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The ERISA Plan Administrator (who is probably the Plan Sponsor in a small plan) is responsible for making the RMDs. While the potential excise tax is on the Plan Participant, failure to comply with §401(a)(9) is a Plan Qualification issue so get the checks issued and sent. Last time I checked the R sands for Required and participant consent is not required. If she just retired or turned 72 and this is her first RMD you have until 4/1/2023 to get it done. If it's an on going thing you have until 12/31/2022.

Peter, those whose benefits are collectively bargained are mandatorily disaggregated, statutorily excluded from sections of the plan for non-bargaining employees and tested separately, so does it matter?

Years ago, had a client in CA that did not have separate EIN/TIN and CA was very aggressive in getting client to pay taxes the state felt were due from the retirement account since it had the same EIN as employer. It was painful to resolve so it would be worth getting the accounts correct IMO

Good questions. The work that your client is asking you to perform is for the previously existing single employer plan for the 2022 short plan year. They (you) will need to file a "Final Form 5500" for that previous plan (with a final audit, if one is required) for 2022 and on that 5500 indicate that the plan was MERGED into the XYZ Pooled Employer Plan. It is almost certainly a plan MERGE, not a TERMINATION, btw. You may be able to reach out to the new TPA on the PEP for clarification. Happy to chat as well. Terry Power tpower@theplatinum401k.com 813.774.3366

Good Evening, Simple solution, known by a few, raise the HCP wages by the desired difference between 100% cost of the benefit plan and the normal non-HCP contribution amount. Then the HCP employee can chose to pay that additional wage as a pre-tax contribution in Section 125 Plan, while the employer continues to make comparabe tax-free contributions for all HCP and Non-HCPs eligible benefits. Assuming the HCE at issue is not ineligible for the cafeteria plan, such as more-than-2% S corp owners, K-1 partners, LLC members, etc, as Brian has stated. BRIAN, Do you agree, as one HCE or multiple HCE paid non-discriminitory amount(s), as HCEs are able to make S125 pre-tax contributions as long as they are not lower than the non-HCPs pre-tax contributions?

We had this happen recently. Separate cash balance plan account and 401k plan account... but both under employer EIN. Worse, neither account reflected the plan name (cash balance or 401k). Applied for TIN for each plan. Sent client's authorization letters (one for each plan) to brokerage firm with full plan names and corresponding TIN's. Two new accounts were created, and assets moved from the old plan accounts to the respective new plan accounts. Seemed rather painless...

Brokers will code the account - qualified plan so no tax reporting. But issue could arise if someone takes a distribution and has withholding. I realize employer can report under employer EIN and mark for 945 but the employer likely has a fast deposit requirement. I've seen by the time the broker sends the withholding, it gets deposited and someone does EFAST, time goes by. And a late deposit of withholding gets costly fast. We apply online to get a plan EIN and use it for tax withholding reporting purposes.

If the brokerage firm screwed this up, why wouldn't they be happy, more than happy, to make it right? I'm assuming the account(s) are for a plan trust. If they are whining about paperwork, then employer needs to find a new broker, asap. There may be unintended consequences, or as Dick Rumsfeld would say, unknown unknowns.

Facts and Circumstance on whether a new issued notice over riding the prior notice would be considered timely. The more documentation that you can detail that employees received the updated notice and had an effective chance to change their deferral election before 1/1, the more likely you are to be OK under a facts and circumstance determination. But yes you're past the "safe harbor period" for providing the safe harbor notice.

Hopefully you've got enough flexibility in your document, and demographics, that perhaps cross-testing a 1% "PS" allocation to one NHCE would be enough.

Yes, they would fail the 55% average benefits test because they would be at 0%. Unfortunately, there is no way to pass the nondiscrimination testing requirements for the dependent care FSA if only HCEs participate. The employees’ remaining contributions in the FSA will simply be returned as taxable compensation. Any amounts already reimbursed will be recharacterized as taxable income. This will effectively eliminate the dependent care FSA for that plan year. Keep in mind that they may be able to take advantage of the top-paid group (top 20%) election to try to get at least one of the HCEs to move into non-HCE status. Then even if they're still failing, at least they would be able to preserve at least some of the HCE tax-advantaged dependent care FSA benefits. Details and cites here: https://www.newfront.com/blog/the-dependent-care-fsa-average-benefits-test

That's a great question. It's really not basic--I've debated this one with ERISA attorneys for years. I've always taken the position that the uniform election rule in the Section 125 nondiscrimination provisions requires that HCPs pay at least as much as non-HCPs for the same plan options. In other words, a contribution structure that charges more to certain non-HCPs for the same benefit does not provide a “uniform election with respect to employer contributions.” So all full-time non-HCP employees eligible for the same plan option as an HCP must be offered at least the same employer contribution amount that is available to the HCPs for that plan. More details: https://www.newfront.com/blog/nondiscrimination-rules-for-different-health-plan-contribution-structures-2 Now there are a couple reasonable arguments that if there is no HCP contribution to the plan, the §125 rules do not apply. One argument is based on the so-called "American Can Plan" approach. However, the American Can Plan proposition I've always understand as there actually not being a Section 125 cafeteria plan in place. That's different in my opinion than arguing the non-highs are using the 125 plan but the highs aren't because they're not required to contribute. Then there's the argument that what happens if you violate the 125 NDT rules with this type of structure. The rules technically provide that the HCPs would lose the safe harbor from constructive receipt, and thereby be taxed on any pre-tax contribution. But there are no pre-tax contributions in this situation. So my argument is essentially that the IRS would try to force them to lose the tax-free premium treatment under §106 as you noted. In short, I've just always thought it is pretty ridiculous to believe the IRS would be ok with highs paying zero, but not with them paying one cent pre-tax. But there's no guidance I'm aware of directly on point. So that's how I advise unless the highs at issue are ineligible for the cafeteria plan, such as more-than-2% S corp owners, K-1 partners, LLC members, etc. In that case I'm fine taking the position that because they're treated as self-employed and therefore ineligible to participate in the cafeteria plan, the employer is prebaby fine providing a larger employer contribution.

The problem is that the law here is not entirely clear, and the IRS has yet to issue any regulations under 404(o) that would provide guidance. The rule is that the liability resulting from any increase on behalf of HCEs which is adopted or effective, whichever is later, within the last 2 years is not included in the cushion amount. The problem is that it is not defined how "last 2 years" is measured. Is it 2 years ending on the valuation date? At BOY? On any date within the plan year? You had an amendment adopted (let's say) 12/15/2021 and effective 1/1/2021 which increased benefits for HCEs. You also mentioned you're using an EOY val date, so that amendment has to be taken into account for the 12/31/2021 valuation (since it was adopted before the valuation date). However the amendment only increased the pay credits, so it would have no effect on the 12/31/2021 funding target, therefore it would have no effect on the cushion amount. For the 12/31/2022 valuation, the 12/15/2021 amendment was clearly within the last 2 years so the increases added by the amendment for HCEs can not be taken into account for the cushion amount. In other words, determine the HCEs' hypothetical account balances as of 1/1/2022 as if the plan was still frozen, and use those to calculate the funding target for your cushion. For the 12/31/2023 valuation it gets tricky. The 12/15/2021 adoption date is not in the last 2 years if you measure from the valuation date, but it would be if you measured from almost any other date in the plan year. What if the amendment had been adopted on 12/31/2021 instead? Then there would be a stronger argument in favor of treating it as being within the 2-year period. A 12/15 vs a 12/31 date would make no difference for almost any other purpose under the Code, so it seems strange that it would make a big difference here. If you want another argument, since the funding target is based on the accrued at the beginning of the year, maybe the 2-year period should be measured from the beginning of the year? The law is unclear.

Agree with Lou - your 415 clock and comp reset.

There was also environmental Armageddon going on all over the country, so if you were in an area that had a Federal weather disaster you may have an extension for that as well. Good luck.

I believe you have coverage failure and will need to give PS contrib to NHCEs. Might be a good time to suggest SH match for 2023. And may want to suggest a 3% PS for all in 2022.

Consider whether not correctly recording the owner and nature of securities accounts and other investment-related accounts could result in generating tax-information reports—including, for example, Forms 1099-B, 1099-DIV, 1099-INT, which might suggest capital gains, dividends, and interest to be shown in the tax return of the organization with the Employer Identification Number.

I think it's the increase you need to exclude from the cushion for 2 years. Since the plan was frozen than all of the new accrual in 2021 and 2022 would need to be excluded when calculating the cushion amount.

RMDs for 2020 were suspended and that included folks who turned 70 1/2 in 2019 who had a RBD of 4/1/2020. 2021 was clearly required by 12/31/2021 and he obviously has another due by 12/31/2022 for 2022. Assuming this is a DC plan or IRA and not a DB plan.

If your taxes were on extension, you might be able to rely on that extension to also extend the 5500 deadline. In that case you could tell the IRS you neglected to check that box on the 5500. (But it's gotta be true, of course!)

This may help you https://www.irs.gov/individuals/understanding-your-cp283-notice Did you file for an extension? - I assume not since you received a CP283. I don't think personal issues is reasonable cause though. It's not that hard to file it timely.

The employee was never eligible to make elective deferrals, so the employee is not included in the ADP and ACP tests assuming that there was no trailing regular compensation paid on 12/21/22 or later. There's no such thing as making a safe harbor contribution for a plan with an ADP test, so I'm confused about your facts. If there is a safe harbor nonelective contribution, it wouldn't be required by the safe harbor regulations, but your plan document may require it.

Granting service for eligibility and vesting for service with another entity would not be a problem, subject to nondiscrimination but since there are no NHCEs you'd be fine from that standpoint. But unless you have a controlled group or affiliated service group I think using the compensation from the prior entity is problematic under the exclusive benefit rule and also don't believe you would be able to use it for establishing a 3 year high salary for 415 limits. Someone else might have a more aggressive position. If so I'd be curious to see what citations would be used to support it.

I'm not aware of any provision to waive the RMD in year of death (I'm assuming participant is past RBD). If you have beneficiaries you would pay it to the beneficiaries and code it as a death benefit and let them know it is not eligible for rollover. But as a practical matter determining these things and getting them accomplished before 12/31 can tricky from a practical standpoint. Especially getting a custodian or reckord keeper to act when they don't have another authorized agent on file. This does seem to be a case where there IRS would likely waive the 50% excise tax for reasonable cause assuming the RMDs are made as soon as practicable but from a plan standpoint I think you might be looking at EPCRS for a waiver of failure to satisfy 401(a)(9). I can't recall if that falls under VCP or something you can self correct. And while I know this is not correct I believe one time we did make a payment to the participant after death when he died late in the year and the heirs deposited it into his bank account post mortem but I think the check was issued a few days before his death but arrived shortly after he passed the 1099-R was issue to the participant in that case.

I'm guessing the proper procedure would be to adopt a new SEP on the prototype, and then either leave the assets alone or roll them. I suspect the investment company sees the account and the document being linked...or not; I'd ask them.

I do not deal with these directly but have consulted with advisors and their clients, communicating their need to restate their SEP onto a prototype and get off the 5305 platform so they could adopt a defined benefit plan, and no one had come back to me saying they couldn't do that so I'm assuming this can be done.