metsfan026

I know this is in DC Plans now. Does it also apply to DB Plans?

Good morning, I hope all is well. I have a Cash Balance Plan that's terminating as of the end of the year. I know upon termination everyone becomes 100% vested. My question is, what is the rule to "forfeit" (not the right word) your benefit. If someone has been out for 5 years, do they lose their benefit if they weren't 100% vested? It's a 3-year cliff vesting schedule, if that matters. I looked in the document, but I can't seem to find the wording, just want to make sure I'm right. Thanks!

I'm taking over a client and they are looking to terminate their existing, traditional Defined Benefit Plan to instead utilize a Cash Balance Plan moving forward. I know the limits are lifetime limits, etc. The question is, are they allowed to terminate one and open the new CB Plan within the same year? Someone is telling them that they can't, so I wanted to double-check. Thanks!

If a client wanted to give our firm the authority to sign the Form 5500 on their behalf (I guess signing it under my ID), what do they need to sign to authorize that? Would our firm just be listed as the Plan Administrator on the Form 5500-SF? We've always had the client sign themselves, but for some reason one client doesn't want to do it and would rather have us sign.

Good morning, I hope all is well. Generally when we file Form 5500 we do so on an Accrual Basis. I'm taking over two 401(k) plans, where the previous TPA has been filing the Form 5500 on a Cash Basis. I assume there is no issue, one way or the other? Is it better to continue filing them on a Cash Basis, or should we consider switching over to an accrual basis? Thanks!

We are taking over the Plan right now. I don't think the document specifically says anything, it's just been the administrative policy from what I've been told. I guess the question more is, do the participants have to be given an opportunity to change their coverage or is that policy (assuming it is in the document) is legally allowed?

The question is, someone wants to change to a "better" plan. The old administrators didn't allow it based on anti-selection (if someone was taking the cheapest plan, got sick and moved to the better Plan it obviously had a negative impact). So I guess the question is now if a participant has to be given the opportunity, at least once per year, to elect different coverage under the Plan. Or can they continue with the old administrator's policy

On a self-funded, granfathered plan. Is it required to have an Open Enrollment period to allow participants to upgrade their benefits? Or is that not required?

Just looking for advice on a new Plan setup. We are installing a new Safe Harbor 401(k) Plan with automatic enrollment and automatic increases. Generally, in the past when we've installed a new plan we've always gone with the first day of the Plan being January 1, even if it was signed during the Plan Year. My question is, under the new Secure 2.0 rules is there a reason not to use a 1/1 start date and instead use 11/1 for a short Plan Year? Thank everyone!

One of my clients is of the belief that they can only designate a spouse as the beneficiary of their Cash Balance Plan. I think I know the answer, but I just wanted to make sure. Someone can name a non-spouse their beneficiary, correct? The only caveat being that if they are married, they need to get spousal consent to elect someone else to be their beneficiary. Thanks in advance!

I know it's likely an inexact answer, but I've had people tell me different things. What is the approximate maximum benefit credit you can get in a Cash Balance Plan? Just a ballpark number that you could tell someone when discussing the design. Obviously there are a lot of variables, but just trying to make it easy for someone to understand who doesn't have much knowledge. Thanks!

Sorry for all the questions today! Have 2 participants in similar situations: Participant 1: Was eligible for the Plan, having worked 1,000 hours from 2014-2016 Worked about 250 hours in 2017 Had 0 hours from 2018-2021 Re-hired and worked 900 hours in '22 So it would appear that there was a 5-year break in service. Does that mean that this participant needs to re-establish eligibility, or do they become eligible again from the re-hire date? Participant 2: Was eligible for the Plan, having worked 1,000 hours from 2014-2017 Had 0 hours from 2018-2021 Re-hired and worked '22 This participant only had a 4-year break in service. I believe this means that they do become eligible immediately upon re-hire, since there was no 5-year break. Is that accurate for both participants?

That's what I thought, I just had a moment though that if the money was deferred prior to becoming eligible those deferrals should be excluded. Thanks for the reassurance!

I'm taking over a client and this is the first year I'm operating as the TPA. They do a match, which is funded after the end of the year. Deferrals are allowed immediately Matching Contributions, you become eligible 1st of the month following the completion of 1 year of service. Currently the Plan does not exclude compensation prior to becoming eligible for the Match. It appears that the previous TPA was matching all deferrals made during the year, as long as the participant became eligible at some point during the year (for example, if someone became eligible on 12/1 all of their deferrals would've been matched up to what the formula allows). My question is if that is allowed? Or are they only allowed to match deferrals made after they would've become eligible for the match?

OK, so it's: Up to 5 5-19 20+ That accurate?

Also, I just wanted to clarify: 1st Segment Rate - 0-5 years till retirement 2nd Segment Rate - 6-20 years till retirement 3rd Segment Rate - 21+ years till retirement So if someone is 5 years to retirement, we would use the 1st segment rate. Thanks again!

Perfect, so the formula I put out there is the correct one?

Someone is making me think I'm crazy, so I just need to make sure that I'm correct in terms of the formula to calculate the Funding Target. Here's what someone is telling me the formula should be: Hypothetical Account Balance * (1+Interest Crediting Rate)^20.5/12 * (1+Interest Crediting Rate)^Years to Retirement -------------------------------------------------------------------------- (1/1+1st Segment Rate) ^ Years to Retirement My understanding is that the segment rate is determined by the # of Years to Retirement. Also don't know where they are getting the 20.5/12. What I thought the calculation was is: Hypothetical Account BalanceBalance * (1+Interest Crediting Rate)^Years to Retirement ------------------------------------------------------------- 1+Segment Rate (dependent on the Years to Retirement) ^ Years to Retirement Please tell me I'm right and that the other person is crazy

The document leaves it open ended, I was just making sure the IRS wouldn't have an issue with it. Basically our document software allows us to input a dollar amount, a percentage or "other" which says: "Describe how pension credit is determined using objective criteria that are not subject to employer discretion" I guess there is no discretion, it's just setting a percentage up to a maximum. Unless I'm not interpreting that correctly.

I just wanted to make sure my thinking was right in terms of a formula for a Cash Balance contribution for an HCE. I know you can put either a percentage or a dollar amount as the set benefit, but does a formula like this work: 20% of compensation up to a maximum of $50,000? It would only be for the HCE, I just wanted to make sure that it was OK to put the cap on the benefit like that. Thanks in advance!

I just want to make sure I'm reading this correctly in the Plan Document for a client. Here is the excerpt, regarding the true-up for the Safe Harbor Match: Notwithstanding the foregoing, if the Employer elects to contribute and allocate separately ADP Safe Harbor Matching Contributions for an Allocation Period of less than the Plan Year, a true-up will be required unless ADP Safe Harbor Matching Contributions with respect to any Elective Contributions made during a Plan Year quarter are contributed to the Plan by the last day of the immediately following Plan Year quarter. So if the client is funding the match on a payroll-by-payroll basis, a true-up for shortages is not required correct?

I have a Cash Balance Plan that is looking to buy an investment property and renovate it, hopefully as an asset of the Plan. The property is about $1.35 million, then they would want to spent $1.5 million to renovate it and create a multi-unit rental. I know owning the property and generating income via rentals isn't an issue, as long as all revenue goes back into the Plan since it is a Plan asset (at least that's my understanding)? Can they also pay for the renovation out of Plan assets?

457(b)

I have a client we just took over that has a 457 Plan. The document I was given doesn't tell me much, unfortunately. I just got the following question, so I wanted to see if anyone had any insight: "They have an employee that has reduced their hours and are no longer making $120,000 a year. They have been eligible for the 457 in the past – are they still eligible? Or do they have to meet eligibility each year?" Thanks in advance!

Good morning everyone. I know someone can have primary and secondary insurance, but we have a participant in a self-insured Plan asking if they can take out a second policy from our Plan to help diffuse some of the costs. The argument is that you are allowed to have two plans, but I can't seem to find anything that says the primary and secondary can't come from the same Plan. Does anyone have any guidance? Thanks in advance!