justanotheradmin

One more thought - is the point of Sec 604 that an employer could say - the contributions are going in as Roth, unless you as participant elect otherwise? That now plans can make the default for employer contributions Roth, instead of pre-tax? That would still allow participants an election, just the flip of what was allowed pre-SECURE 2.0

Aren't all contributions to a defined contribution plan on the employee's behalf though? is it the "on the employee's behalf" wording in 409A that is the crux? I also don't see the point if it is ONLY at the participant's election. Plans could effectively (though perhaps not as streamlined) allow for in-plan Roth conversions. If that is the point then why have Sec 604 at all?

How are folks interpreting this section? I recognize it is optional, but because its effective now, there seems to me a lot of questions about it. Let's start with a basic 401(k) plan, that has a basic safe harbor match provision. There are two options coming up - The employer would make a blanket decision to have the safe harbor contributions as Roth. Can this be a yearly election? What if it's just the annual discretionary employer contribution (profit sharing) does it have to be in the plan document that the employer contributions for year 20XX will be designated Roth Contributions? Each individual participant would elect if they wanted the SH contribution made as Roth or not. For item 2- I'm not seeing anything in section 604 where the the participants get to elect one way or the other. Plus plans can already accomplish pretty much the same thing if they allow for in-plan Roth conversions. I think #1 is how I am interpreting 604, which will be useful for plans that have an auto-enroll feature where the default enrollment is a Roth deferral, so any match will also be Roth. I can see the plan issuing 1099-R at year end for the amounts of the Roth contributions that weren't Roth deferrals. What say all of you?

just being part of an ASG does not require a single plan. ASGs have multiple different plans for different entities all the time. As mentioned above, they just have to pass combined test. If it is a single ASG, then any plans of the employer need to be tested together. Sounds like you are proposing two DB plans(for the HCE), and one 401(k) plan(for the NHCE) for a single affiliated service group. I am not an actuary, but seems minimum coverage under 401(a)(26) would likely have a hard time passing, even if the benefits in the 401(k) plan were generous enough so that overall benefit testing with all three plans passed. I agree with the others, if the CPAs are sure its allowed, they should do the testing and admin for the three plans. And i'd be curious to know what actuary would sign off on it.

We don't have enough information to know. what is the document's definition of compensation W-2 reportable compensation? 415 comp? 3401(a)? What are the deferrals? pre-tax? Roth? Are there additional non-reported non-taxable amounts? Like HSA or section 125 dollars? Which generally aren't on the W-2 at all? And what are you going to use the compensation figure for, once you figure it out? A defined benefit accrual? safe harbor contribution? non-discrimination testing? different compensation definitions are often allowable depending on what it is being used for.

If they worked more than 800 hours in 2021 why weren't they let in as of 7/1/2022? 2022 hours wouldn't even have been available / known as of 7/1/2022. Unless the amendment said that the 800 hours only applies if over for 2022 and future years (which wouldn't make sense since you said others were let in 7/1/2022).

I don't think it's really a software question. Did the amendment change eligibility for only new hires? or existing employees too? Were other participants let in on 7/1/2022 because of the 800 hour rule? or were they held out until 2023 being forced to wait until they had 800 hours in 2022 or by July of 2023? If the amendment said for new hires only, well then the first possible entry with the 800 hours would be July of 2023. if the amendment wasn't specific, I would err on the side of letting the participant in.

You'll want to read up on break in service rules, and rule of parity. Depending on the circumstance rehired employees can be made to resatisfy service for eligibility, and prior service disregarded. Your plan document (look at the basic plan document too if you have one) likely addresses that in detail.

Looks like it is signed? https://www.cnn.com/2022/12/29/politics/joe-biden-omnibus/index.html

I don't know how many sole props would want a short plan year for 2022. For example, if it is signed today, a sole prop would need a short plan year from 12/30/2022 - 12/31/2022 to utilize that provision for 2022. From a practical perspective (depending on the plan's definition of compensation) I don't think it will be useful. As others mentioned, this is really going to be a provision used in 2024 for 2023 plan years.

Generally yes, lost earnings on any corrective amount is required. See Revenue Procedure 2021-30. More information is needed if you have questions about calculating the QNEC for the missed deferrals and the missed safe harbor match amount. Revenue Procedure 2021-30 https://www.irs.gov/pub/irs-drop/rp-21-30.pdf Additional information can be found here: https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide

Hi Folks! I know that in some cases attribution through a retirement plan trust is blocked for purposes of determining HCE and Key status. Is the same true for determining 5% owner status for purposes of an RMD? If that's not the right question please let me know. ROBS plan - the participant turned 72 in the second half of 2022. Their account of course holds the employer stock. they are very much an active employee. I'm thinking the constructive ownership of §318 applies and an RMD is required. But I'm wondering if I'm missing something. Can anyone confirm or deny?

The original entities would still be a single employer for plan purposes. Just because unrelated employers are added doesn't change the original entities from a single employer to a closed MEP. Sounds like you originally had a single employer plan. and now you have a single employer(comprised of the original entities) plus a bunch of new entities that make it an open MEP.

Thanks for the responses to let me know I'm not off my rocker. I'd rather not name names. I don't know if the action is limited to a specific salesperson or is a broader issue for that entire company. So far the e-mails I've seen are all from a specific sales person in a specific region of the country. I did think of the ASPPA ethics angle, but from what I can tell the salesperson doesn't belong to any industry organizations or licensing organizations. So I don't have anywhere to report them. They are not an insurance company, but that is a really great thought. I'm not sure we have the same kind of clients. I know there is a place in the market for most every kind of service provider, but our style of service and fees are very different from this particular bundled provider. So I don't think it's where we typically would look for new business. I'm not opposed to data mining per se. Companies data mine 5500s all the time. I've seen evidence of it on other solicitations over the years. But using it to blatantly lie about their 5500, and throwing us under the bus while they are at it crosses a line.

My apologies if someone else has already brought this up on one of the boards. If so, please redirect me there. Have other people encountered this recently? What are your thoughts? This past week several of our clients have received e-mails from a large bundled provider attempting to drum up business. (we are a traditional TPA) The e-mail states in part "Your TPA is filing your 5500 wrong" and then goes on to explain that Lines 10e and 8f MUST match, and that they are opening themselves up to audit and penalties from the DOL. The e-mails have screenshots of the two lines from their most recent filed Form 5500-SF. I was outraged when I saw the e-mails. I'm just wondering if my outrage is a bit displaced, or perhaps a disproportionate response, because like many folks we are really really focused on getting everything done by 10/17 and things that I would typically be able to shrug off are getting under my skin. Clearly this has bothered me enough to make a post. Thoughts?

Can I tag onto this question? If the union and non-union plans are not permissively aggregated - and someone changes status during the year, and immediately enters the non-union plan. is the Top Heavy minimum to that employee based on only non-union compensation? Or full year compensation including compensation earned during the early part of the year when they were covered by the collective bargaining agreement?

If you know the employer's EIN you may be able to check here to see if there is a Form 5500 for a retirement plan https://www.efast.dol.gov/portal/app/disseminatePublic?execution=e1s1 You would input the EIN (without dashes). It is possible to search by name, but I find the results are less consistent. Absence of a Form 5500 doesn't necessarily mean they don't have a 401(k) plan, as there are a variety of reasons why it might not show up, but if there is one listed, you should be able to request a copy of the summary plan description(ask in writing). If they don't give you one, you should ask why - usually the only reason would be if you aren't an eligible participant.

Why a 4/1 start date? Best practice is to give the employees 30 day notice, even if it isn't technically required for a new start up plan. I'm guessing you want the Safe Harbor Match formula to be calculated on an annual basis and not per payroll basis if you are wanting the full income counted. But I would make the safe harbor match start date as 1/1/2021 even if the deferral start date is 4/1/2021.

Like the others have said - you are overthinking it. With each person in their own group, as long as the tests pass you can give each person a custom amount. If you decide one year that you really like the employees with purple hair, and those are the ones who get the $$ then that's what you do. In a different year if you decide you really like the the employees who drive hatchbacks, and those are the ones that you want to give $$, then that's what you do. In another year, if you decide you really like all the employees name DAVE, and want to give them $$, then you do! It's really that simple.

In reading your post there seem to be several questions - Are deferral elections (your 20%) applied on compensation net of tips? There should be something in writing, so that if they are, the participant can adjust their requested deferral accordingly. Are deferral elections applied on compensation net of withheld taxes? This would be VERY unusual, but I suppose it could be case. Again, something should be in writing that they can provide to you. What compensation is required to be considered when calculating the match? I suggest asking them for a few things - ask in writing, and keep a copy of your written request. 1. Copy of the deferral election form (or website screenshot if an online portal is used) where it states that deferrals are not taken from tips, and are calculated after taxes are withheld. Or any other written notice that states this 2. Copy of the summary plan description, and safe harbor match notice (if your match is safe harbor). This should state if tips are excluded from the match calculation or not. It's not unusual for tips to be excluded from deferrals. But that should be stated somewhere, in writing. If that is the case, you would typically need to make a higher deferral election on your non-tip compensation so that overall your deferrals are what you want them to be. In your case 30% or 40% as the case may be.

Is the employer contribution subject to a vesting schedule? Assuming the contribution is allocated correctly - in proportion to compensation - how much would the daughter actually get to keep when vesting is applied? If there are forfeitures, the forf amounts might be available next year, depending on the document provisions. Edit: Assuming the daughter is terminated and is taking a distribution of course.

What type of entity is the sponsor? C-Corporation? S-corporation? LLC - with an S Corp election? LLC taxed as a Partnership / Sole Prop? Something else? If it is an S-Corporation, LLC with an S-Corporation, or C Corporation - the owner's "draws" would be regular profit or perhaps equity payments, but in any case would not earned income for plan purposes. They would need W-2 based compensation in order to keep having contributions to the plan. If the sponsor is an LLC taxed as a partnership, or something else with self-employment earned income - I'd ask the accountant for make sure the person has actual earned compensation. The term "draws" is sometimes used loosely, and doesn't always mean the person had actual earned income, even though they received money from the business. I'd check with the CPA if you are unsure about the specific classification of the money received as a "draw".

The plan does not use Principal's doc. It uses a common pre-approved volume submitter document provided by their TPA. Principal restricted the loan sources based on the plan provision form that was submitted at contract set-up, which makes no distinction between sources for proceeds and sources for calculations. They are saying their software has no way to distinguish from "lienable" and "loanable" sources (to borrow @MoJo 's terminology). The plan does use Principal's website to facilitate participant loan requests, so when a participant tried to request a loan, it was only calculating / allowing 50% of the deferral balance. The plan is a few years old, but this appears to the be first time a loan has been requested. I find that software limitation to be absurd and wanted to know what others think. Looks like the plan might be shopping for a new recordkeeper.

Forget the aggregating two plans part. The participant is 100% vested? why can't the full account balance be considered? (I'm arguing that it HAS to be considered, but baby steps) The loan dollars would only be paid from the deferral money. I think it depends on the plan's interpretation of "made" Are you saying if the loan wanted all sources considered for the 50% calculation, but only certain sources for the actual proceeds/repayment the loan policy would have to be written with that level of specificity? Or are you saying that's not allowed at all if the source from the which the loan is paid out is restricted? Why not less specificity (i.e the existing language) but interpreted consistently, and in this case in favor the participants?

Plan uses a common record-keeper/custodian that also processes participant loans online. Principal. The plan assets consist of only deferrals and safe harbor match(100% vested, not QACA). The plan's loan policy restricts the loan proceeds source to just deferrals. Well, I suppose that's how my interpretation has always been of this particular policy language. "Source of Loan. Participant loans are may be made from all available contribution sources, to the extent vested unless designated otherwise under this section." For this plan it is designated otherwise and specifies that only Pre-tax Deferrals and Roth Deferrals are eligible. John Doe participant has the same amount of $ in deferrals and SH match. The record-keeper is unable / refuses to process a loan for 50% of the participant's vested balance (essentially 100% of the deferral balance). They are insisting the only way it is possible would be for the plan to amend it's loan policy to allow loan the loan to be take from all sources. I disagree. Loan source restrictions on proceeds are common, for a variety of reasons, I see it done a number of different ways. What I don't usually see (maybe have never seen) is a source restriction on the 50% max value part of the calculation. I don't even think that is allowed, but I'm not able to find a citation. I remember the days when sponsors had two plans, a money purchase, and a separate 401(k) PS, and we would aggregate the balances between plans for the 50% calc, even though the loan was only allowed from the 401(k) plan. Am I wrong? If I'm right, does anyone have suggestions for pushback to the provider? Citations?