"For the exception to the 10% penalty, when does the distribution have to occur? That is does the distribution have to happen 6 months after the participant turns age 59 or is it anytime in the year in which they turn 59½? This participant will reach 59½ anniversary in October 2023. Normally I'd just tell them to wait but the participant is going on leave due to medical issue that may be terminal so waiting until October may not be an issue. If it is after age 59½ is there a hardship exemption to the 10% penalty that would allow the distribution now without penalty? I realize there is a work around where the client could deem him terminated and thus the withdrawal would be after separation of service after attainment of age 55 and not subject to the 10% penalty but there might be reasons like health insurance that they would want to classify him on leave instead of terminated."

"Company A acquired Company B through a stock acquisition 12/1/2021. Company B has a 401(k) plan with a 3% safe harbor non-elective and immediate eligibility -- Company A does not have a 401(k) plan. Company B continued to operate as a wholly owned subsidiary, but it will formally merge into Company A on July 3, 2023. 410(b)(6)(C) for 2021 and 2022 is good -- nothing has occurred that would eliminate the transition period relief. It is now June 30, 2023, and your friendly local TPA was just hired to takeover from a bundled provider who has done nothing to address the acquisition. The plan documents were never amended to have Company A adopt the plan as a participating control group member. The Company A employees, who were never employed by Company B, have not been given the opportunity to participate. If they tried to exclude these Company A employees, the plan would fail coverage in spectacular fashion. Assuming we restate the plan documents effective 7/3/2023 to list Company A as the plan sponsor (since Company B will no longer exist), and all employees are given the opportunity to participate 7/3/2023: [1] Is there a missed deferral opportunity for those Company A employees who were never employed by Company B dating back to January 1, 2023, when the transition relief ended? [2] For Company A employees who never worked for Company B and terminated prior to 7/3/2023, will they need to be included in the 3% safe harbor non-elective in 2023? [3] I know this is open-ended, but are there any other issues that I should be considering?"

"Calendar year 401k, SHNEC, PS plan for a partnership that we took over this year. As we're reconciling it, we notice that the 2021 employer contributions were not deposited in 2022 -- presumably they were deducted. We've always taken the position that the SH has to be corrected so that has to be deposited ASAP with corrective earnings.... On PS.... since the deposit was not made by 9/15/22, the deposit is subject to be counted in both the 2021 and 2022 annual addition limits. But it wasn't deposited in 2022 at all.... so there's no effect on 2022? I assume this now becomes a SCP issue ... and so even when they make the deposit now in 2023, it's under SCP and I don't see where that affects their annual additions limit (I just assumed it should, but most corrections don't). So I must be missing something. It must be somewhere that this would count towards the limit, otherwise any plan that missed the deposit deadline would just wait it out a couple of months and correct via SCP. [Yes, the SH would also be in the same 'count towards annual additions' as the PS. And, in fact, some of the partners' deferrals are in the same boat, too, so they've got late deferrals to add on top of this.] So.... I think it should be that all the missing 2021 deposits have to be made now, and they will offset either the 2022 or 2023 annual additions limit (their choice) by participant. That feels right. Nice to see that in black & white, though.... or to have the actual right answer, either way."

"Maximum participant loan (residential) was granted at the end of 2021. Due to turnover at the plan sponsor repayment was not set up. Error was detected during 2022 plan audit. Recordkeeper is proposing correction by amortizing the loan over the remaining term using the original $50,000 loan as the loan balance with interest only payments until the accrued interest is repaid (entire amount of loan payment applied to interest for the next 13 months). Is this permissible or should the current accrued interest be repaid to the plan now? With accrued interest the balance is about $53,000. if this loan was not already at the maximum limit, I believe their correction would be appropriate. However, I am not sure it is OK when the loan plus accrued interest is over $50,000."

"I am not an expert in Form 5500 but I am very curious about one question here: I thought all large groups (>50 enrollees) are experience-rated to some extent (premiums depending on their past claims). But why most Form 5500 Schedule A filings are nonexperience-rated? Is this an option that employers can choose? If yes, what kind of employers are more likely to file as nonexperience-rated?"