Would appreciate if anyone has recent experience here they can share.

Plan sponsor filed its 2021 Form 5500 late. They did not use DFVCP. IRS (but not DOL) sent a notice of proposed penalty. By phone, IRS tells me that, if we re-file the 2021 5500 now using DFVCP, IRS will waive the proposed penalty. I understand that the IRS's proposed penalty notice does not disqualify the plan from using DFVCP. From IRS's perspective, this is all fine.

My understanding from DOL, however, is that plans are ineligible from using DFVCP once they have already filed a 5500. In other words, once a 5500 is filed, it's no longer "delinquent" so cannot use DFVCP. I've been told by DOL in that situation that an amended return can be filed, but it cannot be filed using DFVCP. (This has been a few years now so may be stale info.) No information would be changing on the new filing; its sole purpose would be to use DFVCP. 

Does anyone know whether DOL will accept a DFVCP filing in that situation? 

Hello, We have a group that is a MEWA and has 15 employer contribute. They are not under a trust. Is 4T to be used under 8b? It has over 10 employers but when I read up on its definition: 10 or more employer plan under Code section 419A(f)(6) and then read on 419, 419A and 419A(f)(6), it talks about a funded plan. However when I called the Efast Customer Service and the Office of Chief Accountant they did not know. They referred me to the Office of Regulations and Interpretations. This office does not call back consistently. Does anyone have any insight to help? 

Many thanks

We have a client that gives about 100 employees varying gift cards throughout the year.  They do not want the gift card included in compensation for employer contribution purposes.  Total gift cards provided might be $10,000 on NHCE wages of $15,000,000.  

This will certainly pass the generally accepted 3% spread for compensation testing.  But I see one IRS requirement that says the definition "does not by design favor highly compensated employees."  This clearly does because the HCEs do not get gift cards so they have no comp reduction (but which is irrelevant since they earn well over $345,000.) It would probably be ok to exclude but then we'd have to get reduced compensation from the client.  

My question is- we can reduce plan comp by the gift cards for contribution allocation purposes but can we use the same reduced compensation definition for testing purposes (this is K/DB combination.)  I wouldn't want a small inadvertent error to cause a testing problem, minimum gateway or top-heavy minimum violation. 

Comments?

Thank you, Tom

I left the company few years ago and holds the ESOP stocks (not cash) in my ESOP account per yearly certificates issues by the previous employer. The company sent out a new letter mentioning they are allowing one time lump-sum distribution for terminated employees at the last years valuation otherwise they will convert the shares to cash next year per recently made plan amendment and distribute the cash in future per plan.

I suspect company is planning to get acquired and this is the way to get as much stock back as they can to sell it at higher when get acquired.

My question is can the employer change the plan terms like this and can they segregate the terminated employees to cash before company sale ?

What happens if the ESOP stocks and cash accounts  gets closed by the buyer of the company ?

My concern is I don't want to miss the upside (appreciation due to suspected sale) especially after company not letting the terminated employees cash segregated and have forced invested in company ESOP stocks for many years.

The sole participant of the PS Plan passed away and all Plan assets have been distributed except for one. The Plan held a survivorship (2nd to die) life insurance policy insuring the sole Participant and Spouse (who as of 2012 became ex-spouse). The policy was to be transferred to the ex-spouse (who is still a Trustee of The Pan) at the participants death. 

Upon transfer the ex-spouse would owe income tax on the cash value of the policy. That cash value is approximately $200,000. The ex-spouse doesn't want to, or can't pay the income tax and proposes an alternative:

1. Leave the policy in the Plan Trust so the ex pays no income tax.

2 The ex pays the annual premiums each year to keep the policy in effect. 

The ex desires to keep the the policy because, besides being a life insurance policy, it also pays Long-Term-Care benefits of up to $17,000 per month for life. 

Can the Plan Trust remain in existence. Can the ex pay the premiums.  The ex is still a Trustee of The Plan because the couple remained on good terms as friends following their divorce.

I had a case not dissimilar a while ago. A client had a a piece of investment real estate in his Plan for many years. After death, it was determined that plot of land was toxic because a paint factory once operated there. No one would buy it because the cost of environmental clean-up far exceeded the value of the land. The land could not even be transferred to a new owner under environmental law unless it was cleaned up. I actually don't know the end of that story but I know the Plan Trust sat there a long time. 

Anyone else having issues with the EFAST system?  I had a client that has been trying to sign this 5500 since late yesterday afternoon but continues to receive a message saying

"ERISA Filing - Technical Difficulties - We're sorry but we are experiencing technical difficulties.  Please try back later."

I'm trying to determine whether stock held by an IRA is attributable to the owner for purposes of the controlled group rules.  So, for example, if I own 100% of Company A, and my IRA owns 100% of Company B, am I deemed to own 100% of Company B, such that A and B are in a brother/sister controlled group?

I know the answer is "yes" in the context of a qualified plan (based upon the language in 414(b) stating that 1563(e)(3)(C) doesn't apply).  However, I have not been able to find a discussion of the application of these rules to IRAs anywhere.  From a policy standpoint, the case for attribution would seem to be even more compelling in the IRA context, given that there's always going to be a single individual who owns the entire account.

I find it hard to believe that this issue hasn't been addressed, and I assume I'm missing something obvious.   

Employer has self-insured health plan administered by large national insurer providing administrative services only. Plan document contains very broad, expansive "latest and greatest" subrogation provisions provided by ASO provider.  Employee / participant was injured in auto accident more than a year ago.  About a year ago, participant's lawyer wrote employer inquiring about plan sponsor / employer's willingness to waive subrogation rights under the plan or possibly agree to reduced subrogation amounts.  Lawyer also requested usual host of plan documents per ERISA.  Employer / Plan Sponsor did not respond or provide any plan documents.  Participant's lawyer has surfaced again noting they have negotiated settlement and are ready to disburse proceeds.  Lawyer reminded employer of its failure to provide documents per ERISA and the potential penalties that have now accrued.  Lawyer is pushing for immediate answer from employer on follow-up request to waive all subrogation rights (or settling for about 1/15th of value) in exchange for agreeing not to report plan's failures to provide plan documents.  The overall subrogation amounts at issue here are not that great. 

Employer freely admits it ignored all requests to provide documents.  Can the employer (as plan sponsor and ultimate ERISA plan administrator) agree to simply waive pursuing subrogation here without giving rise to a possible fiduciary breach or other potential exposure?  Any suggestions on how to negotiate and limit possible exposure to employer?

Client initiated a standard termination of a 403b then filed for bankruptcy last week.  NOPBs were sent out earlier and many participants chose lump sum payments.  Some were paid out before the filing, others made requests (8 requests) but no payouts have been made on those yet prior to the bankruptcy filing. 

Do the lump sum payouts have to end on bankruptcy filing? or can the lump sum payouts still be made if over 80% funded?

A small company just started a 401-k last year and has less than $10,000 in assets as of the end of the plan year.  Are they required to file a form 5500?  (is there a minimum asset level)?

So, Employer A acquires Employer B mid-year. Employer A sponsors a safe harbor 3% 401(k) plan. Employer A credits all service with Employer B for all purposes. The result is that all employees of Employer B are immediately eligible.

What gets strange is that Employer A calculates and deposits the 3% SH each payroll (not by document provision, just by administrative choice). But for the former Employer B employees, not intentionally but through administrative error, the 3% was not deposited until after the end of 2023. (They corrected this for 2024, and everybody gets the deposit each payroll.)

The difference, due to the relative number of employees, would easily pass either a 70% test, or a benefits/rights/features test. Document doesn't specify a particular timing requirement. Yet I can't shake the feeling I'm missing something. Any thoughts on this?

Is there a DFVCP fee for a late 5500 filing that has no assets or lives ?

I have a PEP with a Dec 2022 effective date.  However, no plans joined the PEP until 2023.

Thanks!

I have a plan that allows forced cash distributions for balances less than $1,000.  FTW document.

Participant terminated and took a distribution earlier this year, well over $1,000. 

She was entitled to a small profit sharing from 2023.   Her balance is less than $1,000.

Can I force her out?   Even though at one point it was over $1,000.

I really thought i read, i could but i can not find anything definite.

Thank you!

Plan name:  ABC Corp 401k Plan

Employer on plan doc:  DEF Industries, Inc, d/b/a ABC Corp

Plan Sponsor on 5500:  ABC Corp

is it ok to just list the d/b/a as the Employer

Is it possible to designate a beneficiary with a specific dollar amount?  For example, the primary beneficiaries are two children who each get $100,000, then the rest goes to the spouse?  Realizing that spousal consent would be required, but I've never seen anything other than percentages used.  In the instance for which this is being asked the account balance is well beyond the dollar amount alloted.  Thanks very much.

Multiple ER 401(k) with a 1/1 plan year has 8 adopting employers.

• Employers 1, 2, 3 & 4 are all part of the same controlled group and are tested together in what we'll call plan "A".
• Employers 5, 6, 7 & 8 are all part of the same controlled group (and all unrelated to employers 1, 2, 3 & 4) and are tested together in what we'll call plan "B".
• The MEP uses the prior year testing method.
• The 2022 NHCE ADP average for plan "A" was 3.5%
• The 2022 NHCE ADP average for plan "B" was 4.1%

In February of 2023, ownership changes occur and employer 8 moves from plan "B" to plan "A". So as of 2/1/2023, Employer 8 is no longer related to employers 5, 6 & 7. They are, however, now related to employers 1, 2, 3 & 4. Therefore, 1/1/2023 to 12/31/2023 ADP testing looks like this:

• Plan "A" consists of employers 1, 2, 3, 4 & 8
• Plan "B" consists of employers 5, 6 & 7

How does each plan determine the prior year averages on the 2023 test? Am I correct in saying that each plan only has 1 prior year subgroup, and therefore 3.5% will be used as the prior year average for plan "A", and 4.1% would be used for plan "B"? 

For a PEP with less than 100 account balances, they are allowed to file the 5500-SF, correct ?   I am getting push back that they must file Form 5500 with Schedule I.

Thoughts  ?

I'm trying to close out the plan as the company went out of business last year. It has no assets at this time. We normally file a form 5500 and schedule I every year but this year I'm getting an error saying to use the 5500 EZ. I'm assuming it's because the plan as $0 assets so we don't need the schedule I anymore thus a 5500 EZ. Is that correct? 

for example: calculating a 2024 RMD using the accrued benefit on EOY 2023 valuation (small plan)

NRA in plan document is 62

the owner is 74 in 2024 and is active in the plan (still working at the company)

when calculating the APR, 

1. use 2023 mortality table, and

2. post retirement actuarial equivalent interest rate

I'd like to confirm if the 1 and 2 assumptions above are correct, and see if there are any regs about these assumption determinations. another question is if the plan actuarial equivalence mortality table is 94 GAR, do we need to use 94 GAR for all RMD cals or we should use the 2023 mortality table when using the accrued benefit on 2023 valuation? Thanks in advance.

Trust owns s corp.

The pres and sec of the s corp are the beneficiaries of the trust.

Are they therefore considered owners of the s corp and therefore they ate HCEs irregardless of their salaries being only 100K? Thank you!