"Many off-the-shelf cafeteria plan documents that I see from vendors restrict eligible employees to those eligible for the employer's major medical plan. I understand that for certain components (e.g., pre-tax medical premiums, health FSA, HSA) initial and continuing cafeteria plan eligibility should be tied to medical plan eligibility. However, many of those cafeteria plans also cover other benefits, like pre-tax dental, vision, and other insurance premiums, dependent care FSAs, etc. where the underlying eligibility rules are often different from major medical.

"This would seem to cause a problem if, for example, an ongoing employee goes from part-time to full-time during an ACA stability period. They may not be eligible for major medical for several more months (or longer), but would often become eligible for other benefits upon converting to full-time status.

"While the special enrollment rights allow participants to make or change elections, in most documents I have reviewed, the underlying eligibility rules themselves remain the same. In other words, even though the employee would otherwise be allowed to enroll in the other benefits upon converting to full-time, they technically would not be eligible for cafeteria plan participation until they became eligible for major medical. Am I missing something that would otherwise make a blanket eligibility statement like this appropriate in these situations?"

"Company A (which maintains a 401k plan) and Company B (which maintains a SIMPLE IRA) intend to create a JV. Company A will hold less than 80% interest in the JV after the transaction. Company B's employees will be transferred to Company A in connection with the transaction and become employees of Company A. The intent is to offer Company A's 401k plan to the former employees of Company B (who participated in the SIMPLE IRA) immediately after close. Post-closing the SIMPLE IRA will continue to be maintained by the JV or Company B.

• Do you see any issue with offering former Company B's employees who become employees of Company A in connection with the transaction the ability to participate in Company A's 401k plan immediately after close? Post-closing Company A will not be in a controlled group of corporations that includes the JV or Company B. I'm assuming that the transaction will trigger a separation from service for former Company B's employees that come over to Company A.
• Will the entity that maintains the SIMPLE IRA (either Company B or the JV) have an obligation to fund elective deferrals and employer contributions through the end of the calendar year for the employees who terminate with Company B and transfer employment to Company A?
• If the JV/Company B do not have any employees post-closing would they be able to dissolve the SIMPLE IRA mid year?'

"[1] Plan established 2022. [2] Prior year testing method elected in the document. [3] Discretionary Match -- nothing funded for 2022. For the first year, the 3% rule was used -- HCEs 0% NHCEs 3% -- plan passes ADP They never made a match until 2023. Since this was the first plan year of the match, can they use the 3% first year rule for the match contribution?"

" 'In the event hat a Plan is top-heavy for a Plan Year, no Key Employees shall be eligbile to participate to make any Elective Deferrals under the Plan.' Is that a valid exclusion? What I'm trying to do is have a stop-gap in the plan so that even if a Key Employee contributes to a plan that ends up being top-heavy they just have ineligible contributions and not a top-heavy minimum. We have plans where we 'know' it's going to be top-heavy eventually. We just don't know if it's in 1 year, 2 years or 3 years for example. And of course we tell them to stop contributing in January until we can run the test but I'm afraid if someone forgets it could cost them tens of thousands. I will tell you I asked a guru and he felt that operationally it was a cutback. I would be comfortable explaining that risk to the client but telling them on the plus side their plan as written can never be required to fund the THM. And that is invaluable."

"Terminated participant, instructions sent to brokerage firm to pay out said participant. The payout didn't happen, and participant is asking for earnings on top of the original distribution amount. Is there a standard for how to calculate 'lost earnings'? Should the brokerage firm have standards that would dictate this answer? Thanks all!"

"Just a simple clarification... A client with a 5 participant 401(k) plan asked about the mega backdoor roth option. I explained that every year we max out the plan to the 415 limit, there is no room for a voluntary after tax contribution. Can she convert the PS contribution to ROTH each year with an in-plan conversion?"

"A prospect is wanting to set up a solo K plan for 2023. My first reaction was the deferral for 2023 is not allowed since it was not elected by 12/31/2023 nor contributed on time. But wasn't there a exception for first year plan adoption for sole proprietors?"