sb0828

Does anyone know the answer to the following question, or are we all waiting for guidance from the IRS?: Scenario: A 401k plan was established effective January 1, 2023, and the client opted at the time the plan was being established to wait until January 1, 2025 to add the mandatory automatic enrollment provisions to the plan. Question: When the plan is amended effective January 1, 2025 to add the mandatory automatic enrollment provisions to the plan, which participants must be included in the automatic enrollment provisions? Does it need to be applied to all who are plan participants as of January 1, 2025 as well as all future plan participants, or can it just be applied to those who first become participants on or after January 1, 2025?

I am not sure the effective date of the plan could precede the date on which the business was established, so I think you will need to use July 30, 2023 for the effective date of the plan.

I believe you are confusing the Mega Back Door Roth concept with an In-Plan Roth Conversion. The following link delves into the Mega Back Door Roth concept: http://cvsoci.al/MzGhkV9b

What is your interpretation of the new automatic enrollment rules under SECURE 2.0 for a plan being established as a QACA? Do the new rules (i.e., 3% minimum default; auto increases of 1% per year up to 10%, and not more than 15%, if default % is less than 10%) need to be applied to the plan, or can you abide by the old rules for QACA (i.e., any % for a default; auto increases of 1% per year up to 6%, and not more than 15%, if default % is less than 6%)? Thank you in advance for your reply.

Thank you all!

Hi Bri - it is the latter.

Thank you for the feedback. Yes, both plans in question are 401k plans, and the intention was to merge the assets from the original single-employer plan into the PEO/MEP, but it never happened since the Plan Sponsor decided they had no desire to remain in the PEO/MEP. However, the Plan Sponsor did cease to remit contributions to their original single-employer plan as they were remitting to the PEO/MEP instead for the three month period they were participating in the PEO/MEP.

A Plan Sponsor elects to discontinue their single-employer plan and join a PEO/MEP. 3 months later, the Plan Sponsor decides they want to leave the PEO/MEP and go back to a single-employer plan. Is this an issue since less than 12 months have passed since the Plan Sponsor originally discontinued their single-employer plan in favor of joining the PEO/MEP?

The plan document for a new 401k plan is written with a January 1, 2022 effective date, even though the deferrals do not commence until a date which is later than January 1, 2022, in order to avoid an initial short Plan Year, and the plan document does not include a special effective date for the deferrals. Does this result in a missed deferral opportunity?

The deadline to comply with the Cycle 3 restatement mandate is July 31, 2022 so my understanding is that as long as the assets are distributed prior to July 31, 2022, the restatement is not required.

Where are you located?

From a very reliable source in the industry: 1. Is it permissible for the eligibility requirements for a SHNEC to be different than the eligibility requirements for salary deferrals? Yes. 2. If so, what (if any) are the ramifications to the plan? a. The participants who are not yet eligible for the safe harbor contribution are subject to ADP testing. However, if there are no HCEs in this group, they automatically pass the ADP test. b. The plan will not be exempt from the top heavy minimum contribution requirements (if it otherwise would have been).

Thank you, Peter.

Hi Peter, If a participant has suffered a loss of income because their spouse lost their job due to Covid-19, would that participant not meet the criteria for requiring individual assistance in an area designated by FEMA?

Thank you ratherbereading, but I was under the impression that all states qualified as per the following: https://www.fema.gov/news-release/2020/03/13/covid-19-emergency-declaration