LTPT, 401(k) only for now

I just want to make sure I haven't missed any updated guidance on the following specific items only. Thanks.

1. Only contribution REQUIREMENT is to allow the eligible LTPT to defer.

2. IF the employer chooses to contribute match, PS, SH, (mix and match), to those who are SOLELY eligible due to LTPT rules, these people may still be excluded from coverage, ADP/ACP, and 401(a)(4) nondiscrimination testing.

3. For top heavy purposes, their account balances will be included in the determination if the plan is top heavy or not, but they are not required to receive a top heavy contribution.

4. No gateway required, even if employer chooses to give them profit sharing.

That is my understanding as well.

Vesting is based upon a 500 hour year for those people forever even if they actually become eligible under the regular requirements

19 hours ago, Bill Presson said:

Vesting is based upon a 500 hour year for those people forever even if they actually become eligible under the regular requirements

And that is the sleeper issue that few are talking about.  It is a nightmare to track "regular" participants, LTPT participants, and "former" LTPT participants who may have already achieve vested status, or who will gain vested service under rules different from "regular" participants.

Yeah, one of the more obnoxious provisions in the law.

P.S. - different subject, but what are your thoughts on SMM's? The number and variety of potential SMM's, what with different provisions in different years, for different clients, is terrifying.

2 hours ago, Belgarath said:

Yeah, one of the more obnoxious provisions in the law.

P.S. - different subject, but what are your thoughts on SMM's? The number and variety of potential SMM's, what with different provisions in different years, for different clients, is terrifying.

When we have this many changes, we will probably reissue the SPD in full.  Easier.  The key is timing here....

Yeah, that's what I'm talking about. So you potentially have a new SPD (or SMM, or multiples) due within 210 days after the end of the plan year - so you have one due in 2024, one in 2025, and one in 2026. Blech...

My method has been and remains doing (even for a micro plan, although for them with no fee) a revised summary plan description at least once each year, every year. I typically refresh the SPD each November, just after the IRS releases the inflation adjustments looking to the next year. And I do an off-cycle restatement if there is a change in a plan provision, or something else communicated in the SPD.

Such a restated SPD describes not only the provisions stated in what practitioners call “the” plan documents but also provisions not yet written in those documents but “in operation” as the remedial-amendment legal fiction allows.

I recognize such a method is wildly impractical if the plan’s sponsor/administrator relies exclusively on its recordkeeper’s or third-party administrator’s or its licensor’s document-assembly engine.

For administrators that lack the resources to do it my way, there’s a wide range of business methods recordkeepers and third-party administrators use. Some suggest SPDs; some suggest SMMs. Some key the descriptions to what the plan-documents engine knows. Some include in-operation provisions the plan’s administrator has instructed. And service providers suggest a wide range of ways to schedule these communications.

Belgarath, if you seek to avoid a series of summaries of material modifications as each year’s newly applicable provisions arrive, some practitioners suggest one can write a summary that includes not-yet-applicable provisions if the writing is clear about when each provision becomes applicable. However, such an explanation would require the plan’s administrator to know which optional provisions the plan’s sponsor has adopted and, for each, whether the sponsor makes it available with the earliest time relevant tax law allows, or some later applicability time the sponsor specified.

An SPD or an SMM describes a plan. A plan’s administrator must not describe a provision the plan’s sponsor has not adopted. But a plan’s sponsor might adopt a provision, at least for ERISA title I purposes, by means much less formal than what practitioners call “the” plan documents.