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Showing content with the highest reputation on 01/11/2024 in all forums

  1. ESOP Guy

    Plan Termination

    My reaction to this are as follows: 1) Why are you involved? It sounds like you did your job and helped terminate the plan per their instructions. 2) I don't see how the plan sponsor has legal authority over the IRAs to direct anything. The IRA isn't part of any plan of theirs. That is the point of doing the force out to an IRA. They trustee no longer is responsible for the funds becasue they no long have any authority. I really question of the plan sponsor has a legal right to direct someone's IRA. You might want to ask a lawyer if you could be legally liable if you help them do this. I am shocked the IRA custodian is agreeing to do this. 3) I would not put any assets back into the old plan's trust if the old one has been fully paid out and the final 5500 was filed. The plan is gone. This sounds like a mess I would not want any part of if it were me.
    4 points
  2. Bird

    Plan Termination

    I'm not sure what your role is here but personally, I would let it play out - that is, don't waste much time on it, and let the sponsor (is this the new sponsor or the old) try to get the money. I seriously doubt the IRA provider will cooperate and it goes away. Any idea why this is even a "thing"? ...just saw ESOP guys response; we are in agreement on this.
    2 points
  3. Although ERISA § 403(c)(1) commands that a plan’s assets must never inure to the benefit of any employer, § 403(c)(2)(A)(1) excepts a return, “within one year after the payment of the contribution”, of a contribution an employer made “by a mistake of fact[.]” ERISA § 403, unofficially compiled as 29 U.S.C. § 1103 http://uscode.house.gov/view.xhtml?req=(title:29%20section:1103%20edition:prelim)%20OR%20(granuleid:USC-prelim-title29-section1103)&f=treesort&edition=prelim&num=0&jumpTo=true. Interpretations about what is or isn’t a mistake of fact vary widely.
    2 points
  4. You might get some help by using the Search feature above, with the search phrase "mistake of fact".
    2 points
  5. Ha, thanks for teeing me up here Bill. Good news is you're fine, Bri. You can still be HSA-eligible if your spouse is in non-HDHP coverage. HSA eligibility is on an individual-by-individual basis. You just need to be in an HDHP and have no disqualifying coverage to be HSA-eligible. A few things- You can't just drop employer coverage for the spouse whenever you want. Is your OE for 2/1? If not, you'll need a permitted election change event because otherwise your election is irrevocable under the Section 125 cafeteria plan rules for the rest of the plan year. Make sure you have that in order before the spouse moves to the exchange. You can always use your HSA for your spouse's medical expenses. It doesn't matter if the spouse isn't on your health plan, and it doesn't matter if the spouse is HSA-eligible. HSA eligibility is exclusively about putting money into the HSA. Tax-free medical distributions are always available for you and your spouse. If you're in family HDHP coverage for one month and individual HDHP coverage for the remaining months in 2024, you will have a proportional contribution limit. ($8,300 + (($4,150 x 11) / 12) ) = $4,495. If your spouse enrolls in an individual HDHP for Feb-Dec, she can contribute up to 11/12 of the individual limit to her own HSA. So 11/12 x $4,150 = $3,804. (Subject to the last month rule exception, I won't go into that). You'll each need separate HSAs at this point. You won't have the special rule for spouses that allows you to combine the family limit for Feb - Dec, so you each have to contribute to your own HSAs for those months. The special rule requires that at least one of you be in family HDHP coverage. There's also a proportional amount of the $1,000 catch-up contribution amount available for each period to your respective HSAs if either of you is 55 (or will be by the end of 2024). Here's some info walking through all of this in more detail if you're interested: 2024 Newfront Go All the Way with HSA Guide https://www.newfront.com/blog/hsas-and-family-members https://www.newfront.com/blog/the-hsa-proportional-contribution-limit https://www.newfront.com/blog/special-hsa-contribution-limit-for-spouses https://www.newfront.com/blog/hsa-catch-up-contributions
    2 points
  6. They are clearly incorrect. The instructions to the 2023 5500-SF states that participant includes those ELIGIBLE TO DEFER It also differentiates total participants and participants with a balance. If the instructions say that participant with a balance in 5(c) are those participants from 5(a) with a balance, it also follows that 5(a) includes those WITHOUT a balance, because otherwise 5(c) isn't needed. This isn't rocket surgery, I would push for answers from someone higher up. If they are only counting Ps with balances for 5(a), they are clearly wrong.
    1 point
  7. I am happy to be told I am wrong but wasn't there a recent changed announced that is like this? https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/changes-for-the-2023-form-5500-and-form-5500-sf-annual-return-reports I quote (bold mine): Change in Participant-Count Methodology for Small Plan Simplified Reporting Options Phase III revises the counting methodology for determining the 100-participant threshold for certain small plan simplified reporting alternatives, including the conditional waiver of the IQPA annual audit. The counting methodology for defined contribution retirement plans will be based on the number of participants with account balances, rather than the current method that counts individuals who are eligible to participate even if they have not elected to participate and do not have an account in the plan. This change is intended to reduce expenses for small plans and encourage more small employers to offer workplace retirement savings plans to their employees. Once again feel free to tell me I am wrong. I have NOT studied this at all. I just remember seeing something in my email box mentioning this so I did a quick search. Hope this helps.
    1 point
  8. None that I'm aware of. The only recent change I recall to the audit rules is now you need more than 100 participants WITH ACCOUNT BALANCES and not just 100 eligible. Assuming none of the 80-120 rules comes into play.
    1 point
  9. Bird

    Plan Permanency Rule

    I have too much time on my hands and will rant a bit here. My thoughts on doing the 5310 are completely contrary. My viewpoint is that of someone who works mostly on micro plans. I've been doing this long enough to remember when there was no fee for the 5310, and you got an FDL within a few months. Then they started charging for it, and taking longer and longer. It used to be something that we insisted on, then gradually became a client option, and now we barely mention it. The main thing that triggered my policy change was that we had a plan that was audited, after we received a FDL. I said "but but but but we have an FDL" and the agent said "yeah but we "just" need to review some operational things, and the FDL doesn't cover that." So they did the audit, and it was a major PITA because the company had shut down; fortunately they had some stuff in a warehouse. Of course they found nothing. Unless you have an individually designed plan and need the FDL to cover the document, I do not think it is worth it. Basically you have a choice of 1) getting the FDL and spending a decent amount of money and waiting an interminably long time for an answer, and still being subject to an audit of the plan's operation, or 2) not getting the FDL and being subject to an audit of the plan's operation. You really should not have a document issue if you are using a pre-approved document. I don't believe the ADPs and Paychex of the world are submitting 5310s, and they have way more plans.
    1 point
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