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It's been 10 years since we sold our TPA shop (started it in 1982) - a lot has changed in the past 10 years. I couldn't tell from your post if you have a book of clients that would follow you (or what problems you might incur if you try to pull those clients). You might want to consider these steps: 1. Do a 5 year financial projection - best case, middle case and worst case. If you can't financially survive, more deliberation is moot. 2, Research other recent TPA startups - you may be able to glean a lot from these. 3. Talk to vendors - TPA software, CRM, investment platforms - they know a LOT! 4. Do a 5 year business plan - how will you acquire and service clients, staffing, etc. 5. Do a SWOT analysis of #1 & #3. 6. Start from scratch or buy a firm? Best of luck

Glad to hear it's working out well for you. In my experience, I've never seen the IRS try to bring the hammer down on someone who was demonstrably making an honest effort to comply. They are pretty lenient with waiving penalties as long as you can show you were trying.

To satisfy the RMD in a DB plan, the participant must commence distribution of their entire accrued benefit no later than the RBD. What does the plan document say about the available forms of benefit? I suspect it offers a few annuity options, with monthly or annual frequency. The participant would need to elect one of the available forms of benefit and commence distribution under the selected form. Conversion of the accrued benefit to the elected optional form must be done according to the plan document's rules. In regard to your questions, consider this: I'm assuming your acccrued benefit numbers are single life annuity amounts. What would happen if the participant commenced distributions as a monthly life annuity on 4/1/2026 at $1,090/month and then died on 4/2/2026? Now compare that to what would happen if they took $9,810 on 4/1/2026 instead. Do you see the problem? As an aside, this is why you should never do RMDs from DB plans as life annuities. Use a term certain only annuity without life contingencies, that way if the participant dies, the undistributed part of their accrued benefit is not forfeited. Alternatively, you can do a lump sum distribution of the entire accrued benefit, use the DC account balance method to calculate the portion that is an RMD, and roll over the rest. Just be aware of 436 restrictions and the 110% funded rule if you go this route.

This is very helpful, thank you!

Hi everyone, No one replied to my OP which is cool, it was a lengthy post, but I decided to provide updates in case anyone has an interest. So, the post-dated check to the IRS is now showing as "pending" in my wife's checking account which is great news. It means my concerns over the clerical error on the date of the check were overblown and (assuming the "pending" status is removed and we see a check image or EFT notification in the account by let's say Monday) the first hurdle is passed. I've also called the Employee Plans center in Ogden Utah a couple of times and they've been quite helpful. You have to ask for an Employee Plans specialist because the first-level phone CSRs aren't necessarily accurate. For example, a couple of them insisted that the penalty relief program for 5500-EZ was handled by DOL which is obviously mistaken. So anyone in this situation who wants to contact IRS needs to ask for an Employee Plans specialist. I'm probably not telling any of you experts anything you don't already know though. Hopefully this helps someone else.

In my experience, auditors typically send a formal Request for Information (RFI) or Prepared By Client (PBC) list, outlining exactly what they need and the expected date of their arrival. The scope depends on the type of audit. Below is what is generally requested in a retirement/benefits environment. Auditors almost always request foundational documents first: Plan document (current and prior versions) Adoption agreement Summary Plan Description (SPD) Trust agreement Service agreements (TPA, recordkeeper, custodian) IRS determination or opinion letter (if applicable) Most recent Form 5500 and schedules Auditors will request detailed census data such as: Employee eligibility dates Compensation used for deferrals Hire/termination dates Date of birth (for testing) Hours worked (if eligibility is hours-based) Ownership status (for controlled group testing) They may ask for other items as they review the files.

Our firm pretty much exclusively has done small / micro plans (90% of our plans are <1M in assets and under 30 participants). As we grow, I know large plans are likely something we'll have to deal with eventually. We have one plan that's getting close enough to the threshold for requiring a large plan audit that we know we need to start thinking about that in the next few years. With our plan demographic, we've never once actually had a large plan audit. What kind of things should we expect? Does the auditing firm just ask us for a bunch of reports, and if so, what kind of information is generally requested? In the case that anything out of place is found, how much leeway is there in terms of them talking to us about correcting it vs reporting failures on an audit? I'd hate for a large plan audit to be the way we find out we're operating something wrong & cause problems for a client. Any guidance as we start to move into plans that may require audits?

I don’t suggest a settlement agreement, when there is one, always is incorporated into a divorce decree or other court order. I’ve seen many domestic-relations orders that did not do that. And my observations are from all 50+ States. (Whether an incorporation-by-reference is a good or a bad thing for a domestic-relations litigant is beyond my scope.) While each plan sponsor, plan administrator, or service provider might have a range of purposes, needs, and interests, I have often suggested a retirement plan’s administrator ought to prefer, and, to the extent applicable law permits, require, a domestic-relations court’s order the administrator can apply with no need to look at—and a preference to avoid seeing—a settlement agreement, a divorce decree, or any writing beyond the single-purpose order a claimant seeks to get recognized as a QDRO. (It might have been better for the Office of Personnel Management to have considered a similar clarity and efficiency when making its part 838 rule.) Your client has a helpful view. I wish you luck in persuading someone at OPM to think.

No. Pastor wants to make gross compensation disapper.

In my view (which is not advice to anyone), a fiduciary ought not to direct paying or reimbursing from plan assets such a penalty if a fiduciary, a service provider, or an employer is responsible for the act or failure to act that results in the penalty. That’s so even if a penalty was administratively addressed to the plan. If an employer paid a penalty but another person was at fault, the employer might get its lawyer’s advice about rights and remedies regarding the other person.

Sorry, misworded, what I meant was, getting the RMD all in one shot rather than as monthly benefit, not lump sum per se.

"...take a lump sum..." implies there is a distributable event. Is there? By the way, the RMD at 4/1/26 is not based on the accrued benefit at 12/31/25, but on the AB at 12/31/24. (Of course, the participant can take more than the RMD.)

Incredible. This seems like such a basic calculation they can be programmed into the payroll system. They have the comp and the deferrals. I am really surprised.

None of our clients who have plans with SHMACs use Gusto, but as for the payroll companies they do use (some of which are very large and well known), there are some that do not offer that service. As for the few that do, we usually find inconsistencies on a regular basis, so we have to double check whatever they do - spot checking just a few participants is not recommended. It would seem it's difficult to find a reliable provider, but I would like to be proven wrong.

IRS issued Notice CP1348 assessing penalties regarding a profit sharing plan due to distributions being made to terminated participants without federal tax withholding payments being submitted nor the Form 945 being filed. The Notice was addressed to the plan and stated that the plan's TIN should be written on the penalty payment. The employer paid the penalties, which were over $10,000, from the plan - AI says this is a prohibited transaction - do you agree? The plan has a pooled arrangement, so if the penalties are a valid plan expense, each participant would be dinged an average of about $300, which could become as issue.

Hi A bit confused due to intensive number crunching and brain is fried so need to double check the following and also the client may not be listening to me. Client turned 73 in 2025, so RMD is due 4/1/2026. Already 100% vested Q Part 1 12/31/2025 AB is 1,000/month and AE at 4/1/2026 is 1,090/month (making up the numbers) Starting 4/1/2026, monthly would get 1,090/month till 12/31/2026 (9 payments). Now they want to take the full amount on 4/1/2026 i.e. 9,810 (9*1090) Any problem with this? Q Part 2 Come 1/1/2027, the RMD continues to be 1,090/month till 4/1/2027 but does not take any monthly as he wants to take a lump sum. Say 12/31/2026 AB is now 2,200/month and next payment cycle is 4/1/2027 and the AE at 4/1/2027 is 1,300/month. So starting 4/1/2027, RMD is 1,300/month+1,090/month Clients says I want to take out all in one lump sum on 4/1/2027 i.e. 1,090*12 + 1,300*9 And future years continue with the same cycle. What am I calculating/thinking wrong?

TO: Peter Gulia PC Fiduciary Guidance Counsel Philadelphia, Pennsylvania 215-732-1552 Peter@FiduciaryGuidanceCounsel.com Peter: Thanks for your comments. Let me tell you what I have learned from various sources: 1. You and one of my Maryland colleagues, using simple logic (whatever that is) suggested that the Marital Settlement Agreement (MSA), if there is one, is always incorporated into the Judgment of Absolute Divorce (JAD) that you must send to OPM so they will have complete JAD. My grandkids would say something like "DUH?" 2. You and I both discovered 5 C.F.R. § 838.123(a) - https://www.law.cornell.edu/cfr/text/5/838.123 and realized that "other required supporting information" could easily deemed to include the MSA. 3. Everybody said that they had NEVER been contacted by OPM about the MSA and none of us believed they actually read it. 4. Everybody was aware of 5 CFR 838.101(a)(2): "(2) In executing court orders under this part, OPM must honor the clear instructions of the court. Instructions must be specific and unambiguous. OPM will not supply missing provisions, interpret ambiguous language, or clarify the court's intent by researching individual State laws. In carrying out the court's instructions, OPM performs purely ministerial actions in accordance with these regulations. Disagreement between the parties concerning the validity or the provisions of any court order must be resolved by the court." (Emphasis supplied.) 5. My client was concerned about giving so much information to OPM, even if it was heavily redacted, given that in 2015 OPM suffered a data breach that compromised sensitive, personal, and background investigation files of approximately 21.5 to 22.1 million people. 6. One of my colleagues pointed out the DFAS also requires a copy of the MSA in connection a Military Retired Pay Division Order. 7 . Nobody could remember any other ERISA Plan Administrator every asking for a copy of the MSA. See ESBA Advisory Opinion 1999-13A and Blue v. UAL Corp., 160 F.3d 383, 385 (7th Cir. 1998) - https://scholar.google.com/scholar_case?case=10750404539478630173&q=blue+v.+ual&hl=en&as_sdt=20000003 . 8. You alone led me to SF-3119 - Application for Court-Ordered Benefits for Former Spouse, with the following language: "Supporting documentation must be submitted with this application. This includes an original or certified copy of the court order with the judge's signature that meets all requirements for state certification of court orders. Additionally, all documents referenced in the court orders must be included as well as marriage certificates, divorce decrees, and/or death certificates for additional marriages (see Section C). Divorce decrees include, but are not limited to, the Property/Marital Settlement Agreement, Divorce Decree, or Qualified Domestic Relations Order, etc. If you have already submitted a certified copy of the court order, you do not need to submit it again." (Emphasis supplied). I will update is I receive any other information. Thanks. David Goldberg

FWIW, I would be cautious about treating this as a new business for the 3 year auto enroll exemption. Even if a new LLC was formed, if it is the same location, same employees, and the same day to day operations, it may look more like a continuation of the old business rather than a brand new startup. It may also matter how the deal was structured, such as a stock or asset purchase, and whether any controlled group rules apply.

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There has been some discussion on that before in this forum. The consensus seemed to be that this is definitely a gray area and that the amendment and document language matters - meaning either interpretation is possible. You could likely amend to unfreeze if needed to accomplish your objective, if not for the entire benefit formula at least for average compensation.

125 contributions are pre-tax and not subject to FICA/Medicare as you note. Typically, a W2 compensation definition will specifically say, somewhere and somehow, that 125 and all sorts of other pre-tax deferrals are included (or excluded). Are you looking at an IDP? If pre-approved, look at the BPD, and you may need to bounce around for definitions within definitions. There are also some plans that intentionally use W2 taxable wages, although not common.

Hi, Thank you as always for all the insights. Can a Hard Frozen DB Plan, (that is owner only), take into account salaries that were taken during the current frozen years. Not to increase the benefits of course, as the plan is hard frozen. Rather, to increase the salary average. The owner is past retirement age and is receiving each year an actuarial increase on his A/B, since he is not taking benefits yet (although plan allows for in service distributions after NRA). However, the AB cannot be increased beyond 100% of average compensation. Therefore, if the salary average is allowed to be increased based on current salaries (even though plan is frozen), then the annual increase on the AB can keep going up until the new higher salary average. Thank you

All of that needs to be sorted with a family law/ divorce lawyer first. If the divorce lawyer needs help from an ERISA attorney should know that they don't know enough and suggest additional counsel. Once an agreed upon DRO is written - that conforms to whatever the property agreement (original or updated etc) has in it - if there are issues getting the money out of the account for Person B - THEN the plan gets involved. Is the split in the property settlement agreement appropriate given all the new information? - not a question for these boards or the plan Does the DRO reflect the 401(k) award amount/value in the property settlement agreement ? - not a question for these boards or the plan, get an attorney or accountant who specialize in that to review Is the DRO accepted as qualified by the Plan? - that's a question for the Plan Administrator. If Person B doesn't like the answer, or isn't getting a response, they need to request a copy of the QDRO policy If person B wants to contact EBSA - they certainly could. None of the background information matters to EBSA. They would need to tell EBSA the date they presented the DRO to the plan, or the date the plan was notified there might be a QDRO, the date they requested a copy of the plan's QDRO policy in writing, and then any communication they received from the plan in response either saying no, we aren't giving you a copy, or you aren't entitled to it etc. If a participant/beneficiary is entitled to a plan disclosure, document, SPD etc, and they requested it and haven't received it, then I've seen good success when EBSA contacts the sponsor / plan admin to get it. and then EBSA forwards it on to that person. The QDRO procedure isn't going to tell person B if the stuff in the DRO is correct in regards to the dates, values, etc. Its going to say what the plan will do, notices, etc if a DRO is presented for the plan to accept as qualified or deny it as not. If the property settlement awarded half the 401(k) to person B, as of that date, then the DRO might be fine. Sounds like Person B might have wanted marital assets split differently if they knew the full picture, include a different portion of the 401(k). All that needs to be ironed out first.

Can W-2 Compensation ever include Section 125 pre tax medical/cafeteria contributions? If I understand correctly, Sec125 Comp is exempt from Fed/FICA taxes so is not reported at all in Box 1, 3, 5. However, a plan doc I'm looking at says in the definition of Total Comp that Total Comp = W-2 Comp, which includes elective deferrals and Sec 125 pretax contributions. Mid day confusion here.

Hi QDROphile and justanotheradmin, thank you, I will do my best to answer all the questions you have asked in your latest responses. Background information as to why Person B is asking for legal help. The company that Person A works for and owns changed during the divorce from a S corp to a C corp and then back again after the divorced finalized Person A filed, during the divorce and while still LEGALLY married and against the judges order, a tax return as a SINGLE filer After years of filings and back and forth, Person B finally received this illegal tax filing in the end of summer 2025 The tax filing uncovered that Person A, not only hid assets but sold marital stocks and other things during the divorce and hid them Person A has not updated their income with the State of Wisconsin since May 2021 (you are required to do so every time your income changes) Given, the new information acquired Person A lied about hundred of thousands of dollars in assets both during and after the divorce along with underreporting their income by tens if not hundreds of thousands of dollars. Person B has not, nor anyone representing them signed off on the QDRO that was filed in 2022, they have not received any money from the account The filed QDRO was for 50% of Person A’s 401k account as of May 2021 The value of the account as of the valuation date was ~$360,000 The Plan 401k assets are held with Ascensus Person B had been in contact with their financial advisor in Summer of 2025, who instructed them on getting plan documents and account statements from Person A before signing off on any QDRO and as of writing this has not received them all still In Short, Person B can’t be sure that any information in regards to the filed QDRO is correct, they are missing the key piece of information (QDRO procedure document), as has been pointed out. As QDROphile suggested in his second response, Person B has been already been looking and meeting with lawyers to hire, in order to file and reopen the case to get a new judgement. In doing that, Person B is wondering if they should also hire a QDRO or ERISA lawyer on top of the divorce lawyer. Thank you.