LMK TPA

oops! Yes, 2023. Thank you!

Thank you! If 401k accounts are not distributed by 12/31/2024 but the plan officially terminated, can the SIMPLE still start on 1/1/2024?

My client has a non-safe harbor 401k plan. They want to terminate it and start a SIMPLE IRA. I know SECURE 2.0 allows a SIMPLE to be terminated mid year and start a 401k plan, but is the reverse true? Can a non-safe harbor plan be terminated mid year and start a SIMPLE mid year? Is a 60 day notice of termination required? I have a Q&A from TAG saying that an advance notice of plan termination is not required (even if the plan is a safe harbor 401k plan.) Is that true? I know TAG isn't official legal advice but they're a pretty decent source of information.

Thank you! Wow, so if we've been giving top heavy minimum contributions to the participants that met the plan's 90 day eligibility requirement, we no longer have to give them a top heavy minimum starting in 2024 (for those under 1 year of svc, age 21)?

Employees who will be eligible in 2024 because of the LTPT rules are excluded from the top heavy minimum requirement. If a plan's eligibility is something less than 1 year of service, age 21, are those employees now also excluded for top heavy minimum purposes? For example, a plan has a 30 day employment requirement for participation. The LTPT rule isn't going to affect this plan because essentially all employees are going to meet the 30 day requirement. Are you saying that the employees who wouldn't have met a year of service don't need a top heavy minimum?

As to why it's a safe harbor plan in the first place, my thought is that it's laying the groundwork for a future employee. I wrote a plan recently as a 3% non-elective safe harbor plan with HCEs only (at the moment.) The document allows me to exclude HCEs from the safe harbor allocation so no HCE is obligated to contribute. If a NHCE is ever hired and eligible, the plan is automatically protected from failing ADP. If anyone sees this design is a problem, please let me know - I appreciate the feedback and your expertise!

My TPA firm is very small and 99% of our clients have less than 100 participants. Most have less than 40. I'm concerned that as time goes on, PEPs become more popular and my business is threatened. Is there an option for a small TPA firm to market PEPs? Can I join forces with a company that sponsors a PEP while I maintain TPA and consulting services for my clients? Thankfully, my market values local service but I'm not going to fool myself into thinking that clients won't jump ship if a PEP makes more sense for them and the popularity grows.

Does a statement need to be sent before 6/30/22? That's what I'm concerned about - not getting the info from the client in time to send a statement by 6/30.

If a Safe Harbor Plan terminates mid-year, the plan will retain its safe harbor status and top-heavy exemption for the plan year of termination as long as the termination is due to a substantial business hardship or there is an acquisition or disposition. I would assume that businesses will cite a substantial hardship for terminating the plan. I'm not sure what the definition of substantial hardship is. If the business terminates the plan and the substantial hardship isn't the reason or it cannot be proved, I believe the plan will be subject to the top-heavy rules. Any comments on this are appreciated.