justanotheradmin

Are these all separate business entities? and the entity that employs the NHCE was not a participating ER to any of of the solok plans? Do any of the solok plans already have a SH provision? I often see SoloKs set-up with SH to NHCE only so that if a NHCE becomes eligible in the future its already addressed. If so, there may be a continuity issue with a new 401(k) plan if it doesn't have the same type of SH benefit. if the SoloK had a SH Match, and the new plan is SH NEC and they are part of the same testing group, they typically would not be able to use the SH provisions to get a waiver on the ADP/ACP testing for that year. You should also analyze for possible successor plan issues.

Some initial thoughts / questions I'm assuming there are NHCE that would have been eligible to defer as of 1/1/2025 but for some sort of written class exclusion. But those are assumptions, please correct if wrong. I would think SHNEC would need to be retro to 1/1/2025, to cover the entire period deferrals were available to the HCE. yes, there is a coverage/benefits, rights, and features issue - a retro corrective amendment to allow them to defer to correct the missed opportunity to defer along with QNEC if needed. If considering SH Match, I would expect a full missed match correction per EPCRS would be needed back to 1/1/2025 for the NHCE, but I'm not sure I even see SH Match as an allowable option. Why aren't the NHCE part of the HCE plan? Are they specifically excluded as a class? While it possible, its a bit unusual, depending on the industry and document provider. Why start a separate plan for the NHCE? There are valid business reasons to have separate plans for separate classes, but many small employers find it not worth the effort. Is there a top heavy issue?

Correct, once some has an affirmative election they are typically done for the year with autoenroll. If the plan document has a periodic sweep-in provision they might be subject to it in the future, whereby anyone who is enrolled at less than the auto % has to refill out an election each year, but that provision is specific to each plan. Plans should be giving an annual automatic enrollment notice to newly eligibility participants and anyone else subject to auto enroll. It might be technically allowed, but I've not seen plans rely on just the SPD to satisfy the auto enroll notice requirement. I see the auto enroll notice done as a separate item, similar to a safe harbor notice, updated and given annually. I do often see the autoenroll notice combined or given with the QDIA notice.

Folks should also check your software providers. The one I use defaults to a year of service ending on 12/31 if the date of hire is 1/1, but does have an option to change that to end on anniversary date instead. How software is programmed is not determinative of course, but might be helpful in know how others choose to count a year if you are on the fence about it.

If the sponsor has proof of payment(such as a transaction on the business bank account) I would take that as confirmation that the DFVCP submission was done.

if the entry date was immediate (not quarterly) upon satisfaction on the service and eligibility conditions, yes, December 31 makes sense to me.

I agree with this. The documents don't usually say "a year and a day of service" they usually mention a year. Looking at a basic plan document for a major provider, it says computation period for purposes of eligibility and regular 1 year of service is "12-month period beginning on the Employee's Employment Commencement Date". The anniversary date option also mentioned in the basic plas document - is described as "12-month period which commences with the Employee's Employment Commencement Date or which commences with the anniversary of the Employee's Employment Commencement Date" If I use @Calavera's reasoning each anniversary date would be both the first date of the computation period as well as the last date of the prior computation period. The specific language will vary by document provider, but double counting a date doesn't make sense to me. That's like saying 1/1 is both the first day of the new plan year and the last day of the prior.

I usually explain it by building up with other examples. Abby is hired 12/17/2021, completed one year of service on 12/16/2022, enters 1/1/2023 Bobby is hired on 1/1/2022 has completed one year of service as of 12/31/2022. They enter 1/1/2023. Callie is hired 1/2/2022, has completed one year of service on 1/1/2022, they enter 1/1/2023 since it coincides. Danny has to be 5'2" to ride the coaster, then usually being exactly that height is good enough. They don't have to be more than that height. Emily finished the 8th grade and June 4th was her last day of school. She is done as of that day, she doesn't have to wait until the next day, or the next school year for that so be true.

I agree with Belgarath. Many pre-approved plan documents have sections where eligibility for full-time employees and part-time employees can be set separately. 520 hours in 3 months is very similar to saying full time employees need 3 months of service. Those same documents tend to have the fail-safe language that Belgarath mentions so that even if someone is not in after 3 months, they would satisfy eligibility with the maximum 1 year of service with 1,000 hours.

Thank you @C. B. Zeller this is what I was hoping for!

I used the Cornell website for many years as my preferred one, but with the cite formatting on the Bloomberg website I switched. But now it doesn't seem to make a difference so I may go back to Cornell as my go-to.

thank you @Peter Gulia I like the in-context tool that is helpful to learn! It only seems to be option on the ecfr website for regulations. Do you know of a website for the regular text of the code where that functionality exists? When I use the govinfo.gov website to navigate to the actual text of the code it takes me to the OLRC website which doesn't seem to have any similar functionality on it.

What websites do folks prefer to use when looking up actual text of code and regulations? Last year my preferred one became Bloomberg https://irc.bloombergtax.com/public/uscode/toc/irc Because it included the full cite on each line and I did not need to scroll up to figure out if it was (k)(9)(ii) or whatever. But that seems to have gone away. At least it doesn't display for me. Does anyone else use a free website that has that particular formatting? I really got used to having it.

Yes. The participants need to receive information about the change, typically a summary of material modifications letting them know there was a change to the plan's provisions.

I'm assuming you are talking about a 401(k) plan for a regular for-profit business. If it something else, special rules may apply. You should do a search on this board as well a general internet searches for "disguised service conditions, 401(k) class exclusion" or something similar. Also check the plan's legal document, as often the underlying document makes it clear that while different eligibility requirements can apply to part-time workers, they usually can't be structured in a way to hold them out of the plan completely. So might be your first issue. The second question is does a valid(yours probably isn't) class exclusion override the LTPT rules? I'll leave others to comment on that question, but my hunch is no they don't. If a doc says everyone at location A is excluded, I believe that exclusion applies to any possible LTPT workers from location A as well, but I'm sure others can provide better, or more certain insight into that question.

I have not seen any plans yet rely on electronic notary/ witness. I did attend an education session a few years ago that talked about the changes in various state laws (some enacted, some proposed) that allowed virtual electronic notarization and witnessing. It seems primarily something based on state law. With the arrival of the pandemic and lots of wills being updated the session was very relevant and timely. I wonder if plans can follow the state law rules for notarization with confidence or if they should stick to a possible more restrictive federal standard of some sort (if it exists).

For FWIW I see a lot of 'solo-k' plans with safe harbor in them, particularly SH to NHCE only. In the event an employee is hired and becomes eligible, the SH is already built into the plan document without a need for an amendment. Similarly - I don't like to see them with no service requirements/ immediate entry. A better design is the maximum 1 year of service, age 21, semi-annual entry etc so that if someone is hired who isn't the owner, there is time for an outside party to review the plan provisions before there are any errors, such as a missed opportunity to defer. If someone is hired that they want to let in sooner, usually its not a big deal to do an amendment to change that.

well box 5 is specifically Medicare Wages and Tips, which may or may not be the same as the plan document's definition as W-2 Compensation. You should double check the basic plan document for the actual definition of W-2 compensation, which might be different. For many documents W-2 comp really means anything that could be reported on a W-2, so its more often box 1, plus pre-tax amounts in Box 12, plus pre-tax amounts not reported on the W-2(such as §125 deferrals). I'm not sure what you mean by Gross Compensation either.

Reality has arrived - we are seeing plan audits reassigned due to personnel changes at Treasury, audit appointments pushed out, and even unofficially an audit scaled back. I'm sure there will be more changes coming.

Which part of SECURE 2.0 are you referring to here?

Just FYI - you don't need to put your question in more than one topic thread. Many regular readers and commentators view the most recent posts on the "Latest Messages" part of the website - which shows recent /active post across ALL topics. So posting in the QDRO thread and the 401(k) plan thread really isn't necessary and it is better to have responses consolidated under a single one. Maybe consider deleting this one?

I would like to point out that there absolutely is a 10% early withdrawal penalty to an alternate payee spouse if they are under age 59 1/2 and don't have some other exception. Being able to take a cash distribution payable to themselves pursuant to a benefit award in a DC plan QDRO does not change that.

In my two decades of working on primarily qualified DC plans (and a fair share of DB), I have NEVER had a participant in a regular qualified defined contribution plan elect an annuity. Thousands of plans, even more thousands of participants, not one. Most DC plans do not even allow annuity distributions, SECURE 1.0 and 2.0 does not override that. So I think your fear that a participant will elect an annuity from their DC (such as 401(k), 401(a), 403(b), money purchase etc), and then later a lump sum DRO is approved by the plan administrator as a QDRO - is unfounded. Keep in mind that the DRO is not Qualified until the plan says it is. Entering it into the court does not make it qualified. If the plan administrator receives a DRO that they cannot accept because the form of benefit or level of benefit is not available, perhaps because the participant already did something, the DRO will get rejected. Perhaps I misunderstood your concern, if so, I apologize. I hope others can chime in as well.

and yes, generally speaking, cafeteria plans are subject to non-discrimination testing under the myriad of control group rules and for small employers it isn't that unusual to see the HCE excluded from the cafeteria plan if testing has failed in the past. There are exceptions to everything off course, so whatever your particulars, you should have reviewed by someone who is well versed in control groups and combined testing for that particular benefit type (retirement plan, health, etc).

Given that this question was put in the Cafeteria Plans thread, I wonder if OP was looking for more basic answers, like health insurance plans, life insurance programs, disability insurance, qualified retirement plans, etc rather than understanding the actual mechanics of aggregation, disaggregation, 410(b), testing different parts separately (such as deferral, match, nonelective). The reality is that any benefit, bonus, compensation, depending on what it is, might be subject to the combined rules. There was a case (the cite escapes me ) where even year end grocery gift cards were considered an ERISA covered benefit. If you have a particular benefit any of the companies are offering - and want to know if it has to be analyzed with the rest of the control group - you are best off talking to someone who can review those particulars and specifics and give you an answer.