"For midyear changes -- what constitutes an eligible QE for an employee to terminate an HCFSA midyear, and then start an HSA? As background: our FSA is a general-purpose FSA, not limited-purpose nor post-deductible.... We want to confirm the following scenario would be in compliance: An employee waived health insurance but elected the Health Care FSA. Then, midyear, they lose their other health insurance (say through a spouse) and that is a QE to allow them to enroll in our health coverage midyear. The employee chooses the HDHP which has an HSA. Question: Does the QE that allows the employee to enroll in health insurance midyear, combined with their choice to elect the HDHP with HSA, also allow them to terminate the HCFSA in order for the HSA to be set up prospectively? We understand from the 1/2023 Q&A referenced above that someone can enroll in an HSA midyear if the HCFSA terminates due to an eligible QE. If the scenario above is not eligible, can you please give an example of how an employee could make this switch midyear?"

"The circumstances are that this is 401(k) Plan in transition from one TPA/RK to another. At the previous TPA/RK each individual had a separate account, while at the new TPA/RK there is a core account in which investments are pooled, daily valued with individual balances tracked by RK -- the individual accounts (which function the same as a brokerage portal at the custodian). Functionally, each individual had a brokerage portal with the custodian that are then all associated with the Plan's master Trust Account -- now that is one investment option available for them, or they can invest in mutual funds in the main account.

"During the transition period, an EE entered the Plan; the prior RK would not establish an individual account for this EE, as the Plan was deconverting, and the receiving RK was unable to create an account for them as the master Trust Account & associated individual accounts were not yet registered to the new RK. There was a 'master' Trust Account in the Plan that the deposits flow into and are then transferred to each individuals account accordingly; these are actually separate accounts.

"Because the ER was not able to get an individual account opened for this individual, their deposits were sent to the master Trust Account and sat there in cash, uninvested. AFAIK this was not an interest bearing account. Once the transition was completed, the individual completed enrollment including setting an investment allocation and the funds were then invested according to their allocation in the core account.

"My understanding is that since the deferrals were segregated from the ER's general accounts and deposited in the Trust Account albeit uninvested, they were not considered late deposits. The issue posed by that is potential liability due to a fiduciary breach.

1. The question at hand is if the ER can allocate lost earnings for this participant for the period they were unable to direct their investments. The ER would like to do so, calculated according to the VFCP calculator.
2. Would depositing lost earnings mitigate their potential liability, if permissible?'

"I see that we've discussed several issues relating to 'overpayments' in this forum, but they seem to be focusing on employer contributions and incorrect allocations. What about where the plan sponsor deposits too much into the deferral bucket (bad math, or whatever), and the participant takes their immediate distribution. No other participants were harmed, and I'd argue that the plan doesn't have to be 'made whole' because that money shouldn't have been in there in the first place. Is this just a 'send a letter and if you get the money back, that's great' situation?"

"Back on 9/13 the IRS released IR-2024-236 providing tax relief for Louisiana due to Hurricane Francine. The 'IR' release says nothing about Rev. Proc. 2018-58. In most cases though, the IRS releases a state-specific release at the same time as the 'IR' release -- and this state-specific release will have an 'Affected taxpayers' section that typically covers deadlines under 2018-58. But the IRS has yet to publish a state-specific release for Louisiana. Does anyone know why the IRS hasn't released this and is there any way to confirm whether 5500 and other deadlines related to a qualified retirement plan are extended to 2/3/25 for Louisiana? I tried calling the IRS disaster hotline but the individual I talked to did not understand what I was asking and just directed me to the FEMA page."

"The 401k plan includes Basic SH Match provisions, but no one made deferrals in 2023, so no ER SH contribution is required and no testing is required. Does the question at 14b refer to design only, so SH option should be selected, or is it N/A in a year with no 401(k)(3) testing requirement?"

"What are the requirements and timelines for participant notification that they're plan is being merged/adopted by another common owner in a controlled group?"