Plan sponsor has opted for the loan to be offset, the plan is terminating any idea how the loan offset can be dealt with since some of the participants have taken the distribution and the loan is still outstanding. 

One of the 401k plans that terminated, we were couple deceased participants and since they were no beneficiary the plan sponsor directed to cut a check to the deceased estate.  Although there was no estate set up, a check was cut to the estate of the deceased name.  the check was cut in 2023 and in Feb 2024 the spouse has reached out claiming for benefits, since the spouse wants the money to be rolled over, I'm trying to understanding how the tax that was deducted be handled? 

Hello! We have a client who logged in to HIOS (CMS) to submit their carved out direct contracting RxDC Reporting for 2023. However, the only years available are 2020, 2021 and 2022. Does anyone know if there's a "start date" when you can submit RxDC data for 2023? CMS has launched a ticket but the agent wasn't aware of an opening date. Thanks!

I have about a million questions.  I'm writing this as though I know these to be true but they are only educated guesses...

1) I presume the SIMPLE IRA contributions are from January 1st through let's say May 31st, be they Nonelective or Match.

2) Then, the Safe Harbor 401k contributions, be they Nonelective or Match run from June 1st through December 31st.

3) Profit Sharing / Gateway Minimum / Cross-testing / top-heavy minimums would all be based on comp data from 6/1/2024 through 12/31/2024

4) The 415 regs are crystal clear that ALL defined contribution plans are aggregated for 415 purposes so I would be targeting the 415 limits based on the sum of the above.  My plan doc already says the 415 limitation year is always a 12 month period so no need to prorate the 415 limits. 

5) I suppose I would need to pro rate the comp limit though?  That could be problematic, so I guess I might need to have a 1/1/ effective date after all and just have the 401k safe harbor contriubtions effective June 1, 2024 and determine my top-heavy minimums as 3% of 12 months of pay, offset by any Safe Harbor, and SIMPLE IRA contributions.

I think my point really is, there are so many answers to so many questions.  HAs anyone sat down and tried to figure this out?  Has ASPPA or Ferenczy or ERISApedia answered these questions at this level of detail? These are happening right now so we need a playbook...

I am curious as to any common or recommended disclosures that may be used with deferred compensation plans for participant quarterly statements or on web pages.  

I understand there are no "required" disclosures, but I recommend something that references that the investment shown are not an indication of ownership.

Any thoughts on this?  any suggested statements that you would use on statements or online? 

Our Mom passed away just after receiving two 401k rollover checks made out to a new IRA account FBO her name. My sister and I are named beneficiaries on both accounts. We have the checks in hand.

One plan is adamant that because it's a qualified distribution a new check can only be made out to the estate. The other plan is considering reclaiming the check and issuing out proper beneficiary distributions to us but remains to be seen.

It's my understanding that the distribution is a plan asset and ERISA, DOL, IRS would urge fiduciaries to work in our favor? I hope there's some more legal guidance on this that I've missed in researching. These aren't uncashed checks because we're missing or mailed to the wrong address. I know there's been a ruling and chatter from the agencies about taxes on uncashed checks and what to do with them if they stay unclaimed but... This should in theory be straightforward to fix and honor. 

Any thoughts to change their mind?

sole-prop, taxes for 2023 have been already filed.   I am thinking of still implementing a CB plan retroactively to 1/1/2023, funding it now but taking a full deduction for 2024.  Thus, for 2024 there will be doubled-up deduction.  Income is very high so the numbers fit in.  Am I missing anything here besides the additional level of complexity of decoupling 430 and 404 numbers for a year or two?  Had a crazy week so I am afraid I might be overlooking something.

This question is not exactly on point, but here goes:

An old SEP which was established incorrectly, into which an individual made contributions over many years totaling $66k improperly, but for which the accountant never took deductions (because he had advised his client NOT to make the contributions in the first place.) To clarify, the individual is a 1% partner in an LLC, and all of his income is from this LLC, which sponsors a 401(k) Plan for the partners and employees.

Client now wants to withdraw the $$ from the SEP, but custodian is insisting that they must issue a 1099, since the money is theoretically in a SEP.

Can anyone think of a way to convince the custodian not to issue the 1099?.

A plan came to me asking what is the next step.  They received an IRS notice with a penalty.  A response was sent in April 2023.  The IRS never responded and no follow up notices were ever received.  Should the client assume the IRS closed the case?  Should they call the IRS?  

Something I would have been sure of yesterday, but now...

Plan has been around forever and fails ACP this year.  The 2023 match has not been deposited yet, but the affected HCE has plenty of match source money from previous years.  The platform is refusing to process the refund because the contribution to which it refers has not been deposited.  is that a reasonable position to take?

Thanks.

Hello All,

As you know, effective 1/1/2024 most employers are required to file Form 5330 electronically using the IRS Modernized e-File (MeF) System through an Authorized e-file Provider (AEP).  The IRS has a listing of AEPs on its website (even though the link says individuals, it’s for individuals and businesses):

https://www.irs.gov/e-file-providers/authorized-irs-e-file-providers-for-individuals

I've contacted some of those listed and they actually are NOT registered to file Form 5330.  I've also contacted some mid-size and large accounting firms and TPA firms we work with as well as Empower and have found that while they are set up to file as an AEP, they are NOT registered for Form 5330.  According to Empower, they are ultimately going to be able to file, but there is no ETA at this time.

I’m struggling to advise clients how to file electronically other than contacting one of these random providers.  I can’t find anything online addressing the practicalities of this or whether the IRS is even really ready to accept these electronically.  However, per the 5330 instructions, if a paper return is filed when electronic is required, the return will be considered as not filed by IRS.

Right now, I have two clients who need to file, one of which is a $1.7B plan.  I can't tell them to go to the nearest H&R Block listed on the IRS website (which probably is not even registered for 5330).  

What am I missing here?  What is everybody else doing?  Any help is appreciated!

I have a unique client problem. Client (ex-wife) was divorced in 2009. Ex-husband's attorney drafted a QDRO and submitted it to Putnam, the IRA provider, in 2010. Putnam will only give us the QDRO from the file, and states it requested a signature from the ex-spouses on a form letter of instruction in 2010 but ex-husband never signed or did anything further. Client does not recall ever getting a request to sign anything. Further, Putnam told her in 2010 that the amount owed to ex-husband was on "hold" in her account.  At the time she thought little of it. Ex-husband died 4 years ago. Client recently tried to access the funds sitting in her account, but Putnam says there is a hold due to the language in the QDRO that says if the AP dies prior to receiving all the funds and does not designate a beneficiary "such amount shall be paid to the Alternate Payee's estate."

The client gets statements from Putnam that are titled "IRA Rollover for Mary Smith" -- the funds have never been separated into deceased husband's name.  She has no idea if he had an estate, an executor, or anything else. (They had no kids so there was no connection after divorce.) Putnam is telling her the executor can submit forms to request the funds. I am getting nowhere with them. 

For starters, I don't know why the QDRO would govern since this is an IRA (yes, some IRAs accept QDROs but this provider clearly needed other documents to process the division). I don't see what right they have to hold this money in limbo when the ex-husband never signed what was needed to separate the funds. Anyone have any suggestions about how to proceed?

Hello All, one of plan has After tax contribution and there are allocation conditions for match (1000 hours for Active & last day requirement). In ACP test do we need to include all, irrespective of the allocation conditions as everyone is eligible to make after tax contributions which are tested under ACP test. Thanks!

Employer sponsored a 401(k) that allowed union employees to participate.

About 5 years ago ( approx), the Union started their own 401(k) Plan.  Union employees now participate under the Union Plan.

Several of the union employees have a balance in the original plan.

Question,

1. Can the current plan spin the union employees out to their Union Plan?

2. Union employees want access to their funds in the original plan, want to transfer to Union or maybe take a distribution.

3. The Union employees are treated as ineligible class and therefore are not eligible for a distribution ( not 59 1/2, not terminated).

Trying to figure out  a way to get the funds to the Union plan and they can take funds as allowed under that plan.

thoughts??

I have a plan that for the last couple years was required to be audited due to creeping over the 120 eligible participant threshold.  They've never had more than 50-60 with a balance in the plan.  After filing 5500SFs for several years, the last couple years they've had to perform an audit and file the regular 5500 along with an auditor's report.  With the change in regulation counting only participants with a balance and less than 100 participants with a balance, and an audit no longer required, can they just revert back to filing the 5500SF?  Is there anything else that needs to be filed? 

Thanks in advance!

I tried to find this topic addressed, but was unsuccessful.  It seems obvious to me, but what do I know.

Leveraged ESOP, closely held stock, has only one tranche of stock acquired with the proceeds of a single ESOP loan that has not been renegotiated.  Dividends on unallocated shares are used to pay a portion of the stock loan.  In the third year of the loan, 50,000 shares are released per the amortization schedule.  The loan payment was $500,000, of which $100,000 was from unallocated dividends and $400,000 was an employer contribution. There are a few forfeitures that resulted from participants leaving who were less than fully vested.  Therefore, active participants were allocated shares as a result of the loan payment as well as reallocation of forfeitures.  However, only the shares that were released by virtue of the loan payment are using the cost basis of the shares when the loan was funded; the shares released as a result of using unallocated dividends and forfeitures are allocated with a cost basis of the FMV as of the end of the year.  I had always understood that all shares acquired with the proceeds of a stock loan carry the basis at which they were acquired, regardless of release of shares or reallocation of forfeitures.  Am I wrong here?  

Thanks to any all for their wisdom and insight!

I understand that a participant can opt out of the plan .   And that if they do they can not return.  If a participant opts out, they no longer are part of plan testing.... correct?

EDIT:  I meant "Waive out"

And Dang... meant to mention this.... This guy has 2 daughters.  Would they be considered HCEs due to attribution?  I'm guessing they are both older than 18. 
My thought was they may screw up testing so have them waive out... take them out of the equation.  But if they are HCEs by attribution then no issue if they defer very little or nothing at all. 

Still seems funny not having Tom remind us of this. Tom, if you are lurking out there, Happy Pi Day.

Benefits dept found that an employee had overcontributed to FSA ( 2022 )because of an employer error (having 2 deductions  for FSA, 1 was not end-dated). It is now 2024, how does payroll refund the employee?  

We have someone with an old SEP IRA plan that they are looking to roll the money into a Cash Balance Plan?  The value of the SEP is around $1.1 million, just for reference.

Thanks in advance!