CuseFan

Others may disagree, and this is likely gray enough to get ERISA counsel involved, especially if the employer and affected populations are relatively large, but I think that employees who are "on call" and/or "per diem" may be different than your standard part-timer and not an hours-based exclusion. I have had clients categorically exclude such, and without regard to actual hours worked, so per diem employees who happened to work more than 1000 hours in a year were still not benefit eligible. However, if the employer's industry is such that employees frequently shift into or out of on call or per diem status, monitoring eligibility compliance is a pain to say the least. I actually had a client reverse that exclusion because administration was not worth the trouble relative to the cost savings. It was a situation that required balance between corporate finance (cost), HR philosophy, administrative burdens and risk management (compliance). Another note regarding on call status - if employees are paid (albeit at a reduced rate) to be on call during specific times, then those hours must be credited. For example, say a nurse is paid $10/hour to be on call 24 hours over a weekend, (s)he gets credited for 24 hours whether called in to work 0, 4, 8, 12 or whatever hours - of course you don't double count with hours actually worked. This obviously doesn't apply if these people are excluded. Good luck, this is not a trivial cut and dried issue and unless it would yield substantial savings is probably not worth the time and effort chasing down that rabbit hole, in my opinion.

If this was a totally discretionary profit sharing contribution then it would be permissible if made by the employer, so as the Bird tweeted, transferring from a personal account is a deal breaker.

Although most people's usual convention, there is no requirement to order plan numbers sequentially according to their effective date or the date actually adopted.

Agree with you both. No 2022 RMD under any scenario. Keep in plan, subject to plan provisions but very likely no RMD until participant's RBD. R/O to inherited IRA, no RMD until participant's RBD. R/O to own IRA, RMDs begin 2023 based on spouse age. And if the company/product wanting my R/O was insisting on the plan paying an RMD first, I would find someone more knowledgeable of the rules to take my money thank you very much.

100% agree - if exclusion was a reasonable job classification then permissible provided such resulting "plan" satisfies coverage. However, any hours-based classification, specific or "veiled", is not considered reasonable per IRS.

Agree w/Peter and think on DB you must pay the "benefit waiving" owner last as it must be after all other participant liabilities have been satisfied, and also agree with the wisdom on the pooled account issue, I think there has to be a liquidation date at which all accounts are valued and then distributed.

I would say it depends on the reason for the RK conversion. Was is necessary because (1) the RK dropped the client, (2) because the employer did a fiduciary due diligence RFP which resulted in a decision to change RK, or (3) some discretionary decision which may have originated for some reason? I think (1) definitely and (2) likely could be situations where these conversion fees could be paid from the plan. If (3), I think not. If the fees are substantial, then getting legal counsel to opine might be warranted. If the fees are not substantial then I say play it safe and do not pay from plan unless clearly supportable (1).

Doesn't specifically help here but the current legislation being considered will give plan sponsors leeway to not recoup overpayments. Congressional sentiment seems to be that participants should have to cough up corrections to plan sponsor's (or their providers') mistakes, although the context of that is more in the repayment of years of excess pension payments rather than a $30 lump sum excess. Personal opinion - $30 is immaterial to plan, neither the plan itself nor any participant was harmed as the excess $30 should never have been in there to begin with, so just move on. They could ask for it back, make the plan whole by depositing the $30 from the former participant or the employer, forfeit the incorrect/errant contribution and maybe return to employer (mistake of fact mentioned above) or reduce a future contribution - that's a big circle of professional time costing way more than $30 to get everyone where they already are (except maybe the payee has $30 less). Sometimes practicality and (im)materiality needs to win out over strict legality.

Yes, I think we've run into that as well. I did a quick google and found this Q&A from Guardian. Some other sites had similar type of info. Apparently, the insurer can provide the W2 (if negotiated/policy provides) or otherwise must provide the necessary info to the employer for proper payroll reporting and issuing W2s. https://guardianlife.custhelp.com/app/answers/answer_view/a_id/69/~/do-i-receive-a-w-2-form-for-disability-claim-payments%3F

That is the $64,000 question. I have not seen this, but others may have a different experience. If the physician works exclusively through one hospital then those waters get very muddy, but if (s)he sets own schedule and sees patients outside of hospital then being IC more supportable. This may be the more important question for qualified legal counsel rather than affiliated service group.

Agree that having knowledgeable attorney opine is optimal choice but without overlapping ownership - doctors don't own any portion of hospital and hospital doesn't own any portion of doctors' practices - then I don't think you have an issue. I don't think the hospital could be a management company because the "back office" management services it provides to the doctors would be a sliver of its revenue. It is fairly common to see independent contractor doctors providing services to/through hospitals and many of these doctors have solo plans. But certainly it is worth consulting qualified legal counsel so everyone can sleep at night.

That was my thought - how was it reported to IRS and correcting it there. Will also require employee to file amended tax return, so employer should do the right thing and cover any associated costs including interest and penalties on additional taxes owed. Seems like it's OK at the plan level.

I agree with Luke and I think your summary document may not be correct. Say your original election was later of age 62 or separation. If you left at age 64, payments would begin at age 64, correct? But, a year before your turn 62, you elect to change the age to 67. You separate at 64. If payments begin at 67 they have only been deferred 3 years from the time they would have otherwise been payable (later of age 62 or separation, 64 in this example), not the required 5, and that would be a 409A violation. You should also note that 409A penalties (excise taxes, in addition to income taxes) are assessed to the employee, not the employer, so it is in your best interest that this is administered properly. It could be that the major firm taking over admin of your plan noticed this as a compliance mistake/issue and fixed it.

As I understand it, IRC Section 409A requires that any change to the time and form of distribution must defer the commencement of payment(s) at least five years beyond when it would otherwise be required to commence. If your payments were originally required to commence at the earlier (or later) of age X or separation then 5 years must be added to such timing. Adding 5 years to only the age component does not satisfy that requirement.

Correct, that is the usual application but it could also apply if a change in plan year created a short plan year

Fully agree with Effen - if 0% vested terminated employees are deemed cashed out then you have a legitimate forfeiture under the terms of the plan at the time specified in the plan (usually termination of employment). These people are no longer participants as of the plan termination date, same as if someone was say 20% vested and paid out while forfeiting the unvested 80%. If the plan later terminates you do not go back and fully vest. However, be mindful of partial termination issues that could come into play before the actual termination. If you have standard language that forfeiture occurs upon earlier of distribution of vested balance or 5 consecutive one-year breaks but without the deemed cash out provision, then I believe you would need to fully vest those non-vested terms w/o 5-year breaks. However, I would be shocked if that was the case, I can't recall the last time I saw a plan w/o the deemed cash out provision.

I struggle with the use of alternative investments as options in participant directed plans because usually such decisions are driven by one or more stakeholders at the owner or management level who fancy themselves knowledgeable and sophisticated investors, whether they are or not is irrelevant, for the purpose of catering to their preferences rather than as a fiduciary prudent decision for the benefit of all participants. Should such plans offer crypto, hedge funds, real property? Certainly they could be strategic components of a well diversified retirement portfolio, but what limiting parameters should be imposed, if any, and what sort of investment education is provided to protect Joe Lunchbox (and is there a sophistication level sign-off, like brokerages often require before you can trade options)? I can see a 55-year-old retail middle manager who got a very late start saving for retirement after putting kids through college, sees Bitcoin trading at $20k and knows it was at $60k not that long ago and should get there again, and even knowing the risks (it went from $60k to $20k after all) invests 50-100% of his account in crypto. You can say it's a personal choice but it is also a retirement security and social issue - if a future crypto crash wipes out a billion dollars of retirement savings (on top of other normal stock market declines) who is left holding the bag? Tax payers supporting the social programs that end up being the safety nets for those making poor, ill-informed decisions. If we were still in a pension-driven environment where SS and a DBP could deliver 50-60% or higher replacement ratios, then I'd be all for aggressive DC investing - and where this is actually the case, sure, take the gloves off. However, that is not the majority of our retirement plan participants. Sometimes we need to be protected from ourselves - we have met the enemy and it is us.

Agreed, and I thought I remember this coming up before in this forum and no one thought filing an extension for a non-existent return created an issue.

Yes, they are fairly basic for a plan freeze, but as Jakyasar noted you do need to describe the prior structure as well as the new structure which is the freeze (no future contribution credits). The prior structure description should include the contribution credit formula (either plan-wide or that applicable to the participant receiving the particular notice) and the interest crediting rate methodology.

So they could have not filed and been ok but because they did file but late there's a penalty? I can see the letter of the law and robo-IRS response but agree that it's crazy. I assume filings were made even though not required to start statute of limitations? I would write the letter to request abatement and pursue through further legal channels if not resolved favorably (i.e., no penalty or penalty less than legal fees). Then, to get my revenge, assuming assets continued to remain under $250,000, file an EZ every other year. There's no requirement that once you start filing you must continue, right? I saw that response recently on here where assets went from >$250k to <$250k.

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As long as that is applied consistently without discrimination I don't see a problem and agree that 2 1/2 months can be vague and open to interpretation (which then should also be applied consistently without discrimination). It appears then this is what the TPA is essentially suggesting, that the Plan Administrator adopt an interpretation that 2 1/2 months for this purpose is 75 days. I think most view as half month as 15 days, one could argue 14 if February is involved or 16 days for 31 day month, not to mention the number of days in respective full months, so formalizing a plan policy at 75 days and coding the administrative system makes sense.

I don't think so, but I'm more on the CB side of the equation so I don't know that unequivocally. What possible advantage would they get to do this? Just retroactively adopt the PS-only 002 for 2021 with the desired allocation formula, merge it into the existing plan 001 at 12/31/2022 and prior to 12/31/2022 (or earlier if you still send notices) amend the existing plan 001 effective 1/1/2023 for the SHNE and PS allocation formula from 002. And of course, timely adopt your new CBP 003 effective for 2021. Isn't this standard operating procedure? If they're trying to get deferrals out of 001 and into 002 for 4Q2022 to save on the SHM and get cross-testing benefit of SHNE, I don't think that flies. It's a trap!

Maybe, but don't service providers who handle funds (RKs, corporate trustees, custodians) sometimes make mistakes and then directly correct them? Things like errant transfers, mistaken deposits, fee withdrawals from the wrong plan, etc.? Yes, the plan sponsor is ultimately responsible, but wouldn't direct RK corrective action provide a paper trail that mitigates that somewhat? As I said, personal preference and not so much a strong recommendation - the main thing is that the corrections get done timely, completely and accurately and there is sufficient documentation as to precisely how.

If the plan is less than 100 participants and not covered by PBGC, then yes, 15 days. If freezing benefits before the termination date, then 15 days before that amendment. If >100 participants, 45 days, and if PBGC covered then a Notice of Intent to Terminate is due 60-90 days in advance (and PBGC has a model). If you use a pre-approved document that provider should have 204(h) statements, I know FTW does.