Tom

Thank you for your comments all. ERISA_Guy, I agree it would just be a way to see their account online and would only change annually. And an investment manager could allocate among the funds offered. This group has had 2 prior CB plans - terminated due to high balance and investment risk (a 5% market drop that didn't recover would be very expensive.) Yes prior distributions are reducing the 415 limit for the new plan. And yes the plan credits actual interest. It's our only plan that does so and was insisted by the managing principal because he heard of it somewhere. A platform sure would facilitate distributions - I think. But I don't want to add more complication to this 500-participant plan which normally functions well with us and the actuary. They are interviewing managers for the new plan so we'll see if they like the platform idea - I'm guessing no.

We have a large client that will be opening a new CB plan for 2026. They recently closed a former CB plan. It was managed and record kept in the traditional way. Now the CEO would like to investigate online record keeping products for the new CB plan. Does anyone know of a CB record keeping product? The CEO would like participants to be able to access their balance throughout the year. Their plan plan credits actual earnings between 0 and 5.5% annually. How would actual earnings be credited during the year? The plan sponsor historically pre-funds large amounts to the plan monthly. How would that get credited to participants? The plan requires 1000 hours teach year to receive a contribution credit. This could work reasonably if the plan is funded once after the end of the year, and then actual earnings within the allowable range are credited. I can see some advantages with distributions - online application, notification to the Trustee to approve. The spousal waiver witness/notary could be a complication. To make it work, the plan sponsor may need to change how it has operated in the past. Plus there are record keeping fees which will eat away at the low earnings needed by a CB plan. The plan has operated very well under the traditional arrangement but technology sounds appealing more to some than others. Comments, product recommendations, experiences are appreciated. Tom

Ok, the below came from a major record keeper. Please confirm who must contribute catch-up as Roth in 2026 - those with FICA wages of $145,000+ for 2025 or those with $150,000+ in 2025 or 2026? This should be the most simple determination in all of pension regulations but some sources seem to be wrong or misleading in their wording. Thank you!

I think employer Roth is irrelevant since Roth conversion is available but regardless, a client is asking. I asked ChatGPT which came up with a completely different reporting/taxable answer than what I was expecting and I was very clear and detailed in what I was asking. So I saw published pieces from 2024, post IRS Notice 2024-02, from two very reputable industry sources who you all would recognize. They indicate what makes sense to me - the employer contribution is deductible, and the contribution is taxable to the employee when allocated and reported on a 1099-R. Interestingly ChatGPT said the complete opposite on both. I realize "employer" Roth can sometimes be construed as the employer paying the Roth amount withheld from an employee's pay. But I couldn't have been more clear in my question to ChatGPT. My question here is I want to make sure nothing has changed since the 2024-02 notice; Roth Employer contributions are deductible to the employer and the taxable to the employee when allocated. Makes perfect sense to me. Thank you Tom

I know there was an allowance during Covid. A client is asking if they can witness the spouse's waiver via remote video. My answer was going to be have the spouse show driver's license to confirm the person is the spouse. I'll check further on the rules for this. But does this sound ok? Follow - up - I checked the regulations on this. No need to comment (unless you want to.) Thank you

A large group of doctors has several doctors in their census with DOH 7/1/2024 which makes them eligible 7/1/2025 in accordance with the plan document. This was on the census file uploaded to the record keeping platform who determines eligibility. They are eligible then for SH, PS and DB. Now the plan sponsor says they didn't actually start working until mid-August and therefore should enter 1/1/2026. These doctors make the max in 6 months and so the employer contribution is large - they maximize the K plan with SH/PS. My approach - plan sponsor we rely on you. Tell us their DOH. I don't know if the IRS has a position on this. I advised them to keep the DOE as 7/1/2025 as that may be the expectation of these recent hires. Thoughts? Thank you

The spouse and adult children if they have 500+ hours in 2024 and 2025 (but <1,000) and are age 21, they are LTPT for 2026. The doctor owner wants them to be able to fund maximum elective deferrals as LTPT employees. He knows they will not receive any employer contribution. I just want to make sure these LTPT family members do not come into play for testing whatsoever with this cross-tested plan which only has to provide the minimum gateway for eligible NHCEs at 3.4% to max the doctor. Thank you

A plan sponsor wants to cover his LTPT spouse and children so they can make deferrals. I realize they will not receive any employer contribution. This plan is cross-tested and provides the minimum gateway for other NHCEs (3% SH and 1.4% PS) The family members' deferral rates will be a very high % of pay. I want to make sure their deferrals don't get included in the big average benefits test EBARs Otherwise they will cause that part of the test to fail and then cross-testing will become very challenging. Thank you, Tom

HR standpoint - not HRA

Plan sponsor wanted a plan that provided a 1% match to HCEs and a higher match to NHCEs. The match is calculated each pay period with the plan sponsor setting the match in with their payroll service provider at the beginning of the year. This provision is obviously problematic as employees might move from HCE back to NHCE and vice versa and from an HRA standpoint is not very employee-friendly. I should add they have many well paid employees who however over and under the HCE threshold each year and are not owners. So for 2025 we see a couple HCEs who received more match than they should have. The match is discretionary but rigid and so the notice goes out. Seems we would transfer the excess match along with earnings from the participant's account to the plan's unallocated cash account. So there would e no distribution to the participant nor 1099-R. Thank you, Tom

We have a small group of DB plans and work with an excellent actuary. Our plans are generally small but for one with several hundred participants. The sponsor wishes to start a new DB plan but would like it to look like their 401(k) - online access to see balance, process distributions online, etc. Does anyone know if Ascensus has such a product. I did a search on them and was directed to their subsidiary Future Plan. Thank you for any comments.

I doubt this is possible but I wanted to be 100%. We've always provided the 3% nonelective safe harbor to all eligible regardless of employment condition on last day or hours worked. A large client does not want the terminated employees to get 3% as the cost is fairly high. A 3% profit sharing plan to those still employed does pass coverage but the plan will not pass ADP and the client is firm - no corrective distributions. Is it possible to test the terminated employees ADP (there are no HCEs in that group) and only give the safe harbor to those still employed? The plan is not top heavy. Just taking a wild shot on this. Thank you, Tom

We've continued to provide the 3% notice even though the requirement has changed. A typical plan for us is 3% FIXED in the document nonelective safe harbor and profit sharing. My understanding has been if there is no discretionary match then the notice is not required. I went to ChatGPT which said it could be required if the safe harbor "interacts" with profit sharing. The explanation was lacking. I don't know what it means by that, This is a plan with 350 participants and i didn't want to burden the sponsor with the distribution as it is not distributed by the record keeper. Thank you

Record Keeping platforms - these are most of our distributions by far. TPAs generally get notification, log in, check vesting and approve. Is anyone doing anything extra to be protected? I'm thinking of requiring the plan sponsor to contact the participant (who likely is terminated) to confirm their request if the distribution is over say $10,000. A 3rd party could have hijacked their login credentials. If a problem, I'd expect the plan sponsor would point fingers at the TPA - "you approved it." I'm not sure all platforms require both TPA and plan sponsor. We do our part but we don't know if the sponsor always has to approve as well. We will need to confirm. Broker accounts and DB plans - for these, we provide distribution packets, plan sponsor requests funds be sent to us, we issue checks, deposit tax into EFTPS as needed and do tax reporting. We do not get funds for larger amounts - brokers get letter signed by Trustee to distribute as the participant has elected. For all check distributions we request driver's license unless small (under $1,000) to be provided to us at the same time they send their election form - not separately. Still there is risk the election form could have been completed by a 3rd party who also had access to the driver's license. All ideas welcome! Thank you, Tom

Is it possible for a terminated plan to file Form 8955 with an end date different than the 5500. Example: plan final 5500 2/28/2025; 8955 3/31/2025. Comments? Tom