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Outside of VCP (where just about anything is possible), I don't think it is possible. Peter, even if you established and merged plan 002 with plan 001 immediately and retroactively, why wouldn't a 5500 for 002 be necessary? The financial reporting would be in plan 001, but you would still have to report participant counts and plan characteristics for plan 002 since they are eligible for the PSP at creation. If we accept that creation of plan 002 created the eligibility for a PS contribution, that plan existed and must be reported. Creative solutions to the retroactive merger aside, I don't see a way out of the reporting.

I would be interested in a way of doing a retroactive merger. I'm not aware that can work.

Only the excess transferred over is a "real" transfer for lines 8j and 13 purposes. The rollovers are treated like you'd do for normal 5500 stuff, on the benefit payments value line 8d. Look at it as, you're presenting the financial summary, all the gains and payouts and contributions net to the final 100K, and you show that as a transfer out on 8j so that the assets balance to zero. Then on 13c you show where that 100k went.

***TPAs***

Can't do it. Create a new plan and merge them. Should have allowed PS in the 401(k) from the beginning.

To tax-qualify under Internal Revenue Code § 401(a) and for other U.S. tax law reasons, the plan’s trustee should be a U.S. person. If the plan were ERISA-governed, a fiduciary would obey ERISA § 404(b)’s command to maintain the indicia of all plan assets within the jurisdiction of U.S. Federal courts. Even for a plan not ERISA-governed, a prudent trustee might maintain in the United States (and, preferably, in the State in which the plan’s trust has its situs) the record of the UK company’s securities the plan’s trust owns. That includes a certificate (if there is one). If there is no established and efficient market for the securities the plan’s trust invests in, consider what valuation expert the plan’s administrator or trustee would engage to set—at least yearly, and whenever needed midyear to allow a transaction—an imaginary fair-market value for the securities of the UK company.

CBZ, I noticed you avoided being RATIONAL with your sample percentage. (Better than assigning (1+i)/(2-5i) as a fraction of one's retirement benefit to a beneficiary.)

Yeah 200% of the first 6% SH match satisfies the enhanced safe harbor match formula for ADP/ACP 100% of the first 7% SH match satisfies and enhanced safe harbor match with respect to ADP, but not ACP. Though there are a couple ways you can run the ACP test as I understand it. I've never actually had to worry about in the practice though.

This means amounts that could be distributed from the plan. For example, 401(k) deferrals if the participant is over age 59½. There are other distributable events for 401(k) deferrals, of course, but those would not generally be of much use in an IRR context. Terminated employees can't usually make rollover contributions, and hardship distributions aren't eligible rollover distributions, for a couple of examples. This is anything that couldn't be distributed from the plan, for example 401(k) deferrals or safe harbor contributions under age 59½ while still employed. If a plan allows a Roth conversion of amounts that are not otherwise distributable, then it has to retain the distribution restrictions that applied to the amounts prior to the conversion. That means, in most cases, the plan will have to track twice the number of sources that they had in the plan before. For example, now they have 401(k), 401(k) Roth conversion, safe harbor, safe harbor Roth conversion, profit sharing, profit sharing Roth conversion, etc. That might be the reason why a particular platform isn't supporting this type of conversion.

As long as the formula is written into the plan doc, then I agree you are good on the ADP and ACP safe harbor.

Agree.

And when will that be? 😉 I live and work in NJ and many of our clients are in NJ. I'd say that generally speaking, company contributions are deductible. However, for self-employed individuals, their own employer contributions are not deductible, only their own 401(k) contributions. But as suggested, an accountant is the one to ask.

This will NOT meet the requirements for a discretionary ACP safe harbor match. It should be ok for a fixed match however.

The difficulty, of course, is that these elections are not being processed by fifth-graders - they are being processed by computers, which are only as smart as they are programmed to be. Computers generally process numbers as either integers or "floating point" numbers - essentially decimals. While it is certainly possible to program a computer to work with fractions, it is more complex than using integers or floating points, and the person developing the system (or more accurately, the person paying for the development of the system) may feel that benefit of the added precision gained by supporting fractional numbers is not worth it in terms of development and support costs. If we continue this line of reasoning, why stop at fractions? What if I want to designate 1/sqrt(2) of my account to my first contingent beneficiary, and 1-1/sqrt(2) to the second? This amount could be readily calculated, but it would not be reasonable of me to expect the software to support designations made in terms of irrational numbers. Instead I should be prepared to accept an approximation. An approximation that is accurate only to one part in a hundred (whole percentages) is not great, however the information provided in this thread seems to indicate that is uncommon among providers. More common seems to be precision to one part in a thousand (percentage with one decimal place) or one part in ten thousand (percentage with two decimal places), which while not perfect, is pretty good. For an account with a value in the millions, percentage with two decimal places means that the amounts will be accurate to within the hundreds of dollars.

I think that's right. It does not match on deferrals over 6%, and I think that's the only cap.

Got a plan that has always been a closed MEP due to common ownership. For some reason, it was thought by a previous provider that this MEP was open and needed the two employers to file separate 5500s going back to 2018. My question is how do you amend a 5500 that should never have existed? The only option I can really think of is to just amend last year's returns and show it as a transfer of assets to the "main" plan and as a final 5500.

Agreed. And document everything.

fmsinc, to answer your last question, the Eighth Circuit’s recent decision (following an earlier Eighth Circuit decision) does not preempt State-law remedies that do not involve the retirement plan or its fiduciaries. As I explained in another BenefitsLink discussion, decisions for the Third, Fourth, Sixth, Eighth, and Eleventh Circuits interpret ERISA as not precluding a remedy that does not involve the plan or any fiduciary of it, and does not frustrate a surviving spouse’s right. In States’ courts, often the court does not even consider ERISA, especially regarding an already-distributed benefit. (If no plan fiduciary is in the State-law remedies litigation, only the plan’s distributee seeking to keep the benefit has a reason to raise the issue. And even when that person’s lawyer understands the argument, many abandon it.) States’ courts use remedies to move property from the plan’s distributee to whoever is the rightful taker under State law. You are right to fear that a plan’s distributee might dissipate the property paid or delivered to that distributee. That’s why another claimant should pursue remedies promptly and vigorously.

Fidelity acts as TPA for hundreds of Plans so I don't think you can get a feel what what will do in any particular case. But I have reviewed their procedures and model orders in hundred of cases over the years and have never seen the sort of restriction to whole number that you mention. In dealing with Military retirement plans the DoD FMR require that any computation must be rounded down to two decimal points. In 55 years of practice including 36 years preparing pension and retirement documents I have never seen anything like the Gelschus v. Hogen case. In that case the facts were as follows: Sally A. Hogen made contributions to a 401(k) plan during her employment at Honeywell International Inc. She originally designated her husband, Clifford C. Hogen, as the sole beneficiary in the event of her death. Sally and Clifford divorced in 2002. In the marital termination agreement (MTA), they agreed that "[Sally] will be awarded, free and clear of any claim on the part of [Clifford], all of the parties' right, title, and interest in and to the Honeywell 401(k) Savings and Ownership Plan." In 2008, Sally submitted a change-of-beneficiary form to Honeywell. She, however, did not comply with a requirement. She allocated "33 1/3%" of the 401(k) benefits to each of her siblings. The instructions said, "The Allocation % must be whole percentages." Because she did not use whole percentages, Honeywell did not change her designation. Honeywell called Sally and left a message notifying her of the rejection. Honeywell also sent eleven annual statements showing Clifford as the sole beneficiary. She took no further action. Sally died in 2019, with nearly $600,000 in her 401(k) plan. Honeywell paid the benefits to Clifford. Robert F. Gelschus, as personal representative of Sally's estate, sued Honeywell for breach of fiduciary duty, and Clifford for breach of contract, unjust enrichment, conversion, and civil theft. Would you ever in your wildest imagination think that the beneficiary of a 401(k) plan could not receive a fractional share of the Plan owner's account? I have asked the members of my family law listserv if they always caution their clients, the Participant of a defined contribution Plan, to address this issue in naming the post divorce beneficiary(ies). Would it be malpractice not to do so? Do you know how the scenario set forth above will play out? Who can sue who and for what? And what will happen if Plan assets are dissipated by the unintended beneficiary? Are you familiar with Kennedy v. Plan Adm'r for DuPont Sav. & Inv. Plan, 555 U.S. 285 (2009), Est. of Kensinger v. URL Pharma, Inc., 674 F.3d 131 (3d Cir. 2012), Andochick v. Byrd, 709 F.3d 296, 300 (4th Cir. 2013) and it's progeny, and Metlife Life & Annuity Co. of Connecticut v. Akpele, 886 F.3d 998, 1007 (11th Cir. 2018)? Did you know that in the case, In Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, 136 S. Ct. 651, 193 L. Ed. 2d 556, 577 US 136, (2016), the Supreme Court held that pursuant to 502(a)(3) of the Employee Retirement Income Security Act of 1974 ("ERISA"), [29 U. S. C. §1132(a)(3)] a Plan Administrator may not recover overpayments from a Participant's general assets. Said the Court: "We hold that, when a participant dissipates the whole settlement on non-traceable items, the fiduciary cannot bring a suit to attach the participant’s general assets under §502(a)(3) because the suit is not one for“appropriate equitable relief." Does this ruling, coming as it does from a Federal Court and with respect to Federal law, preempt the ability of the courts of my home state, Maryland, to order the attachment of general assets on a finding that the same behavior by the former spouse amounted to a breach of contract, or contempt of court, or trover and conversion? This is a bad case for everybody.

pmacduff, thank you for your helpful observation. Some participants tolerate the constraint and adapt to it in a way you describe. But at least some are offended that a Procrustean computer system requires a participant to specify a difference (however slight in percentage and amount) that pushes one to express (however subtly) a difference the maker does not intend. That offense-taking can happen even when the participant knows the favored beneficiary will adjust the difference by giving money to the others. And even when there is no discord, many people care about the symbolism. Also, some plans’ sponsors and administrators care about this point for other purposes. One of them is decreasing the number of participants who made no (valid) beneficiary designation. Many participants don’t read carefully the beneficiary-designation form. Some miss or ignore the instruction about whole percentages. Some don’t respond to a notice, or even repeated notices, that an attempted beneficiary designation was not processed. (Without those failures, the court case described above would not have happened.) It’s not enough to observe that people should be more careful; human behavior has weaknesses. (I know I don’t diligently do everything I should.) And some fiduciaries seek to make things easier for participants. An absence of a participant-specified designation burdens the plan’s administration because it calls for interpreting and applying on particular facts (which take time and effort to get) the plan’s default beneficiary designation. What if the plan’s default is to pay the personal representative of the participant’s estate, but no executor or other representative was appointed (often because the individual had no probate assets)? Or what if the plan’s default, after confirming the absence of a surviving spouse, is the participant’s children? How does the retirement plan’s administrator know how many children the participant had? If no one submits a claim, must the administrator search for the children? Or if someone submits a claim and states the participant had two children, how does the administrator confirm that there are no more than two? Dealing with these and other default situations is work. The expenses of applying a plan’s default-beneficiary provision can be significant if an administrator or a service provider administers a plan or plans with hundreds or tens of thousands of participants. I’m hoping to discern a range of experiences from plans that use a range of service providers. Among them, how about: Fidelity, Empower, TIAA-CREF, Vanguard, Alight, Voya, Principal, Merrill Lynch/Bank of America, T. Rowe Price, . . . ? I’m guessing some have figured out ways to manage and adjust a whole-percentages constraint.

You have deferrals with no plan. Amend the W-2 to show no 401(k). File an amended tax return for 2021. If they filed by April 15, too late to set up PS plan for 2021. If they were on valid extension but filed after 4/15 you could put in PS plan under secure with up to 25% employer contribution. Assuming their W-2 pay was at least $82,000 you could cover the $20,500 as employer contribution and the tax implications would be a wash (I think but I'm not CPA). Make sure he adopts a 2022 401(k) Plan (or amendment to SECURE adopted doc if you can do it) before he makes 2022 401(k) contributions.

IMHO I think the plan would still prepare a 1099-R for the outgoing funds as a direct payment distribution (if that's how it went out). It's up to the participant to report it properly and have the backup information when he files his personal tax return that he rolled it into a tax qualified vehicle within 60 days. No matter that he rolled it back into the same plan, that just reports as an incoming rollover to the plan. Again - this is just my opinion on how I would handle this situation. It's ultimately a wash if it all happened in the same plan year but I believe the plan needs to show it as it happened..... my two cents!

You can file an SS4 on line and get EIN almost immediately.

Need an EIN. Do not use a SSN. From the instructions to 5500-EZ

If the TPA works mostly (or exclusively) with plans on daily investment platforms, they may have little to no need to deal with 1099-Rs, as those would be handled by the platform. The TPA might be further insulated from the process if they utilize a service like Penchecks for distributions from non-platform plans.

Pardon me, but is there a concern about the original question? The correct 1099 process should be very well-known at the TPA level. Shouldn't it?

I'm guessing there was no WH but that's a different issue (and at this point nothing can be done about it). I agree with the others. What happened the moment it left the plan is what matters, not what happened later.

Agree with Belgarath. The 1099 is issued based on what transaction took place from the plan. What happens after that is irrelevant to the plan.

Not sure I understand the question. Was the lump sum distribution was paid directly to the former employee, with the check issued to the employee? If so, there was a taxable distribution with 20% mandatory withholding, and a 1099-R would be issued accordingly. There's no subsequent 1099-R when the individual then rolls to another IRA, or to another qualified plan. The participant would have to show the rollover on their individual tax return for the year in question. I'm wondering if there s some additional detail that you can provide, if there's something else you are really asking?

I'm surprised to see some of the responses but I shouldn't be so confident with my assumptions. I've understood that employers may, essentially, set any eligibility requirement so long as the fallback provides 1 Year of Service. Could an employer set eligibility to 1 month + 200 hours of service (with 1 YoS fallback)? If 1,000 hours is the issue, could they set 6-months + 999 hours? I've always understood the purpose of the 1 YoS fallback to provide flexibility for the first year for stricter requirements such as 6-month/1000 hours.

I do not think you can require 1000 hours to be completed in a period of less than 12 months, whether for eligibility or (definitely not for) vesting. What is the goal, earlier entry for FT but keeping out PT under 1000 hours? There are other pre-approved plan eligibility options to accomplish that with the provision noted by Lou that anyone with 1000 hours in 12 months is eligible (unless permissibly categorically excluded).

I think you can do it if your document allows for it, but you have to have a fail safe language to bring in folks who meet the 1000 hours in the 1st year but not the first six months. I could be wrong but it sounds like they are trying to bring in "full time employees" after 6 months while excluding "part time employees". Which can be problematic under IRS rules if not structured properly.