WCC

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?

I am not aware of a regulation that would require a mandatory 30 day wait to amend. My guess is the RK cannot amend any faster due to their internal processes and therefore they are pushing the 30 day timeframe to give them time to amend.

This post is intended to gather the groups thoughts about auto enrollment to pretax or Roth. Let's assume the document allows for either choice. Among our clients who auto enroll, 100% auto enroll with pretax. At the time of making the decision to auto enroll to pretax, there is no analysis done to determine if it should be pretax or Roth. The decision is always made solely based on the idea that pretax is most common and therefore must be the right decision. I feel like no one wants to be the first one sued over a Roth default. Even though pretax is the most common default and little thought goes into the decision, a decision is still being made by the sponsor to determine that pretax is better and more prudent than a Roth default. Either choice impacts the participants tax situation. Does anyone see auto enrollment to Roth among your clients? I think there is a valid argument to say Roth auto enrollment may be better for certain employers. Are there any publications that suggest auto enrolling to Roth is not a prudent decision? Thanks for your thoughts.

Thanks. Both plans currently meet all requirements under DOL Reg. §2520.103-1(c) to receive the audit exception.

A single employer maintains two calendar year plans to avoid the audit. On January 1, 2022 Plan A has 90 participants and Plan B has 90 participants and both plans are identical from a benefits standpoint. On July 1, 2022 Plan B will merge into Plan A (waiting until 1/1/2023 to merge is not an option due to other business reasons). On July 1, 2022 Plan A will have 180 participants approximately. Is Plan A a large plan filer beginning on January 1, 2023? Or does the mid year merger have any impact on making them a large filer for 2022? I am being told they will require an audit for 2022 and can't figure out the reasoning why and the person telling me this can't provide any support for their reasoning. Thank you

I have learned more on these boards than any credential program I have gone through. Those programs are excellent, but it is impossible for them to cover the amount of information that comes through these message boards. There are some incredibly intelligent commenters that I have come to trust over the years (I know that is scary based on a message board, but it is true). They have helped me more than they will ever know and I am grateful to them (all of you!!). Thank you!!!