CuseFan

If you can do that with the excess and don't need to aggregate with a DCP for 2024 testing, then yes, no need to wait to terminate 12/31 to have a matching plan year.

I kind of view that stuff like extended service warranties - if you are selling me a quality product (or service) then why should I pay more for insurance that I'll very likely never need? Some insurance specialist was probably seeing all these fiduciary breach lawsuits concerning investments and thought hey, we can scare people into buying protection they'll never need and make some more money.

Here is a thought: I expect a 204(h) notice was never issued to the MPPP participants since the plan sponsor didn't think they were freezing that plan. An amendment to reduce future pension accruals goes into effect the latest of (1) the effective date of the amendment, (2) the date the amendment is adopted, and (3) the date that is 45 days (or 15 days for plans <100) later than the date the 204(h) notice is provided. By that scenario, it can be argued that the amendment never took effect and by administrative practice that holds true. If 204(h) notices were issued then this argument has some holes in it. I would suggest some legal counsel input before going this route for a better comfort level. I assume the plan document has continued to have been updated as needed, but is not on a pre-approved platform otherwise this should have been discovered long before now.

Agree with Corey, check the specific language of the resolution and if it has all that is required then maybe that would suffice as the amendment. I would also suggest client gets its attorney's blessing for treating as such.

Consider using to pay final plan expenses to use up and not have to deal with allocating the excess which might push you into a 2025 filing if those have to be determined after a PPTD of 12/31/2024.

RTFD per David

What role does Fidelity play - custodian, trustee? For what services are they contracted and does that include distribution processing? I have seen where the employer is the distribution processor and the custodian forwards funds. The employer then cuts check, withholds and remits taxes if necessary, and does the 1099R reporting. I'm not saying it's a best practice or even recommended, but I have seen it done in the past, and can work if employer really knows what they're doing or has a good accountant to assist.

First, any claim for benefits made by anyone other than the known participant should be scrutinized and require sufficient documentation to establish to the Plan Administrator's satisfaction that such person is entitled to a benefit. If benefits have been claimed under misrepresentation then the PA/fiduciary should determine if any benefits have been paid in error and if so, whether to attempt to recoup. It is also noteworthy that the time limitations for doing so imposed by SECURE are specifically exempted in cases of fraud/misrepresentation. Facts and circumstances, including amounts in question and funded status of the plan, should be considered as well.

Depends on the terms of the NYS hospital's plan. If his goal is to contribute less, then it might be that he has to be treated as a new employee again under plan rules. However, just a termination and rehiring would not be sufficient as that could easily be abused to negate/change an "irrevocable" election. If he wants to do more I would expect that is very possible - usually these initial irrevocable elections are the mandatory piece required by the employer to be in the plan and then there is usually a voluntary piece that the employee can vary at their discretion. The advantage of that irrevocable mandatory 5% is that, if properly crafted/administered, it does not count toward the individual's annual 402(g) deferral limit. That is, it gets treated more like an employer contribution.

That was the real issue in question, in addition to entering the plan under the mistaken elapsed time eligibility, did they also satisfy the requirements for a PS allocation, and it looks like the auditor believes that to be the case.

Are you concerned about their participation or subsequent distributions impacting SSI benefits? I do not think that retirement plan distributions impact SSI. I'm not sure about active participation/contributing to a 401k plan. On one hand, why would someone deferring some of their pay reduce their SSI? The flip side of the argument is if they can afford to contribute and do without that portion of their pay, why is SSI "subsidizing" that with what could be considered higher than necessary payments? Sorry, but I don't know that answer, nor if it is more a Federal or specific state concern.

The participant elects the annuity option (or lump sum) prior to their annuity starting state (ASD, or for ease of discussion, their benefit commencement date). A 401(k) plan would have to purchase the annuity from an insurance company. Once that happens, it is done. If a life annuity, it stops when the participant dies. If a J&S then the surviving spouse gets survivor portion. A divorce after the ASD does not change either scenario, nor does it change the (now ex) spouse as J&S beneficiary (if that was elected). There is no more 401(k) account balance or lump sum available. An ex-spouse's only option - unless the insurance annuity contract says otherwise - is a shared interest QDRO that gives the ex a percentage of the monthly annuity payments. For example, say a 50% J&S was elected and ex gets a 50% QDRO award on a $1000/month annuity payment. Participant and ex each get $500/month and then ex continues to get $500/month after participant death as the survivor annuity. If ex dies first then participant should get $1000/month (if QDRO properly drafted). My perspective is from DB plans, which routinely pay annuities from the plans. DC plans cannot pay life annuities so they have to use the account balance to purchase from an insurance company. Maybe those contracts are more flexible than DBPs on QDROs, but I doubt it.

Agreeing with Paul and echoing a comment I made on another post earlier, just because maybe you can doesn't mean you should. And EBEC brings up a great point and potential gotcha as sometimes a PT can result through indirect avenues.

I think it depends on the plan/amendment language. You need to examine the year of eligibility service definition and the eligibility computation period for such. If the language doesn't (explicitly) support using 500 hours in a computation period prior to 2024, I think these people come in 1/1/2025. Also, isn't it a little late to be asking if these people are 401(k) eligible 1/1/2024? If language is sufficiently vague and reasonably interpreted by the Plan Administrator that 1/1/2025 is the entry date, then that is their right.

Not sure what you mean by this. Are you saying stock is not being deposited and held in the plan's trust? If this is a trustee directed pooled PS plan, then I do not think there is a prohibition on employer stock being an investment and I do not think there is a limit (like 10% in a DBP). However, by NOT being designated an ESOP, you do not get the advantage of statutory "free pass" on investing primarily in employer stock. Therefore, you likely have a fiduciary issue with respect to the prudence of plan investments. That would lean toward DOL VFCP, but I don't know what correction they would mandate or allow - whether retroactively changing the plan type to a designated ESOP (IRS might also need to be involved in that conversation), or requiring the plan to divest employer stock down to a level deemed prudent. Good luck.

Like a lot of these small plan situations (usually driven by advisers rather than practitioners) you can do it but that doesn't mean you should do it. Why create two documents and necessitate two filings when each could have their own brokerage account under one plan? Maybe the adviser is charging each as if the only plan and able to double the take - which would be unethical - or, giving the benefit of the doubt, didn't know any better and thought it would be easier if kept separate?

Check the document and follow it, the plan sponsor making up its own rules based on what it wants to do does not fly. if there is no BIS then the document should say the person re-enters immediately and treated as if (s)he never left, which renders the initial "retirement" moot in my opinion.

I would do this in a heartbeat. David, even if the fees were somewhat higher, Peter is talking about getting more than $1M out of the Ascensus arrangement which I think would be well worth it.

What are the implications? Would you have longer term PT <1000 hours become eligible due to elapsed time? What are the requirements for a PS contribution? If there are people technically in, but who do not get a PS because they worked <1000 hours, and if the plan is not top heavy and can pass coverage (these could be otherwise excludable, so likely OK there), then might this be a non-event from an administrative perspective that can be fixed with a prospective amendment with the intended language? This could also, if properly worded, "kick out" those who never worked 1000 hours. If this doesn't work then I agree it's audit CAP which likely also requires some contributions for those unintended entrants.

Are there any HCEs in D? I'm not sure about QACA SHM, but in regular SHM you can't have an additional match where any HCE can, by design, get a higher rate of match than any NHCE. I also don't think you can restructure D out like that, but I'm not sure. If D was all NHCEs I think you'd be OK regardless.

I think your first statement was the answer to your question, LOL, as these situations often get treated like they are personal bank accounts rather than QPs, IMHO.

I would use the word blatant, but yeah, if that is not the perfect example of a PT, I don't know what is. I remember seeing this sort of stuff a lot back in the 80's when I first started and most/all PSPs were pooled balance forward trustee directed. Vacation homes/condos, timeshares, antique/collectible cars, etc.

agreed

Agreed. If I remember, the prohibition of earlier NRAs (what IRS thought were artificially low NRAs) was to prevent manipulation of nondiscrimination testing - but maybe I'm off base. Doesn't change the answer though.

A 457(f) plan can be structured many ways, it could be in the form of DB SERP that takes into account average compensation and all years of employment, and may be offset by other employer-provided benefits. It could be an account balance plan where the employer books an annual contribution of whatever for the executive, there is no limit (other than overall reasonable comp & benefits for tax-exempts), so why would it matter what criteria the employer used to determine? 457(f) applies to any tax-exempt organization's NQ plan that provides benefits in excess of the eligible 457(b) limits. Whether exempt form 409A as a short-term deferral depends on the design. As a NQP it is also unfunded by definition, so if/when/how the employer wants to set aside any assets to cover this benefit doesn't matter, except when the time comes to pay the obligation. This would be a book expense until such time. If the employer was also wanting to allow the executive to elect to defer compensation into the arrangement then you have those timing issues, otherwise, no.