and to the best of my knowledge and belief, it is true, correct, and complete. (bolding is my doing). When your clients file without the audit, are they leaving Schedule H part III blank? Does the IRS and/or DOL not care about this statement? Or is everyone who files late relying on "reasonable cause" (which I doubt is established in most cases). Or does this statement have nothing to do with the attachment? Thanks for your help. I have just never understood how that statement relates to knowingly filing an incomplete form.

From a participant perspective, one advantage to a pay period deposit is the benefit of dollar cost averaging. The best possible scenario for a participant is a document written with an annual match but the contribution is funded per pay period (so you get both a true up and dollar cost averaging). A plan administrator may feel that an annual match funded once per year is better due to the reason's Bird provided (to which I agree).

I agree with you and want to clarify my comments if they sounded like I was suggesting to amend the document and remove catch ups all together. I prefer one election as well, so we have advised clients to turn off the erroneous "catch up election" on the record keepers website. Or if it is not turned off, the payroll system needs to add the elections together to calculate the match.

This. We have done this many times with one specific large record keeper. A participant has one election on file, if the participant is catch up eligible, then the payroll system is set up to continue to withhold until they reach 402g + catch up.

No. Attaining age 50 in the calendar year (or already age 50+) makes an individual catch up eligible. However, a contribution is not recharacterized as a catch up until a limit is exceeded (e.g., 402g, plan imposed limit). In this case it would appear the "catch up" election should be matched until it actually becomes a catch up.

I reviewed my Empower account. They accept decimals, but the total still needs to equal 100%. 33.33% for three beneficiaries is not accepted by the website.

This is a similar discussion, it may be helpful too.

Our firm does not administer these, so I may not be much help. However, one of our concerns is obtaining a legitimate valuation of the stock. The last plan with a ROBS transaction we looked at, the stock valuation provided to us was literally just a value written on a piece of paper determined by the owner. I think obtaining a legitimate valuation from a professional is expensive and the cost may deter owners from obtaining a proper valuation. We ran away from this one. We don't see ROBS often, but this is one reason we don't have interest.

Is a 30 day notice required when amending the eligibility service requirement to immediate?