Message Boards Digest

September 28, 2023

Here are the most recently added topics on the BenefitsLink® Message Boards:

Santo Gold created a topic in Retirement Plans in General

Whose Employee Is This, Whose 401(k) Plan Is This?

"Medical professional #1 runs a stand alone business. No employees, only the owner. She has a solo 401k for herself. Medical professional #2 also runs a stand alone business. No employees, only the owner. She also has a solo 401k for herself. #1 and #2 form a separate company to handle administrative work for both companies. Assume 50/50 ownership. They plan to hire 1 individual to handle the admin duties that pertain to the other 2 companies. With 50/50 ownership I don't see a controlled group here. But this would appear to be an Affiliated Service Groups (ASG). If an ASG, what are the 401k plan implications: [1] Assuming full time employment, will the employee of the new company eventually be eligible to participate in one or both of the solo 401k plans? [2] Can #1 and #2 still maintain separate plans, different benefit structures, etc if they start the new company? is there any required aggregation?"

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bdeancpa created a topic in 401(k) Plans

Correct Year for Deferrals to Apply Against 402(g) Limit

"I have a client that maintains a 401(k) plan with 500+ lives. The plan assets are with a large insurance company who also provides the TPA services. The insurance company just notified the sponsor that 8 people violated their 402(g) limits. Corrections were not made by the April deadline as the sponsor's accounting department tracks annual deferrals and, according to their records, no employee was over the limit (except for eligible catch-up contributions).... It turns out the TPA was treating the first pay date in 2022 as 2021 deferrals and the first pay date in 2023 as 2022 deferrals.... The pay dates in question did represent the payment of wages for a pay period that ended in the prior year (paid on 1/5 for pay period ended 12/31). The pay and deferrals for the 1/5 pay date is reflected on the employees W-2 for the calendar year in which the pay was received by the employee (i.e., 1/5/23 pay and deferrals are reflected on the 2023 W-2). Per my reading of Tres. Reg. 1.402(g)-1(b), I interpret the definition of an elective deferral for 402(g) purposes to be an amount that would be taxable in the year, except for the fact that it was an elective deferral into a 401(k) plan (SARSEP, SIMPLE, Roth, 403(b) as well). If I am interpreting that correctly, a deferral from a 1/5/23 paycheck would have been taxable compensation in 2023, except for the fact it was deferred into a 401(k) plan, and thus it counts as an elective deferral for 2023 for 402(g) purposes. Not 2022 as the TPA is contending. Am I missing something?"

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Belgarath created a topic in 401(k) Plans

Withdrawing from MEP

"A MEP. Big 'lead employer' (A) and a 3-person (no HCE's) participating employer (B) as a MEP. Participating employer (B) withdrawing, so will no longer be a MEP. Participating employer (B) does not want to maintain the plan, but the employees of (B) are not terminating employment with (B). As I understand it, there needs to be a spinoff plan with (B) as the sponsor. It is (B's) intention to have the assets transferred to the new spinoff plan, and immediately terminate. (B) does not want to allow any deferrals or contributions to the spinoff plan. Since the existing plan permits Roth deferrals, one of the participants has Roth deferral account. Trying to figure out if the new plan can accept this Roth deferral account if the spinoff plan doesn't allow deferrals at all, so that there is technically no 'designated Roth account' -- and/or is there another way around this that isn't penetrating my skull?"

1 reply so far   |    Click Here to Add a Reply

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