C. B. Zeller

Is it possible these people are statutory employees? They would get a W-2 and have FICA/FUTA withheld, but wouldn't be employees for plan purposes and wouldn't have federal income tax withheld. See if you can get a look at box 13 on their W-2. The definition of statutory employee, from IRC 3121(d)(3):

Hold up a second. Is Empower actually the Plan Administrator, or merely a service provider? I'm using Plan Administrator in the ERISA sense; that is, the person who has the authority and responsibility to interpret the plan documents, approve claims for benefits, and determine the beneficiary of a deceased participant. Typically the Plan Administrator is the employer sponsoring the plan. Your masseuse should request a copy of the summary plan description (SPD) which will identify the Plan Administrator and list their contact info. Your masseuse almost certainly has at least a "colorable" claim to benefits (see Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989)), so she is entitled to receive the SPD, no matter what Empower says. If the front line customer service rep disagrees, cite Firestone to them and that should get them to escalate the issue to someone who understands. If the Plan Administrator does not provide the SPD, they could be subject to a penalty of up to $110 per day under section 502(c)(1) of ERISA. Once you have the SPD, find the section that describes the plan's claims procedures. Follow those procedures, including the procedures for how to appeal a denied claim for benefits, and see where that gets you. At the very least this will give you the opportunity to make your case before the person who has the authority to make a decision on it.

I agree with Effen. Unless the plan meets one of the exemptions, it is covered by PBGC. You only pay the flat rate premium on participants whose benefits are not fully offset. This can be confusing if the owner is the only one who is not fully offset, since normally you would not do a premium filing showing only 1 active participant, especially if that one participant is the owner. But that's how it works for floor offset plans. They will owe multiple years of back premiums plus interest. I agree that you should let a lawyer handle this in order to preserve privelege. Your comment about the audit threshold is confusing - did the DC plan hit over 120 participants with account balances this year, and now the IQPA is asking about the PBGC filings in the DB plan? Is that why the issue is coming up now? Or are you the IQPA? It would be helpful to know more about your role in this situation. And the plan is terminating (or has already terminated)? What is/was the termination date?

There is no clear answer to this in the law or regulations or other official guidance. Absent that, it seems to me that the most correct thing to do is 1. Net out self-employment earnings and losses from all entities 2. Apply reduction for 1/2 self-employment tax to the net anount 3. If the result is less than 0, treat it as zero 4. Add any W-2 income In your case I think their 415 comp is $25,000. Think about it this way: if this wasn’t the case, then everyone should start a second sole prop to absorb all their losses, and only recognize gains in the one that adopts the plan. That’s clearly not the intended result so I wouldn’t go that route.

I haven’t seen it personally but I’ve heard from attorneys on occasion that it can be justifiable. Were all other necessary actions taken that would normally be required for a plan termination? For example, was the plan amended to be up-to-date with changes in law and regulations, and were 204(h) notices and NOITs distributed? If all of that is clean then I wouldn’t worry too much about it.

IRC 401(k)(12)(A) is the cite you're looking for. Clause (i) says that the plan meets the safe harbor requirements if it provides the appropriate matching contribution and notice. Clause (ii) says that the plan meets the safe harbor requirements if it provides the appropriate nonelective contribution. No requirement for a notice. Does the plan does provide matching contributions? Are they relying on the safe harbor non-elective contribution to get them a free pass on the ACP test? If so then the notice is still required.

Companies aren’t subject to the ADP test - plans are. There is only one plan in place here and it satisfies all the required tests. You might be thinking of the rule under IRC 401(k)(3)(A) which says that if an HCE is a participant in more than one 401(k) plan of the same employer, then you include their deferrals on both plans’ ADP tests. In your case there is only one plan so this rule is not applicable.

In the context of Title IV of ERISA, which is what this rule relates to, "withdrawal liability" means amounts owed by a participating employer to a multiemployer plan arising due to an the employer's withdrawal from the plan while the plan is underfunded. See ERISA sec. 4021 at https://www.law.cornell.edu/uscode/text/29/1381 No other comments - just didn't want any readers to be confused by a discussion of PBGC rules that have nothing to do with QDROs or participants'/alternate payees' benefits.

Not sure I understand the situation. You said that the 401(k) plan passes coverage since company B (whose employees are not eligible) has a high proportion of HCEs. The plan meets the safe harbor requirements because every employee who is eligible to defer is also eligible for the safe harbor contribution, so no ADP test is needed. Where is the failure?

Are they on a bona fide leave of absence that could let them suspend repayments? Does the plan allow participants to make loan payments by personal check instead of by payroll withholding?

This is awesome. Very excited to see where this goes!

If you're seeing a ULT that starts at 70, it's outdated - the ULT is found in the regulations at sec. 1.401(a)(9)-9(c) and it starts at 72. The rule saying that a surviving spouse can use the ULT at their own age to determine the RMD is not actually in the final regulations yet, it's only contained in the proposed regulations from 2024. Consequently the expanded ULT is also only found in the proposed regulations at this point. You can find it here: https://www.federalregister.gov/d/2024-14543/p-115

Thanks! I should put "Pension Artist" in my signature 🤣

I re-read 1.411(b)(5)-1(e)(2) to be sure and I concur - there is nothing that would require you to use a different interest crediting period post-termination. If a full interest crediting period elapses after termination, then yes, you have to use the 5-year average of interest crediting rates as the interest crediting rate for that period. But if all distributions are completed before the end of the first interest crediting period post-termination, then no one would actually get that interest credit. Effen, I get where you're coming from. But remember, 411(d)(6) only says you can't reduce a participant's accrued benefit by an amendment. If it's part of the formula from the get-go then 411(d)(6) doesn't apply. And there is no reduction in the participant's normal retirement benefit. All you are doing is saying that if you take a distribution on day X, your lump sum will be $Y. Now Y could be less than the actuarial equivalent of the normal retirement benefit, and that's ok. In a cash balance plan, the lump sum doesn't have to be the actuarial equivalent of the normal retirement benefit, it's actually defined the other way around - the lump sum (or any alternative form of benefit) has to be not less than the actuarial equivalent of the hypothetical account balance. Since the hypothetical account balance only gets interest credits annually, then yes, it's possible that the actuarial equivalent of the hypothetical account balance will decrease throughout the year. That's expected and again it's ok. When it's not ok is if the participant is past normal retirement age, because then not applying the partial-year interest credit would result in an impermissible forfeiture of accrued benefits (unless the plan uses the suspension of benefits rule). So the accrued benefit does still have to be actuarially adjusted post-NRA to the date of benefit commencement. But for pre-retirement distributions, you're fine.

If the payment of the advisory fees may have resulted in fiduciary liability to the sponsor - perhaps because it was not reasonable for the plan to pay those expenses under the circumstances - then the plan sponsor may make a restorative payment to the plan. The restorative payment is not considered a contribution for purposes of 404, 415, etc. See Rev. Rul. 2002-45

Assuming that the divorce settlement stipulated a QDRO, then you've breached the agreement. However if there is no money left in any qualified plan then a QDRO won't be useful at this point. You agree that some money must change hands, but how much (taking into account earnings, taxes, etc) and by what vehicle (such as cash, IRA transfer, or something else) is up in the air. If you and your ex can agree on an amount that you owe her and by what means, then get it in writing and give her that amount. Done. If you can't, then you'll have to go back to your attorneys and/or mediation to come up with something. Good luck! And of course, I am not a lawyer and I am most certainly not YOUR lawyer. This is based on my best understanding of the law based on my personal experience. It is NOT legal advice by any means. Check with your lawyer before doing anything.

They can exclude him from both plans, by name or by job category, as long as it's not a service-based exclusion (including a disguised service-based exclusion). He would still be considered non-excludible so he would count against the coverage test (assuming he's a non-HCE). However - and read your documents carefully to be sure - his prior accrued benefits (if any) may well have to be restored. You said he got no money because he was 0% vested; this implies that he accrued a benefit in 2025 but received a "deemed zero-dollar cash-out" upon termination. Re-hired employees have a right to have their forfeitures restored by repaying the distributed amount, so just like he was deemed to have been distributed $0 he would also be deemed to have repaid $0, and would be entitled to a restoration of forfeited accrued benefits. If he is excluded from participation, he won't accrue any additional benefits, but he will continue to earn vesting service towards the benefits previously accrued.

Two things: 1. The definition of benefiting in the 401(a)(26) regs points to the definition in the 410(b) regs. The 410(b) regs say that you are still considered to be benefiting even if you don't accrue a benefit, if the reason you don't accrue a benefit is solely because you hit the maximum number of credited years of service under the plan. So in your case, somebody who has been at the 30% cap for a few years would still be considered benefiting under 401(a)(26) even though they didn't have an increase in their benefit. 2. Meaningful benefits can be demonstrated on an accrued-to-date basis. If you (or more importantly, your IRS examiner) accept that 0.5%/year is meaningful, then an employee would have to have over 60 years of service for 30% to be less than a meaningful benefit.

What? Why are they contributing a 3% QNEC and still choosing to be subject to the ADP test? To answer your question though, in order to count a QNEC towards the NHCE ADP, it has to be contributed for the same plan year as the NHCE deferrals being tested. Right now it’s 2026 and you’re doing the 2025 ADP test. With the prior year method, you’re using the 2024 NHCE ADRs in the test so you could only take into account 2024 QNECs (which could have been deposited as late as 12/31/2025). Hence why it’s generally not feasible to correct a prior year ADP test using QNECs. Now in your unusual situation, where they did actually contribute a QNEC during the prior year, you still have to take nondiscrimination into account. 401(a)(4) has to pass both with and without the QNECs that were applied to the ADP test taken into account. If you are including all of the NHCE QNECs in the ADP test then 401(a)(4) will fail since you’ll have contributions going only to HCEs after backing out the QNECs used towards ADP. If you calculate just the minimum amount of QNEC needed to pass ADP and leave some over to be included in 401(a)(4), then you can try to see if it would pass using cross-testing or another method. But if it fails, you now have a failure for 2024 that you would need to back and correct somehow. In short, if you’re using prior year testing, plan on correcting via refunds.

The mid-year/retroactive safe harbor non-elective is only good for the ADP safe harbor. If you need the ACP safe harbor for a discretionary match, then you will have to wait until the next plan year. Since you mentioned you have access to ERISApedia, chapter 14.12 has a great discussion on safe harbor plans. In particular there is a chart in 14.12.3.5 that I think will help you narrow it down. Remember that the notice has to be given before the beginning of the year, so if a notice is required then you can't make the change mid-year.

Safe harbor match can't be added mid-year. Safe harbor non-elective can be added up through November 30 (assuming calendar year plan) of the current year at 3%, or up through December 31 of the following year (i.e. 12/31/2027) at 4%.

I disagree with Marjorie Lucas (who I suspect might be an LLM, based on the responses posted above). The employee enters the plan immediately upon rehire. You can not disregard prior service merely because the plan was frozen at the time, or because there was no plan in effect at the time. Requiring him to work another 1000 hours before entering the plan would violate the maximum service requirement of IRC 410(a)/ERISA 202.

Google Workspace and Microsoft 365 are the big cloud-based products. Protonmail, based in Switzerland, has a security-first product, but they are not as full-featured as Microsoft or Google. If you are using your own domain name, it can be complicated to get your email up and running without professional help. Besides configuring your MX records for the new email host, you will also need to make sure SPF, DKIM and DMARC are configured correctly to ensure your outbound email gets delivered and not flagged as spam on the receiving end. Good luck!

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Yes, they have to. Unless the assets are less than $250k, in which case, they don't have a filing requirement at all.