EMoney

If plan is not on a recordkeeping platform, use PenChecks for plan distributions that require withholding

If you choose the print option and then choose the "Other" tab, there is a "Company List" option. That report provides much of what you listed.

Sounds like a plan that should not allow participant loans!

In the ERISApedia Grab Bag webinar, the presenters specifically said that adding deferrals to a profit sharing plan was not a grandfathered plan so auto enrollment required.

I'll take the under on the .01% good:) In all seriousness, the situation you outlined is the only potential positive I can see in the LTPT rules. Other than that. LTPT is an absolute nightmare from an administration standpoint and plan sponsors are not going to do it correctly. The eligibility rules are far more complicated than they need to be--if all you had to do was determine if the employee in question worked 500 hours in the plan year for 3 (or 2 starting in 2025) consecutive plan years, it would be mostly doable. But these eligibility rules are insanely complicated IMO. If I feel that way, how is a plan sponsor supposed to understand them?

Unless I misunderstood, during the ERISApedia Secure 2.0 Grab Bag webinar, the speakers indicated you could add profit sharing back to first day of the year. However, they also indicated you could not add an additional plan (i.e. CBP). Anyone else hear it that way?

Are there any local TDA (now Schwab) offices in your area? In recent years, we came across an advisor in a local TDA office and working with him has made our life much easier when we need things done (i.e. statement copies, distributions, etc.).

I think the question is did the employee work 500 hours from 10/4/21 through 10/3/22? If yes, that is first YOS for LTPT. If document switches to plan year, then 2022 becomes second YOS for LTPT.

I read an article last week on the daily BenefitsLink Retirement Plans newsletter. It was written by a law firm and indicated that the plan must count hours for LTPT purposes in the employee's first 12 months of employment and then can switch to plan years beginning with the plan that starts in the year the first employment year ends. If I understand correctly, that means you need to determine if your employee works 500 hours from 10/4/21 through 10/3/22. If so, there is one year. If your eligibility computation period shifts to the plan year, then you look at 2022 so you potentially have two years for LTPT purposes at the end of 2022 even though the employee did not work 500 hours in 2021. In 2025, when LTPT rules only require 2 years of 500 hours, an employee could easily get 2 YOS for LTPT purposes when they completed barely over 12 months of service. I think this logic makes it far more complicated than it should be (it's already complicated enough). I hope the law firm is wrong but I doubt they are. Anyone have a different interpretation? It would be much easier to simply determine if an employee had 500 hours in a plan year and credit on that basis. Just one more thing SECURE 2.0 is trying to make overly complicated IMO.

Good comments. Also, if you keep the receivable loan payment on there, you would reduce the overall loan balance by the principal portion of the payment, not the total loan payment. Perhaps that is what you meant but not how I read it.

What's wrong with letting them participate in the year(s) they are NHCE's? The plan won't fail the ADP test if they contribute when they are NHCE's.

We use Relius documents (PPD version). In one of their document seminars, they went through a similar situation and described months of service as simply a passage of time. So, if an employee was employed on the entry date, they entered on that date regardless of how many times they may have been terminated and rehired. If that is the case, I think both of your examples would result in an entry date on the rehire date. (Of course, other documents could be worded differently.)

Allocation of fees is a fiduciary responsibility. How would your fiduciary decision maker feel arguing he or she allocated 20% of a participant's account balance to fees? If it were me, I would not want to make that argument to any governing body. I've seen a client do it, though, and he was HCE/key!

CuseFan, I agree with you. My premise is more along the lines of a plan sponsor taking an in-service distribution to avoid the $250,000 in assets so they don't have to file an EZ. I've seen that happen and then they think they don't have a 5500-EZ filing obligation or a need to terminate the plan when they decide they no longer need the plan.

I agree with this.

Does account close = plan was terminated? Account could have been closed simply because no assets remained (i.e. an in-service distribution). If plan was not terminated, I don't think you have a Form 5500-EZ filing requirement until final year or assets exceed $250,000 at plan year end.

What document provider do you use? We use Relius (PPD version). Under the definition of compensation is the following definition of excluded compensation: (G) Excluded Compensation. Excluded Compensation means such Compensation as the Employer in its Adoption Agreement elects to exclude for purposes of this Section 1.11. Regardless of the definition of Compensation selected in the Adoption Agreement, the Plan Administrator may adopt a uniform policy for purposes of determining the amount of a Participant's Elective Deferrals of excluding non-cash Compensation. For purposes of this Section 1.11(G), Non-cash Compensation means tips, fringe benefits, and other items of Compensation not regularly paid in cash or cash equivalents, or for which the Employer does not or may not have the ability to withhold Elective Deferrals in cash for the purpose of transmitting the Elective Deferrals to the Plan pursuant to the Participant's Deferral Election. Additionally, the Employer may, on a uniform and nondiscriminatory basis, provide different deferral elections for different items of Compensation (e.g., a separate deferral election for bonuses), and may exclude for purposes of calculating elective deferrals one or more items of irregular pay (e.g., car allowance) in accordance with the Adoption Agreement. Unless otherwise specified, the Plan Administrator shall determine the amount of a Participant's Compensation (for purposes of allocations), by disregarding Excluded Compensation. If your plan has this or similar language, would you be able to hang your hat on the "irregular pay" language?

I agree with Lou S. on the calculation of the maximum deductible employer contribution. While I agree with the portion of Bird's statement that you have to subtract any employer contribution to get the net compensation available for deferrals, I don't agree that Mike Preston has the correct maximum employer contribution. Mike indicates that you subtract the employer contribution (and 1/2 of SE tax) and then multiply the result by 20%. I think that you multiply the result by 25% if you have already subtracted the employer contribution and 20% if you have not. I always learned it as 20% of gross equals 25% of net but just two different ways of getting to the same correct answer: $100,000 - $7,065 = $92,935 * 20% = $18,587 $100,000 - $7,065 - $18,587 = $74,348 * 25% = $18,587 Admittedly, I've followed these boards enough to know the both Mike Preston and Bird are way smarter than me! So, to make sure I wasn't losing it completely, I even plugged $100,000 of schedule C income into Datair and requested a 25% of pay profit sharing allocation. It calculated $18,587 also.

My apologies. I didn't read carefully enough and missed that it was a DB situation. Mine is a DC situation.

Have a similar scenario. In your 10/1/20 effective date, would you pro-rate the 415 limit for the 3 month short plan year? Haven't done any research but thinking 415 limit would be based on limitation year which is still 12 months. Does that change anything?

Understood. I thought it was a similar line of thinking, though. While I don't disagree with you, it doesn't seem like it would be considered income either.

Thanks to all who replied. Your thoughts make me feel better in that we're not missing something obvious. I think Bird's comment about doing what seems appropriate given the situation probably makes the most sense unless we get some direction. We've considered "other contribution" whether it's on a Schedule H or an SF (which is similar to what ESOP guy suggested and what Bird suggested)--it seems reasonable and defensible in an audit. If the distribution is ultimately made, we can report it again. In the event of an audit, I wouldn't feel terribly stupid telling an auditor what we did and why we did it. Admittedly the 1099-R's would not match up to the 5500 but we could explain that.

Thanks, Bird. We've certainly considered that but have run into the situation of no other distributions that year. A negative distribution didn't make sense to us.

We're seeing more stale dated checks being re-deposited by recordkeepers into plans--typically to an unallocated cash account or the forfeiture account. How are others reporting these on the 5500 filings? Obviously the checks have been shown as distributions in prior years.

Just thinking off the top of my head--have not done any research whatsoever. Now, you are allowed to file an SF version even for a 1 life plan that would qualify for an EZ filing. I cannot recall if that was the case back in 2009-2012 but, if it was, couldn't you choose to file an SF for those years which would allow you to only pay the DFVCP penalty?