justanotheradmin

can they not log in to a custodian or plan website and see balances?

that depends. by current participants do you mean people with balances? actives with balance? terminated people with balances? actives who are eligible but do not have a balance? if the MEP is relying on the individual employers to send them a census each year, they might not know who the current participant are, just who has balances and who was current as of the most recent year end. If the MEP is also the recordkeeper/custodian/and 3(16) provider it will vary.

100% this something that an experienced ERISA law firm should handle. This is NOT the type of VCP to cut your teeth on, even if you as a TPA want to start offering VCP services and have staff with the proper enrollment (CPA, ERPA, ETC) to do so.

All of that needs to be sorted with a family law/ divorce lawyer first. If the divorce lawyer needs help from an ERISA attorney should know that they don't know enough and suggest additional counsel. Once an agreed upon DRO is written - that conforms to whatever the property agreement (original or updated etc) has in it - if there are issues getting the money out of the account for Person B - THEN the plan gets involved. Is the split in the property settlement agreement appropriate given all the new information? - not a question for these boards or the plan Does the DRO reflect the 401(k) award amount/value in the property settlement agreement ? - not a question for these boards or the plan, get an attorney or accountant who specialize in that to review Is the DRO accepted as qualified by the Plan? - that's a question for the Plan Administrator. If Person B doesn't like the answer, or isn't getting a response, they need to request a copy of the QDRO policy If person B wants to contact EBSA - they certainly could. None of the background information matters to EBSA. They would need to tell EBSA the date they presented the DRO to the plan, or the date the plan was notified there might be a QDRO, the date they requested a copy of the plan's QDRO policy in writing, and then any communication they received from the plan in response either saying no, we aren't giving you a copy, or you aren't entitled to it etc. If a participant/beneficiary is entitled to a plan disclosure, document, SPD etc, and they requested it and haven't received it, then I've seen good success when EBSA contacts the sponsor / plan admin to get it. and then EBSA forwards it on to that person. The QDRO procedure isn't going to tell person B if the stuff in the DRO is correct in regards to the dates, values, etc. Its going to say what the plan will do, notices, etc if a DRO is presented for the plan to accept as qualified or deny it as not. If the property settlement awarded half the 401(k) to person B, as of that date, then the DRO might be fine. Sounds like Person B might have wanted marital assets split differently if they knew the full picture, include a different portion of the 401(k). All that needs to be ironed out first.

you haven't said what the actual issue is - has Person B received money and they disagree with the amount? They don't like how the DRO was drafted? Are you saying the DRO was never signed or reviewed by Person B or their legal representative? If they have a copy of the DRO - and it is doesn't agree with their property settlement agreement - that needs to be addressed. The plan doesn't get involved with that, and the plan's QDRO procedures don't matter for that part. Bottom line - if there is an issue with the language in the DRO - specifically the asset value award - that probably has nothing to do with the plan's QDRO policy. You haven't said where the money is held either. If it is someplace like American Funds, or Hancock, etc when the distribution / segregation of accounts form is submitted they will often do the calculation for the plan administrator. You ask what legal action can be taken - What issue is it that Person B would want a remedy that the PLAN has anything to do with? Failure to receive a copy of the QDRO procedure? Failure of the Plan Administrator to correctly apply the asset valuation / award that was specified in the DRO? - then that's a math problem. See my earlier reply for suggested steps. If the issue is the DRO has the wrong amount(date) in the order, that's not a Plan problem, that's something they need to take up with whoever is helping them with the assets in the divorce. Either what you are wanting help on - has nothing to do with the plan - and is out of scope of these message boards - or, you haven't given the information needed to make it clear to the folks reading that there is an issue with the plan.

When a DRO is signed - and the asset valuation date (via date or otherwise) are two different things. The DRO might say the alternate payee gets 65% of the vested benefit as of November 17, 2019, with adjustments for earnings thereafter, but the actual DRO might be signed and recorded with the court years later. And the actual split of the money might be well after that. TL:DR Present the DRO - ask for copies of the QDRO policy and ETA on decision - get decision - get forms to get money out. Person B can perhaps start by giving a copy of the DRO that was filed with the court to the Plan Administrator (this person, can be an entity, business is usually listed in the SPD). If it is the EMPLOYER it is helpful if it is going to someone whose responsibilities include the retirement plan. Person B might want to include a cover letter with the DRO - asking for a copy of the plan's QDRO procedures/policy, and confirmation that the DRO has been received by the Plan Administrator and that it will be reviewed. Ask for an ETA on when the DRO will be accepted as Qualified, or rejected. And include where the written acceptance or rejection should be sent to notify the alternate payee. Keep notes - and dates - and copies of correspondence. When the ETA passes - and no Acceptance or Rejection is received in writing - ask for an update, in writing. If DRO is accepted as Qualified - the Plan Administrator(or perhaps a recordkeeper) calculates how much the current account belongs to the alternate payee, and the segregates or tracks it separately. Then the alternate payee asks for a distribution form, and can do whatever the plan allows with the money, often rolling it out into their own IRA. If the alternate payee disagrees with the amount that was segregated - then they can ask for supporting documentation, such as statements or what formula was used to arrive at the split amount. How much detail they receive will vary a lot based on a variety of factors. You do not mention where the plan's money is held. None of this is legal advice. Just a simplification of what to actually focus if someone wants to get the plan to review a DRO.

I agree with C.B. Zeller. Is the issue the file type? Because ASC takes .txt files for import just fine. Is the issue how the data is in the file? What import function in ASC are you trying to use? there are a variety of ways to import things into ASC. For example, investment imports where ASC has pre-programmed to work with certain major recordkeeper files. And then there are ASCRIPT custom imports which are super easy to use as well once you know what you are doing. Plus wizards and such. If the issue is how the data is in the file, and you don't want to manually edit the file then a macro or code to do that as CB suggests. You can just open the txt file in Excel, and then save it as an excel file type if you really just want to change the file type.

I think the auditors are probably right. you need to look at the formula of the match - if it is on an annual basis - and everyone is to receive a uniform percentage of pay based on deferrals - which is typical - why would someone who enters 4/1 or later be excluded? discretionary does not mean it can start stop any time - it usually means they can choose to give it one year or not. If they give it for that plan year, it needs to follow the formula in the document. Which sounds like is based on annual compensation and annual deferrals. If you let us know specifically what the document says for the annual based match formula maybe people can give more insight. If the sponsor wanted the ability to contribute match for some paydates and not others, the formula for the match needed to specify a payroll period or paydate basis. Not Annual.

Everyone has made excellent points. Even if allowed(very doubtful) - consider the additional expenses of a periodic independent appraisal for valuation to report correct as a plan asset, as well as the expense of an ERISA bond covering a non-qualifying asset. Is the plan or employer willing to pay those expenses?

In addition to the issues mentioned by @C. B. Zeller, (the control group / affiliated service group / related employer group issue is so common!) some what I see: Disregard for deposit timing, both for deferrals, and Over contributions thinking it can count towards a future year even though the deposit occurs this year. - think throwing in an extra $100,000 because they have the cash available and want it to grow As well as disregard for limits, such as depositing up to what they think is the maximum, even though the W-2 compensation they have paid themselves(or a covered spouse) is substantially lower. Investments in unusual assets with no additional compliance such as an independent appraisal for valuation Assets/accounts titled to the business rather than the plan name when they were intended to be for the plan Starting more than one plan every time they get a new account or advisor. Or thinking they have more than one plan when really a new doc with a new account might be a restatement of the older document, but they don't realize it Compensation not being eligible - thinking that profit and loss is enough, and not having earned income, but still making contributions Failure to make any contributions - for 5, 10+ years(sometimes nothing beyond the first year) at that point the plan isn't really a plan and should be terminated and closed

Is this allowed? and if yes, does it have to be written into the plan document? offhand I don't know the answer to your first question. I suspect there is something about definitely determinable as of the last day of the plan year, but I am unsure, but I suspect it is allowed, based on my answer to the second question. Does it need to be written into the plan document at all? If the plan uses a "everyone in their own group" method of allocating the employer contribution, and testing passes, why would an allocation condition need to be written into the plan document at all? An employer could decide "everyone who wears blue shoes in November" gets an employer contribution this year, and the plan's TPA, recordkeeper, etc might never know that is the reason why some people got a contribution that year and not others, even if the TPA was the one who performed the testing. When the allocation groups are not a safe harbor classification - full testing has to pass anyways. So use whatever criteria or allocation restrictions the client wants and as long as it passes I would think its okay.

Super helpful, thank you @Peter Gulia!

TPA for a small PBGC covered plan, with various HCE and NHCE A portion of the plan's money has been transferred to what appears to be a pooled off-shore account with a wealth management firm. No annual statements are produced, just a letter that says something like your starting interest as of 12/31/2024 is $X, P/L during the year was $Y, and end value of your interest in the pooled investment is $Z. The letter explains that statements are not available due to the pooled nature of the investment with lots of other investors. Off-hand I do not see anything prohibiting a pooled investment interest that would impact either an ERISA bond (non-qualified assets), or filing of a Form 5500-SF (must be eligible plan assets). Is there one? Other potential restrictions that should be asked about? There really isn't enough information to go on, so right now the goal is to make a list of questions for the sponsor and the wealth management company to address. So far: I intend to ask which is the categories of "qualifying plan assets" the investment is, in case the bond is not sufficient to avoid audit. What other questions /issues should be addressed? I feel like there are things we should ask about that I just don't even have an inkling about. Not a producing TPA, do not get involved in investment discussions, other than what is necessary for compliance, testing, reporting etc. Thank you all in advance for your insight.

Is 2025 a typo? Are you asking if 2025 Safe Harbor Match benefits can be reduced? What is the plan's definition of compensation? Is it W-2 based? If yes, then there is no cutback for 2025 because the final compensation for 2025 is already done. Excluding bonus for 2025 would have no affect if no bonus was paid during the calendar year. Unless perhaps there was a bonus paid in Jan 2025 that was for work performed in 2024. In that case, I agree, not allowed because its a cutback. Any amounts paid now, in 2026 would appear on a 2026 W-2. Even if for work performed in a prior year. Could you clarify? Are you proposing amending now for 2026? To exclude any bonus paid in 2026? Does the plan have a 12/31 year end? Or a different plan year end?

2% Shareholder premiums are generally already included in the box 1 figure. This is one reason why it is good to cross check comp on payroll reports against the actual W-2. Payroll reports through out the year do not usually include the 2% shareholder premium, it is tacked onto the final income reporting at year end and reflected on the W-2. An aggregated payroll report for the year may not include it, which it often is needed information to correctly determine Plan Compensation. The amount in box 14 is for informational purposes, not tax reporting purposes. So if the plan definition of compensation is gross W2 with no exclusions, usually you would take Box1 + pre-tax amounts in box 12. If there are pre-tax amounts NOT reported anywhere on the W-2, such as §125 or employee HSA contributions, those get added as well, because absent the employee's election to put money into those buckets they would have appeared on the W-2. Box 3 - I pretty much only use it for HPI determinations unless your plan doc has some interesting definition of compensation. Box 5 - this almost always means nothing for plan purposes unless the plan doc has an interesting definition of compensation

Ignore the sale for a moment, and ask the same questions. Can the plan terminate as of March 1? how is safe harbor impacted? If yes, what is the last pay date that is included as plan compensation? Typically this would be the last pay date on or before March 1 if that is the termination date. Once you figure out the answers to the questions above, then move on to the next question,. Does the pending/ anticipated sale change any of the answers?

Thank you!!

That helps! at least it keeps me motivated knowing there is something out there! Thanks @austin3515

if the two testing groups are in the same plan, yes overall gateway must be met if one is tested on an accrual basis. Answer might be different it it is actually two separate plans being permissively tested together, and each plan covers two different sets of people (not the same people). Like a plan for division or Company A, and a different plan for division or Company B, assuming A and B are a control group or some such. i don't know for sure the answer in that scenario.

Similar Question - Non profit and For profit are clearly a control group (Non profit owns the for profit). Non- Profit has a large 403(b) plan with several hundred participants. For profit does not have a plan but would like one, small employer. There are a few HCE. The for profit cannot participate in the 403(b), but if they start their own 401(k) plan, I think testing would fail? They do not want a 401(k) plan to cover both entities, the non profit likes their 403(b). My understanding is 403(b) and 401(k) plans cannot be aggregated for testing, but if I'm wrong, could someone tell me? Am I thinking of this clearly? Issues: 401(k) with a 403(b) in the same testing group Different entity types in the same testing group Anyone have suggestions? My apologies if this would be better in a separate post of its own, it just seemed like a good place to ask about a similar scenario.

If the kids are not deferring the maximum - perhaps their tax advisor could educate them on IRAs. If they are eligible to make IRA contributions, might be better than messing up the 401(k) testing with deferrals. They could still be eligible for the plan, and help testing, but a way for them to still get tax savings, but not skew testing.

CuseFan has the best suggestion. Restructuring is sometimes also known as component testing. both testing groups would have to meet minimum gateway. Generally the youngest HCE + older NHCE are put in a group and tested on a contribution allocation basis, the older HCE and the younger NHCE are tested on future basis. For next year - I would not suggest adding in allocation conditions - if you do , it handcuffs who can receive an discretionary employer contribution. Your plan document might waive allocation conditions for purposes of meeting gateway, but what if a younger NHCE left partway way through the year, and it would be advantageous to testing to give that person a larger contribution? you would not be able to if the plan has a last day employment condition. That person would be limited to the Safe harbor, and perhaps gateway. I do suggest that safe harbor nonelective go to NHCE ONLY in plans that are cross-tested. If it works out to give the HCE 3% and not skew testing, that can always be accomplished with a discretionary contribution. Alternatively - for some future year - if the plan is small, owner comp is high, and general participation is low - sometimes it works out better for the plan to use safe harbor match. The owners defer the maximum, if their comp is high they can receive a large match, and then make up the difference in discretionary employer. Depending on the specifics, it might get the owners to the maximum overall limit with less minimum to the NHCE to pass testing. May not work as well if the plan is top heavy. But something to consider sometimes.

vested account balance.

Before getting into the Safe Harbor question - Does the service component pass benefits, rights, and features testing? Is the service based match formula discriminatory in favor of HCE? If the HCE are getting(or even more likely to get, even if not actually receiving it) the higher formula, and not the lower formula, does that pass non-discrimination testing? If a discretionary match is within the ACP safe harbor parameters - my understanding is that it has to utilize a formula that is non discriminatory. If it does that, AND is within the extra parameters, then it is possible to preserve the automatic pass on ACP testing that the safe harbor match portion provides. A service based formula (for match, or nonelective) in and of itself - is not automatically discriminatory. But for things like an employer nonelective would typically be subject to 401(a)(4) testing. So similar questions have to be asked about Match. I hope others will provide more specific insight.

The owners might not have very high compensation. If person's earned income for plan purposes is $85,000 it will be hard to get a maximum contribution with just deferrals and employer. If the owners have personal taxable investment accounts with large balances, its a way to basically transfer $70,000 from that account into a Roth account each year. And then instead of sitting in a personal taxable investment account, the money sits in the plan as roth and grows tax free. I'm not a big fan personally, but that's what I hear from some that use it for that purpose.