Leaderboard

I agree, you are fine just adding them to the 2022 8955-SSA. I have never heard of anyone getting penalized for late reporting. If they were handing out penalties, there would almost have to be a correction program...

Or just file a 2022 form now. We are as picky as anyone (pickier) when it comes to a lot of things, but IMO this is not something to worry about. It's not like you are telling them anything is late. Someone please speak up if they are aware of anyone, anywhere, who got penalized for late reporting on an 8955-SSA.

Are you sure the person terminated? PRN is hospital/medical-speak for "as needed". An employee marked as such works less than parttime but hasn't been terminated, although they could have 0 hours for a year, I guess. Would that be a termination for plan purposes? It's not clear to me.

If all you have is a fax, there really is no way to confirm the authenticity of the signature. Today's image processing technology makes it fairly easy to grab a signature image from another source and apply it to a fax document. It can help to have some contemporaneous validation steps together with the transmission of the fax similar to steps taken with multi-factor authentication with texted verification codes to a known user phone.

I can't help but comment: THERE IS NO SUCH THING AS A SOLO 401(K) PLAN! There is just plan documents that are crippled and probably screwing up clients all the time (we know that's true: they often end up on our doorstep and we have to "fix" things). If he never hires a real employee, his existing plan document can do all you need to. If the plan was well drafted, there should be a provision that says HCEs don't need to get the Safe Harbor allocation (but you CAN give them a PS allocation if the client desires). You can amend the plan to eliminate the safe harbor provision, but it likely doesn't matter. Hopefully, as noted by another, there is the standard 1 year/ age 21/ semi-annual entry date provision, which a lot of so called "solo 401(k) plans" have hard wired as immediate entry; that's a problem if, g-d forbid, he hires someone for even one day. They also tend to be hard wired for immediate 100% vesting; also should be avoided just in case they ever hire someone. Again, the "solo 401(k)" document is just a crippled document with bad provisions. Bottom line: if your plan document is a good one, then just modify anything you really don't want and keep it. As far as moving it to a "new vendor", if you are just talking about the investment, a non-participant directed, pooled plan would make the most sense for this situation and those changes can be made to the plan document and you can invest the funds with anyone you want.

You can't find it because you can't do it. There is no correction program for a late 8955-SSA. Does she still have a DVB? If not, she should have been registered and deregistered, and I wouldn't worry about it. If she does, submit a amended 2016 8955-SSA.

Hopefully you've advised the client about the annual additions limit...

Breaking this down (and agreeing with previous comments and observations), The company sponsor a 401(k) plan for all employees. All of the field employees get a $4/hour non-elective employer profit sharing contribution to the plan. The profit sharing plan is tested for nondiscrimination (since non-field employees do not get $4/hour NEC and the amount of contribution for field employees varies based on hours worked). The nondiscrimination test supposedly passes. The company wishes to offer to the field employees the option to continue receiving the $4/hour NEC or receive $3 in direct compensation. This clearly is considered a cash or deferred arrangement (CODA) going back to the 1950s when Kodak offered employees the right to take their profit sharing amount in cash or have it contributed to the plan. In this case, put another way, a field employee can choose to receive $3/hour in direct compensation, or get a $3/hour amount deferred into the 401(k) plan and get a $1/hour match contribution. There is not enough information to know how this deferral and match interacts with the provisions of the existing 401(k) plan. The 401(k) plan's eligibility to make elective deferrals, any existing match, match allocation eligibility requirements, vesting and other similar BRFs would need to be reviewed. The 401(k) plan also would need to consider what happens should a field employee reach the 402(g) annual deferral limit during the plan year. There would be no opportunity to deposit the $3/hour deferral into the plan without violating 401(a)(30) limits. A guess as to the motivation for considering this idea is that enough field employees want cash-in-hand now, even at the cost of $1/hour off the top and paying payroll and income taxes. The company likely is looking at its portion of payroll taxes plus any impact this may have on other company-provided benefits. As a possible compromise, the company could consider keeping the current $4/hour NEC and making in-service withdrawals as readily available as permissible. For example, these amounts could be withdrawn from the plan once they have been in the plan for at least 2 years. The amounts also could be available if the participant, for example, has at least 60 months of participation, or attained Normal or Early Retirement, or is disabled, or has a safe-harbor or non-safe-harbor hardship. This avoids all of the payroll tax issues, doesn't complicate the 401(k) plan design, apparently already passed nondiscrimination testing, does not involve a match, and cannot trigger 401(a)(30) limits. Once an employee is qualified for in-service withdrawals under any one of these rules, the employee would have access to the funds. Generally, we don't advocate very liberal in-service withdrawal rules and would recommend limiting the number of withdrawals per year, but if the recordkeeper is geared up for plan accounting for new features like emergency savings, qualified disaster, qualified adoption and all of the other available in-service forms of payments, this approach should be relatively to implement.