"Is it possible for a Plan to use different subsequent eligibility computation periods for different money sources? For example, a Plan would like to do 1 year of service, with 1,000 hours, for the deferrals and safe harbor match, but do 2 years of service with 1,000 hours for profit sharing. They would like to 'switch to plan year' to calculate subsequent eligibility computation periods for deferrals and safe harbor match, but use anniversary of hire to calculate subsequent eligibility computation periods for profit sharing. Is this possible? What additional testing would the Plan be subject to?"

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"An owner is selling his business. He will be paid in equal annual installments over the next 10 years, well over 6 figures each year. He will not be working for the new owners and will likely be retired. Would the income he receives from the sale over the next 10 years be considered passive income? He is asking whether he can set up a solo 401k for himself, create a sole prop business entity for himself and use the annual payment to him as a basis for funding a solo 401k plan. Is proceeds from a business sale considered passive income and prohibit him from using it for retirement plan purposes?"

"If a new plan with more than 10 people elect to have a QACA instead of the EACA with safe harbor basic matching, would this satisfy the auto-enroll requirement under SECURE 2.0?"

"Client is a 501(c)(3) and I'm looking at what I was told was a pretty simple 403(b) (plan 001). Nothing exceptional stands out in the plan document, participants get a 3% non-elective on top of a 50% match up to 4% of comp. The plan files a Form 5500 every year. After speaking to the accountant, what happens in practice is throwing me off a bit.

• Elective deferrals in excess of 4% of comp are actually deposited to a second 403(b) plan (lets call it plan 002). I haven't seen a plan document for this plan, and no 5500s have been filed. It sounds like its a deferral only non-ERISA 403(b).
• Both plans are with the same provider
• Plan 001 does not mention anything about deferrals in excess of 4% of comp being funded to a different plan.

This doesn't seem right to me, I would expect that plan 001 would have to spell out that it will only accept elective deferrals up to 4%. Am I missing something? What is the point of splitting elective deferrals into two plans?"

"I've got two 40(b) plans where there is definitely no controlled group and no ASG. However, they do operate closely together, to the point where employees are shared. Over the years I've made the plans identical, but now I'm thinking about a 403(b) MEP. The main consideration is that the want to continue to not have automatic enrollment. Both plans are pre-2022, so they are currently not required to offer it, but the way I'm reading the IRS clarifications, if Plan A becomes a MEP by Plan B merging into it, they will be subject to the SECURE auto enrollment rules. Is that correct?"

"Does a safe harbor plan with less than 100 employees need to give the safe harbor match (or non-elective) contribution to these Part Time employees now eligible to participate?"

"Our client contacted us to let us know that a participant completed a deferral election form November 2023 and they've been making deposits into her brokerage account. However, the deductions were never set up with payroll. She just noticed a year later. The client spoke with their payroll company and their labor lawyer and both said as long as they don't tell her it's required, she can sign something and can have deductions for the next 3 payrolls to make up for it. The payroll person even mentioned her writing the company a check (I explained that the money shouldn't be from her, if would need to come from her SDBA if she were to pay it back). I explained to her they have two issues going on: [1] failure to implement, and because of that, [2] excess deposits. I calculated a QNEC, g/l and the full safe harbor match and then figured out the difference between that and what was deposited. I guess I'm just looking for guidance because even with the deposits being made erroneously, I feel like this is still a MDO that needs to be corrected."

"Which Federal website are other TPA's using to see what the current 'prime' interest rate is when processing participant loans when the document says the interest rate to be used is 'prime plus ___%'? Moody's, Wall Street and Bloomberg are all showing different prime rates.... Are TPA's just trusting the pre-populated rate that comes through from the recordkeeper instead of checking on it themselves?"

"Is there a grace period before an employer has to start withholding from an eligible employee's paycheck? For example, employee is eligible on 1/1/2025. The employee was given the required notices 30 days prior to 1/1/2025. If the employee does not make an election to contribute (or not contribute) is the employer required to start withholding from the 1st paycheck after 1/1/2025? Or can the employer say that they'll start automatically withholding with the first paycheck 30 days after 1/1/2025?"

"A U.S. based tax-exempt organization 457(b) plan sponsor wants its new CFO, an Australian citizen who does not have a Social Security number, to participate in the plan. I'm only guessing, but I would think that a non-U.S. citizen earning compensation within the U.S. from a U.S. employer would need a Social Security number unless the individual is exempt from U.S. taxes, most likely pursuant to a tax treaty between the two countries, although I'm no subject matter expert. If so exempt, then presumably there is no advantage to the CFO participating in the plan (other than perhaps receiving an employer match if the employer decides to make one). Anyone with other thoughts concerning this situation? Absent a Social Security number, I'm not sure our systems will even allow us to establish a plan account for this individual."

"An employer offers two medical plans. Plan 1's self-only coverage is $500/month. Plan 2's self-only coverage is $1,200/month. In order to use the ACA FPL safe harbor, the employer offers a $400/month employer contribution toward either Plan 1 or Plan 2. After the employer contribution, Plan 1's coverage is $100/month and Plan 2's is $800/month. Assume that neither $500/month for Plan 1 nor $800 or $1,200/month for Plan 2 meets any ACA safe harbor (i.e., without the employer contribution, no coverage is affordable). The employer's policy is to stop the $400/month employer contribution if an employee is out on unpaid non-protected leave (e.g., not yet FMLA eligible, not ADA, no state law, etc.). The medical insurance policy allows active coverage to continue for up to six months. An employee is going out on a three-month non-protected leave during a stability period in which they are full-time. Active coverage will be offered for the full three months.

• If the employee is on Plan 1 and the employer stops the $400/month credit, the employee will not have affordable coverage ($500/month). I assume this will be a problem as the employee still needs access to affordable coverage while in a stability period.
• If the employee is on Plan 2 and the employer stops the $400/month credit, the employee will not have affordable coverage ($1,200/month) but is not enrolled in the "affordable" coverage (Plan 1) to begin with, i.e., it was already not affordable but they had access to an affordable plan during open enrollment. Is this a problem?
• What if the employer only continued the $400/month credit during non-protected leaves for employees who were already enrolled in Plan 1 (but not any other plan)?
• If the employer's plan terms or policies say as much, is it permissible to continue/stop the employer credit only for employees enrolled in certain plans?
• If so, might the cost increase allow them to switch from Plan 2 to Plan 1?"

"We had a plan merge (transfer) their assets from a 401(k) plan to a 457 plan. They were not distributions. The 457 plan does not have a Plan Number so we are receiving an error on the SF about the missing Plan Number when trying to report the transfer under the financial section. Any suggestions on how to handle?"