Luke Bailey

But again, you'd want to separate the HCP portion of the medical plan from the cafeteria plan in terms of both documentation and communications.

The participant can contribute a nominal amount (e.g., $100) to an after-tax IRA, then convert the after-tax to a ROTH, so as to have a rollover Roth running simultaneously with the in-plan Roth account that will be ready for any rollovers.

This argument actually has some technical merit, I think, since salaried employees for whom self-only coverage is the best fit really have no choice between cash and benefits, I'm assuming. That's especially the case for salaried employees who have neither spouse nor dependents. The reason it doesn't look like a strong argument is that the salaried self-only coverage is probably in the cafeteria plan document as a choice, even if only indirectly through a reference to the company's medical plan. I would certainly make the argument for any past years, though, in the event of an exam. Whether it's worth trying to structure salaried employee only coverage as a separate benefit outside the cafeteria plan (plan documents and election forms) is an involved question, but probably doable. Just specifically exclude salaried self-only from the cafeteria plan's reference to the medical plan and leave it out of the cafeteria plan election process. Communicate to the salaried employees that if they are going to take self-only coverage, they do not need to make a health plan election under the cafeteria plan because the coverage is automatic. All of the above assumes that salaried employees who don't want coverage at all are not permitted to receive cash for that election. In other words, I'm assuming that the default, if the salaried employee made no election, is self-only coverage.

As long as the partnership makes the contribution by the return's due date (including any extensions), the partners are good and their deduction for the contribution, allocated in accordance with the partnership agreement, goes on their return. In some cases, if any individual partner has been overdistributed and has not in effect funded his or her contribution for the year, the partnership can treat that as a reduction of the partner's capital account.

Yes, but my recollection is that the additional phantom interest (i.e., the phantom interest that accrues after the loan has been deemed) is treated as taxable at the time of offset. I think it is only used for purposes of determining whether a new loan can be taken under the $50,000/50% test.

Peter, I would think that works for the right employer, but for many would fail 410(B) testing.

BG5150, I have not looked into this, but I would point out that while ERISA preempts most state laws that relate to employee benefit plans, it does not preempt other Federal laws. The basis for most of the Supreme Court's decisions over the last decade or so ago that have expanded individuals' rights to the free exercise of their religion (e.g., an employer's not being able to fire an employee for wearing particular clothing or facial hair at work, or refusing to work on certain holy days) is not the First Amendment's antiestablishment clause, but the Federal Religious Freedom Restoration Act which, per Wikipedia, applies "to all Federal law, and the implementation of that law, whether statutory or otherwise", including any Federal statutory law adopted after the RFRA's date of signing "unless such law explicitly excludes such application." Therefore, it seems possible that a participant in an ERISA-covered plan has a right to have the plan's rules be harmonized with his/her/their religious beliefs.

A few years ago I had quite a time finding an administrator for a very small nonprofit 457(b). Finally found a very knowledgeable person who was on her own out on the West Coast and someone with Ascensus. Both seemed competent and client went with Ascensus because was local (at least that's my recollection) and less expensive.

TPApril, are you talking Determination Letter or Opinion Letter?

gerald hazlett, coverage under Part A (hospital stays) is automatic at age 65. If you did apply for Medicare Part B in may of 2022, you would have those as well unless something went wrong with application. Medicare should have sent a letter to you shortly after you applied that confirmed you application had been accepted and this letter would have contained your Part B start date. Go to https://www.medicare.gov/account/login and either log in to, or set up, your Medicare account. It will summarize your eligibility and also contain copies of letters it has sent you.

TPApril, Determination Letters are on the individual plan as adopted by the employer and are issued to the employer. A prior TPA would have no ownership or similar rights to the plan document just because it submitted the plan to IRS for letter.

RamblinWreck24, I completely agree with Peter's legal analysis and with the other posts as well, but I will add the following from the standpoints of business and fairness, based on my experience in similar situations: -- Suppose 10 people form a partnership at the same time and are all of the same age and get paid the same (I know, stupid assumptions, but bear with me). They form a cash balance pension plan under which everyone has the same benefit and there is perfect consensus among the 10 partners regarding how it will be designed and invested. If the plan also covers non-owners, assume there is equal staff cost/utilization by each partner in the practice. Each year, the same reduction occurs to the partners' taxable/distributable profits to fund their benefits (and possibly the benefits of any staff participants). Then one of the partners pulls out early and an additional amount must be contributed to fund that person's distribution. The other nine will forge ahead and make contributions to fund their benefit on a going forward basis, just as before. -- In the above situation, it might make sense that the partner retiring early would need to make a contribution to fund his/her benefit fully (although as pointed out by justanotheradmin and truphao above, if there are non-owner participants, it generally would not be possible to fund a full distribution for the early retiree even if an amount is contributed equal to the allocated underfunding for the one departing partner). On the other hand, in virtually any real-life situation, where there may not have been equal buy-in by all participants regarding plan design, crediting rate, annual contributions, and investment policy, where different partners will have had larger or smaller demands on staff (assuming staff participation in the plan) and different shares of firm profit, and where partners of different ages will have come and gone at various points in the market cycle), reaching a consensus about handling the departing partner's share of the underfunding may be difficult to achieve. But again, the above is just an intro to the business/fairness aspect. As Peter points out, the legal documents govern, most critically the partnership agreement.

Insurancegirl555, I have had a couple of experiences with DOL penalties. The first case was a physician who had ignored prior DOL requests for late returns. I do not recall whether he had previously received from IRS. The good Dr. had also let the time lapse for asking for the statutory penalties to be reduced for reasonable cause (i.e., had missed the deadline for requesting a hearing with Administrative Law Judge. The DOL was adamant that it had no authority to reduce the penalties once the period for requesting a hearing had passed. I had a fairly long conversation with the guy at DOL in DC who was in charge of the division that enforced the nonfiler penalties and understood his rationale and his explanation of precedent. The total penalties were about $125k. Luckily, the Dr. had a professional corporation and the DOL did not try to pierce it. Based on the argument that the PC had little in assets, we got the penalty down to around $40k or $50k as I recall, to be paid over a period of time. In the second case there was plenty of time to file a reasonable cause letter. The issue was that the plan needed an audit and the auditor had not properly performed its engagement. We wrote a detailed explanation to DOL and got the potential penalties substantially reduced. Don't recall the exact numbers, but 75% or 90% reduction, if I remember correctly, like maybe from $50,000 down to $5,000 or $10,000.

You can have different compliant vesting schedules for different groups of participants in the same plan, in parallel, indefinitely. It's just that if you WANT to modify an existing vesting schedule (e.g., have everyone on the same schedule as soon as possible after the merger), then you need to grandfather no less than the existing vested percentage for money already allocated to participants' accounts, and give anyone with 3 or more years of services a choice of old or knew for going forward.

Yes, but would appear to meet the requirements for the exemption for a 3-day or less interest-free loan under PTE 80-26. Agree that pulling the funds back if the employer ACH fails seems problematic on at least a couple of points.

ERISA-Bubs, which calendar quarter was the last missed payment in?

Dougsbpc, I'm a little confused as to whether you want the new partners' contributions to be fundeded specifically by them or not. However, most partnerships will provide that the expense of a partner's retirement contribution is specially allocated to him or her under Section 704 of the Code. If it does not say that, then the expense would probably need to be allocated based on income share or capital, but it would really depend on what the partnership agreement says. You need to read what is actually in this partnership agreement. There's a lot of freedom there. But again, most will provide for specific allocation to the partner whose account is receiving the contribution. As Bird says, that would cover only the period during which they were a partner.

Of course, on plan termination everyone is fully vested, so presumably the forfeitures in question are for individuals who terminated before the plan was terminated or a termination was being seriously considered by the employer. Also, unless the plan had an immediate forfeiture and buyback provision (which, admittedly, most do), some folks who left before termination may have forfeitable amounts that are still credited to their accounts and would become vested in connection with the termination.

But whatever is done, or whatever opportunity is provided to the owner, must be provided also to the rest of the employees.

If the plan was never qualified (which it would seem it wasn't) and you did not take a deduction, then legally you should be able to just get your money back without IRS involvement. It's a mistake. You're fixing it. Usually, however, the plan custodians don't understand that, at least not at the level you are dealing with. They don't want to get involved in any tax underreporting/skullduggery so want you to get approval from IRS, which I don't think really fits in this situation since there never was a qualified plan.

Would need to review plan language and know more facts, but might seem mandatory to let him make up missed payments and continue repayment to me. What if instead of terminating the employee had stopped loan payments, either revoked withholding or was garnished. But kept working. Plan would have allowed to reinstate loan before end of quarter following quarter of first missed payment.

If this is a nonhighly compensated employee, you should also consider a retroactive amendment under EPCRS to include this employee. Lots of details. Might or might not work out for you. I am raising this only because I wanted to make sure you were aware that this might be an alternative solution.

It's worth a try. Talk to a lawyer in your area that is expert in marital dissolution law. Perhaps the lawyer you used for your divorce. The plan shouldn't care, because if you switch to a joint and survivor annuity there will probably be an actuarial reduction (based on standard life expectancy) that will make the new benefit actuarially equivalent to current.

Lou S, I think the beneficiary is entitled to everything in the account at time of death. All the 401(a)(9) regs say is that you still need to make the year of death RMD. But it goes to the beneficiary.

Eaglepi, say you work for a company. For a week's work, they owe you $1,000 and they run that through payroll. Withhold federal income and FICA, so you actually receive in cash, say, $700 and change. But the full $1,000 goes on your W-2. It's the same thing with 401(k). And just as with wages, you credit whatever they withheld against the calculated tax on your 1040 when you file.