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The Form 5500 Preparers Manual notes: "Entity Control: Edit tests or checks programmed into the EFAST2 system that are used to determine whether certain identifying data was being reported each year for a particular filer in order to maintain accurate year-to-year records for each filer. Such data as the employer identification number (EIN), plan number (PN), plan name, sponsor name, effective date of the plan, and total assets (beginning and end of plan year) are items commonly targeted for matching a current year filing to the prior year's report for the same entity." Reporting a plan with a beginning balance and also checking the box that say this is the initial filing should not trigger a rejection of the filing. However, if the EBSA undertakes one of its periodic reviews of the 5500 data, they could send a letter to the plan sponsor questioning the circumstances. Should this happen, responding with the facts should suffice to answer the question.

So, this means the mandatory catch-up rule must be compiled with for taxable years on or after 12/31/25. But for the 2026 taxable year, plans can use a reasonable, good faith interpretation of the statute. Then, for taxable years after 12/31/26, the final regs must be complied with. Correct? Lots of confusion on the web about this.

If you are just asking which form to file, you file an EZ for the years it was a one participant plan, and an SF or (5500 with Sch I) for the years when it was not a one participant plan. I would take it to an ERISA attorney ASAP. Can he even afford to "save" the plan considering all the issues?

This is an acutal, recent, fact pattern. Plan transferred into my tpa shop with a significant forfeiture balance. The employer stopped responding to the advisor and myself shortly after the assets transferred. The employees started requesting distributions, stating they were all let go and the company went out of business. The employer would not respond to authorize participant distributions, so an employee called the DOL. I explained to the agent that the trustee is non-responsive and there is a significant forfeiture balance that needs to be addressed. I had no census data to allocate the forfeitures as a contribution and no history to see what years the forfeitures started. The DOL agent told me to allocate the forfeitures based on prior account balance and payout the employees. I said the recordkeeper will not make distributions without a Trustee's signature. One of the former employes knew a prior trustee who still had authorization on the recordkeeper's system. The DOL said to use him to authorize ditributions and pay everyone out. There was a six figure forfeiture balance that got allocated to 40 employees, based on prior account balance. There is no way that reallocation of forfeitures complied with anything, but that's what the DOL agent said to do in order to close the plan.

For a plan participant in dire straits, it was not uncommon for them to take a loan and then a few days later take a hardship withdrawal (plan provisions permitting). This got the participant the maximum dollars out of the plan.

Remember that MPPPs are subject to minimum funding due 8 1/2 months after PYE (9/15 for calendar year plans) similar to DBPs. In that manner, I believe you may have a funding deficiency. However, if checks were cut/mailed by the due date but not received/deposited until a couple of days later you may have wiggle room - but if a late electronic transfer then truly late.

Statutorily, yes, but make sure the plan's provisions allow.

I agree that $150,000 is likely. The IRS has already said that had plans been forced to follow this rule in 2025, the 2024 limit would have stayed at $145,000. We won't know for sure until the COLA adjustments are published later this year.

I don’t know whether EBSA’s software is smart enough to process as not an error the situation you describe. Consider attention to some details to help lower the risk of a query. Part 1 line B: “Box for First Return/Report. Check this box if an annual return/report has not been previously filed for this plan. For the purpose of completing this box, the Form 5500-EZ is not considered an annual return/report.” Form 5500-SF Instructions, page 8 left column. Does this suggest the software might be smart enough to see that an opening balance greater than $0 is not necessarily inconsistent with a first Form 5500-SF report because the preceding year might have permitted a Form 5500-EZ report (or none at all)? Part II line 1c: “the date the plan first became effective”. Part II line 5 about the counts of participants. While this might not prevent a query, a count of 1 or 2 might support an explanation that the plan was a one-participant non-ERISA plan for the preceding year. This is not advice to anyone.

If there are forfeitures unused, perhaps austin3515 didn’t bill enough. To find an allocation is good enough, let it be the administrator’s decision, not austin3515’s risk (however slight). Remember, a recordkeeper proclaims that it does not provide tax or other legal advice. And courts have followed those warnings and contract provisions, putting the responsibility and liability on the plan’s administrator. That said, I often favor letting a plan’s administrator (knowingly) accept risks, especially if an expense for advice would be disproportionate to the exposure. This is not advice to anyone.

A few other discussion threads here touch on taxation w/r/t estate. In a nutshell, an estate is not a natural person, so it cannot open (or add to) an IRA. Therefore, assuming the distribution is a lump sum, the distribution to the estate is NOT rollable. Therefore, the 20% withholding does not apply. Therefore, the "other default" withholding applies: 10%. However, as mentioned in the instructions to Form W-4R and/or Form W-4P, an estate has the right (just like any other recipient) to elect zero withholding. Therefore, the plan administrator must provide the opportunity to make such election (eg, put a copy of the forms in the hands of the estate administrator). But, before that, the plan needs ERISA legal advice to confirm whether or not the "...QDRO requires the distribution in this case to be made to the estate." (OK, I admit to being skeptical. It is not common for a QDRO to do so, and it seems unlikely the QDRO can override what the plan says about the spouse's right to name his/her own beneficiary.) If the payment to the "former spouse" is the remainder of a "ten-year-certain-and-life" form of payment (or something similar), that might be one case where the remaining payments* go to an estate; however, before jumping to such conclusion, it is important to determine whether the spouse has already elected a beneficiary. Thus, my urging to get legal review. *Note this example might have "remaining payments" as a monthly/quarterly annuity or a lump sum, maybe an option. It seems likely the estate should request a lump sum if given the option.