justanotheradmin

are you talking about a formula? for example if the CBA says a fixed 10% contribution? Having that written into the plan document seems standard? If that is what the CBA calls for? then all the plan information - such as summary plan description - includes it correctly. Or are you talking about more general CBA language in something like the adoption agreement / basic plan document? If more general language - well then that's a function of the pre-approved plan document provider's choices. There are lots of different ones out there, and each organization that is submitting one can tailor the language in the document to be as simple or encompassing as they like, as long as the IRS accepts it. For example, pre-approved documents designed for use by one person plans are usually much much simpler and shorter than ones drafted to accommodate maximum flexibility in design and larger employers.

sure. be careful if the auto enroll is structured as a QACA as it will impact other areas, but removing auto enroll is allowed. and if the plan is grandfathered under the pre-SECURE 2.0 rules, then having auto enroll is not required period. and the plan will have to let people know, for example if they are deferring due to auto enroll, is the plan going to put them at zero, or leave them at their %. But for 11 people, why not just get everyone to sign a form electing zero if they don't want deferrals taken out? Or are they wanting to remove it because the 3 year tax credit for it is up? and don't want it cluttering up their plan?

I would think they should, but what does the plan document say? If using a pre-approved document usually this type of thing is addressed in the underlying basic plan document, not the adoption agreement.

its already subject to coverage (typically done via 410(b), though I suppose could be 401(4)) so if that passes BRF will pass. I've never seen separate BRF done just for the right to match.

Is there information out there about how the long term part time rules inter play with leased employees? a plan sponsor uses a temp staffing agency for their workers and while most never work 1,000 hours in a year to ever meet regular eligibility, there are probably a number that would be classified as LTPT under the SECURE 2.0 rules. Does the sponsor need to offer the plan to the LTPT workers? What if the doc excludes leased employees? What if the doc doesn't exclude lease employees? Is the answer different? Assume the staffing organization does not offer a retirement program. I don't think SECURE altered §414(n)(2) but I've been wrong before, so I figured it was worth it to ask since maybe someone else already figured all this out. If this has already been discussed, my apologies, please point to the thread and I'm happy to read it. If there are articles, presentations floating around out there that cover this particular point, please let me know as well. EDIT to add: what about common law employees? possible similar issues?

Yes. Class specific match groups are written into plans all the time. Usually done only for regular match (not safe harbor or its variants). As long as testing (coverage, ACP etc) passes its fine.

There was another thread about this. Right now there is only one approved e-filer. So I think the hope is the efiling requirement is delayed, or figured out before 7/31/2024. https://www.irs.gov/charities-non-profits/tax-year-2022-other-tax-exempt-entities-modernized-e-file-mef-providers-form-5330

The post was made the Plan Terminations board. Is this related to a plan that is terminating? I'm not very familiar with the office of foreign asset control, but I don't know why it would impact an employee's ability to contribute a deferral to a 401(k) plan, as along as they otherwise are eligible. I know its not the same thing, but even employee's whose pay is garnished because of court orders (such as child support, tax liens etc) generally are able to still contribute deferrals to the plan if they have pay left over. Or are you asking about a participant's ability to invest in something subject to sanction? With their 401(k) money? Or are you saying the participant's account is subject to OFAC sanctions? If its the latter, you really should ask an ERISA attorney.

What does OFAC stand for? Is this related to a retirement plan that is terminating? Are you asking about continuing deferrals? or an employer contribution? What kind of plan are you asking about? Defined Benefit, 401(k), 403(b) etc.

are you asking about potential audit for 2024? "For example, for a Code section 401(k) plan, the number entered on line 6g(2) should be the number of participants counted on line 6f who have made a contribution, or for whom a contribution has been made, to the plan for this plan year or any prior plan year. Defined benefit plans do not complete line 6g." So if completing the 2024 Form 5500, I interpret that to mean the 2024 BOY part w/ balances count should include those 20. So the BOY would be 130, and yes and audit would be required for the 2024 plan year.

I agree that TH status is definitely determinable at the beginning of the year. Is Key status though? Officers with compensation, people who become owners mid-year etc, at the beginning of the year they are part of an eligible class, and part way through the year they are not. I suppose its no different from any other participant who moves from an included class to an excluded class during a year, so hopefully the plan document addresses it.

I just wanted to share a WTF moment that I think many of you can understand. Mostly rhetorical - but feel free to chime in, especially if you think my indignation is unfounded. This week in reviewing an existing 401(k) plan document there was a written in class exclusion for Non-Highly Compensated Employees. In the Other line option in the adoption agreement. I could not believe a service provider, and and large national one at that, would let a sponsor include it. But it is a lower cost one, so I really shouldn't be surprised. It is a small plan, likely owner only, but still. A few weeks earlier I saw a similar exclusion in a defined benefit plan for a small employer. Though that class exclusion did not use the term Non-Highly Compensated Employee. It was something like 'everyone except two of the owners, Jack Smith and Jill Smith are excluded' that employer definitely had plenty of employees that are NHCE that have plenty of service and cause the testing to fail. And no, there did not seem to be any other plan with this one combined for testing and benefits. Setting up a plan that on its face fails non-discrimination before any benefit accruals or contributions are even considered is terrible! Even if those exclusions are ultimately considered void, there were document providers, service providers, financial advisors, and probably a TPA or recordkeeper involved in setting those plans up! They never should be there in the first place! Two in such a short time, from two different places, I just felt like was worth sharing. Maybe these exclusions are written in more than I realize and I've just been fortunate enough to not see them up until now.

I've had several as well already and there is lots more interest so I know quite a few more will come this year.

If possible - the request should be in writing, even if just a quick fax to the agent asking for more time. I think there are a few different things that might be going on - is the audit notice just a request for information? Or does it have an appointment date (for either in-person or over the phone)? If it includes an appointment date, its possible the date is far enough in the future that the auditor isn't able to justify an extension? If just an audit notice / information request with no appointment date, then how far out is the date that the information is due? standard extension for the due date for an information request is only 10 days. More than that and a manager definitely has to be involved. At least that's been my experience the last few years. The last few years it seems auditors have come from all around the country to audit plans and they make several appointments for a single trip, so those ones have been less flexible when a change of date has been requested by the sponsor. Agents from the local office, if they are doing the audit, are able to be more flexible for accommodating requests to change the appointment dates. Just my experience.

I had similar questions There seemed to be disagreement among the commentators about if the replacement plan could start 1/1, but several saying no, but myself and possible Derrin any others saying yes.

With that fact pattern, does everyone need to be included in the ACP test if no one made a voluntary after-tax contribution for that specific year?

https://www.irs.gov/businesses/small-businesses-self-employed/s-corporation-compensation-and-medical-insurance-issues If you share what kind of plan it is, pension, 401(k) etc, and if there are other employees, etc, and what kind of contribution they are wanting ( employer, deferral, etc.) I think folks can provide better insight.

Thank you Peter! I'll pass the information along to the plan sponsor.

Small profit sharing only plan with incorrect contribution allocation issues(due to inaccurrate compensation figures) needs an ERISA attorney to handle communications/negotiations with the IRS due to plan audit. The TPA can do any calculations, testing, 401(a)(4), etc as needed but isn't a law firm, and the sponsor is at the point of needing to hire formal help. They would really like to find one local to them in the New York City / New Jersey metro area. Do any of you have specific suggestions for attorneys or firms in that area? Self referrals are welcome. Thank you!

yes. The feedback I've gotten from small plan sponsors has been just this kind of scenario. A relative of the owners hasn't been able to be part of the plan, but will be able to due to the LTPT rules and they are excited for the opportunity to defer. Why the 50% of pay restriction? Is that part of the LTPT rules? I haven't seen that, but could be I missed it. Or does the specific plan have a restriction? Most all the plans I work with allow up to the 402(g) limit.

Additional question - if you were me - would you send an e-mail to that other TPA? It would be a very soft nice e-mail. I do have contacts there that might not know what is going on, and could possibly pass along the concern to the department or team sending out those e-mails. Or they could tell me to just mind my own business, which is possible. I have no interest in their small DB plans, I have enough work already, so I truly don't have a business interest in those plans. I think its more that if the front end admin staff or sales staff was implementing this kind of thing and the back end compliance or legal staff wasn't aware of how it was being communicated, I would hope some one would clue the back end in. Especially if I was the person who wasn't aware. I would want someone to tell me so I could try to put a stop to it, or convince the decision makers in that other department to reconsider. The TPA is doing a huge disservice to those plan sponsors with how the communication and instruction is given. I am hoping someone at that TPA, that is in a position of input, sees this thread and recognizes their company, and understands why it is unethical, but I don't think that will happen.

The communication is clearly telling the sponsor the action they need to do is to sign and retain. It is also crystal clear that the TPA does NOT want the sponsor to send them a copy, unless they ask for a copy later in the year, which the TPA is very clear they will only do if there is a funding issue and the freeze amendment is needed to lower the required minimum contribution for 2024. It will be very convenient that only the plans that have funding issues are the ones that sign, and the ones that don't have funding issues are the ones that didn't sign. Doing two amendments - a freeze - and then if needed an unfreeze - is more work - but its the correct way to do it, and is allowed! Why would anyone put their personal reputation, licensing, etc at risk and do this? Its definitely a large enough company(the TPA) that they should know better. I can see for future years - some TPAs or document provides saying here is a freeze amendment for the upcoming year - and then as needed do another amendment after the year ends depending on funding goals. Which is a great way to do it to give employers, particularly smaller employers flexibility. Sort of how some 401(k) providers really loved the Safe Harbor Maybe notices for awhile. Which again were allowed, when done correctly.

A TPA firm seems to be proactively sending out freeze amendments for small DB plans. No mention of the notice requirement to participants, and the communication is very clear that it says not to return a copy of the signed amendment right now to the TPA, but that if there is a need to reduce the 2024 contribution they will ask the sponsor for a copy of the signed amendment then. Has anyone else seen this? Is anyone else doing this?! If plans are in danger of funding issues, I 100% agree that freeze amendments should be considered, and if needed executed and notice given. With the ability to increase benefits after year end that now exists with SECURE 2.0, another amendment to unfreeze can be done after year end if circumstances change. I disagree with the "sign this now, but ignore it unless you need it" approach that TPA seems to be taking. I disagree with sending a resolution/amendment and telling a sponsor essentially if it's needed at the end of the year, they can provide the TPA with a copy then. I have been doing this a long time now, but still learn new things all the time. And admittedly don't spend as much time on DB as 401(k) so they are not my strong suit. However, this seems to be a document violation. Is there something I'm missing that doesn't make this at worst tax fraud and at best an ethical violation on the part of the TPA? I'm really hoping one of you says "justanotheradmin - there is a special rule for small DB plans that you obviously aren't familiar with that allows just this kind of 'execute but don't have to use if you don't want to' amendment" .

Both.