metsfan026

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!

I'd have to go back, but it was probably quite a few years ago

I have a plan terminating that had about $20k in the Forfeiture Account. They used some of it to pay plan expenses, but even after that there's about $12k left in there. So who does that money get split up between? Is it: Anyone still actively employed at the time of termination (I believe it was just the owner) Any person who had a balance at the time of termination

Thanks! The Plan isn't currently Top Heavy, so that's not an issue. It was more the idea of people deferring money, but not getting the ADP Safe Harbor Match. I don't believe they actually fail ADP Testing, it was more a safety thing setup at the beginning. So that wouldn't be an issue?

I have a client that wants to shorten the eligibility for 401(k) deferrals to 60 days, but leave the Safe Harbor Match at 1 year. I would think this would cause an issue with the testing, but I wanted to make sure I wasn't overthinking things. Thanks in advance!

This one is new to me, so I wanted to check. We have a potential new client, who plans to employee their 10-year old son (I'm not really sure of the specifics, to be honest). So the question is: 1) Can someone legitimately have a 10-year old on their payroll? 2) If they are allowed to be on payroll, could they then allow them to participate in the 401(k) Plan? The whole thing seems a little odd to me, but they are asking questions so I wanted to try and get the correct answers. Thanks!

Thanks! I believe the fear is that the person on leave has no plan on returning to work, so they would ultimately be taking a distribution, in essence, that wouldn't be allowed otherwise. Is the Plan allowed to have any employee on leave sign something stating that they intend to return to work, and understand what will happen with their loan (re-ammortizing upon their return), in order to take the loan?

Is there anything that restricts a participant to take a loan while they are out on a leave of absence? The loan specifically states that all repayments must be made via payroll deduction, so the thought is that it naturally restricts it. The Trustees are asking if there is anything more specific, though. Thanks in advance!

Good morning everyone! Is the 408(b)(2) required for a Trustee directed pooled fund? It doesn't appear that the investment people do it, and the client is asking. I wanted to confirm if it was required under this scenario or not. Thanks in advance!

Thank you! So even though they were under 1,000 hours they will be getting the 7.5%. I appreciate it!

Sorry, one more on this has come up. There are eligible participants who worked under 1,000 hours during the year. They have to get the 3% Top Heavy, obviously. But is that all they get? I just wanted to make sure they shouldn't be getting the 7.5% Gateway. I'm sure I'm overthinking this, just checking something another TPA did and I'm confusing myself lol