Leaderboard

One plan for union employees, another for non-union employees? That's commonly done.

No one has mentioned the 80-120 rule so far. Please see below as the information also applies to 2021 years. But wait, there is an exception…the 80-120 participant rule. This exception provides some level of relief for plan sponsors to avoid having to change filing categories. Included in the Department of Labor (“DOL”) Regulation 2520.103-1(d), “plans with between 80 and 120 participants (inclusive) at the beginning of the current plan year may elect to complete the current year return using the same category (that is, “large” plan or “small” plan) that was used in the previous year.” The Department of Labor (“DOL”) has graciously provided this exception in the instructions to the Form 5500. As it relates to the determination of the necessity of a 2020 plan audit, the DOL states, “if the number of participants reported on line 5 is between 80 and 120, and a Form 5500 Annual Return/Report was filed for the prior plan year, you may elect to complete the return/report in the same category (‘‘large plan’’ or ‘‘small plan’’) as was filed for the prior return/report. Thus, if a Form 5500-SF or a Form 5500 Annual Return/Report was filed for the 2019 plan year as a small plan, including the Schedule I if applicable, and the number entered on line 5 of the 2020 Form 5500 is 120 or less, you may elect to complete the 2020 Form 5500 and schedules in accordance with the instructions for a small plan, including for eligible filers, filing the Form 5500-SF instead of the Form

Not only to keep each plan’s count of participants small but also for many business and plan-administration reasons, an employer might prefer to establish and maintain two or more distinct plans. One kind of distinction is between [PIN 002] “employees who are included in a unit of employees covered by . . . a collective bargaining agreement . . . , if there is evidence that retirement benefits were the subject of good faith bargaining[.]” and [PIN 001] employees not represented by any labor union. See Internal Revenue Code of 1986 (26 U.S.C) § 410(b)(3)(A) http://uscode.house.gov/view.xhtml?req=(title:26%20section:410%20edition:prelim)%20OR%20(granuleid:USC-prelim-title26-section410)&f=treesort&edition=prelim&num=0&jumpTo=true

Post-transition period, you can aggregate the plans for testing if they use the same method (safe harbor, current year, prior year) to satisfy ADP/ACP. Since the plans together would cover all employees there shouldn't be a coverage issue in that case. If eligible, you could apply for QSLOB status and continue to test them separately. Or, you could just merge the plans into one and forget all this.

Yup, audit by checklist, gotta love it (or not)!

Those agents started to retire in the 2000's... As for this current crop, they have their checklists to satisfy...😵