deferral and SH have 1 YOS requirement, and PSC has 2 YOS. a participant is eligible for deferral/SHNEC but ineligible for PSC. should he be included in gateway test and get gateway minimum as he is benefiting SHNEC (an ER contrib)? thanks!

We are facing a debate: for a final Form 5500 report there is agreement that on page two of the Form 5500 the end of the Plan year participant count is left as zero. However, some have a covered persons count with those enrolled at the end of the Plan year on a Schedule A. Others have said that this is incorrect;  the Schedule A also is to list zero. Can anyone settle the debate? 

We have an employer who owns 2 companies:

1) Company A: has employees. Currently has a 401(k) plan.

2) Company B: has no other employees besides the owner. Currently has no plan.

Can the owner set up a SIMPLE IRA for company B? Based on my research, it seems like it's not possible, but wanted to make sure.

Thanks,

Does the 12 month rule ( terminating 401(k) and starting a new plan) apply to a Solo 401(k) Plan.

In  December of 2023  solo 401(k) sponsor terminated his Roth 401(k) and rolled the funds to his Roth IRA.  Now he wants to start another Solo 401(k) for 2024.

Does the 12 month rule apply in which case he can not defer to the new plan until 2025?

Thank You

I have a plan that has terminated effective 12/31/2023.

I am completing their 12/31/2023 plan year end work.

There were 3 participants that took a full distribution in 2023 (prior to the plan term or knowledge of the plan term).  They were not fully vested to the profit sharing.  2 terminated in 2023 and 1 in 2020. 

The money was forfeited and used in 2023.

Do we need to restore the accounts of the 2 participants that termed and distributed in 2023? 

If yes, where do I find, exact DOL or IRS language? 

Thank you!

Has anyone had experience with a client who had a husband forge the wife signature to change beneficiary designations on Defined Contribution Plans?

Do you need Spousal Consent to withdraw from an Empower 457 Plan Account

If a Participant of a Plan during a Divorce changed their beneficiary designation from their sign and had someone else sign as the Wife to change it and to withdrawal, is that illegal and what can be done to make sure the other side receives their share of the Retirement?

We have a potential new client that is unhappy with the MEP that they joined 1/1/23. They would like to leave and become a standalone plan. How does a plan leave a MEP and become a standalone plan? Is this possible to do mid-year?  

Common Law marriage in a QDRO. Should include common law marriage dates in a QDRO?

Hi

Calendar 401k/SH/PS plan with 21/1 and dual entry as eligibility

EE DOH 1/1/2023.

Apparently deferred during 2023 (no idea when started deferring).

Just got an amendment signed in 2024 stating as the employee deferred during 2023, for this particular employee eligibility is waived effective 1/1/2023.

Does this sound right?

Thank you

IRA funds were drained by the owner's son hacking into her IRA account online. Son took the money, a police report was filed, and son is facing felony theft charges under state law. The money is gone; used to pay off gambling debts.

The IRA custodial institutions were notified. They are investigating. The IRA owner has now received from those institutions Forms 1099-R reporting the funds taken by the son as taxable income to the IRA owner (the parent). It would be adding insult to injury if the IRA owner has to pay the income taxes due on the stolen funds.

Any suggestions on how to handle these Forms 1099-R with the IRS?

Hello, I wondered if anyone may know - Is the Plan year in the Form 5500 and the Form M1 to match? The instructions in the Form M1 do not provide instruction on this. On page two the instructions note to use the same identifying information but do not classify  if the Plan year is to be included in this case. Any insight would be valuable. Many thanks! 

Looking for a interpretation of the below from the 1099-r instructions.

If someone separated from service earlier in 2024 and takes a distribution now but are only age 54.  Are they exempt from the 10% early distribution penalty because they will turn 55 later in 2024?

Thank you, Tom

I am a Paralegal and I am assisting a homeless woman divorcing her husband. In the Domestic Relations Order, should I include the total months of marriage and total months of employment so that the Plan Administrator will know how to divide benefits?

I’ve had a Safe Harbor plan for a few years under my small business going smoothly. Small group plan, with 6 participants, and me as owner of the S-Corp. 
 

In April of 2023, I purchased an existing Laundry business (different industry than the S Corp business) and from day 1 have been using a PEO for the 3 employees of the laundry biz. The PEO offers benefits including retirement savings options that I’m not too familiar with. 
 

Since my wife and I own the laundry business LLC 50/50, and are not employees with the PEO (just owners), is the controlled group definition going to be a mess? I am sole owner of the S Corp business with the established Safe Harbor plan. 

So my company failed  Section 125 Nondiscrimination Testing and a decision was made to change all pre-tax benefits for Highly compensated employees to taxable income immediately  ending the FSA program for 2024.   Company is refunding all the contributions made to the date.  If an employee already made payout on the FSA account, are they legally required to pay back? What happens if they don’t?

This is a weird ...A client would like to exclude bonuses from deferrals but not match. In short, they are finding it a pain to set up the deferral's deductions via payroll, so they don't' want to allow participants to be able to defer from their bonus but don't mind matching on bonus compensation. Is this permissible.

The match formula is 33% up to 6% funded annually, I believe for anyone that defers over 6% it doesn't matter that they can't defer on bonus they will get match on the total gross.

However, if they defer less than 6% then there's nothing to match on. I feel like this set up may be discriminatory. Do you see anything wrong with this set up?  Overthinker here so sorry if this is a stupid question.

Here are the match examples:

10% deferrals (more than 6% example)

Base Compensation $125,000 Bonus Compensation $10,000 Gross $135,000 - participant defers $12,500 which is 10% of their base salary, they cannot defer on the $10k bonus. Calculating the match in this example if match includes bonus would mean the match is $2673. ($12,500/$135,000=9.26% deferral % they are deferring more than 6% so 135k*.6%*33% =2673). It doesn't matter if they had deferred the 10% on the bonus the match would still be the same.

5% of deferrals (less than 6% example)

Base Compensation $125,000 Bonus Compensation $10,000 Gross $135,000 - participant defers $6,250 which is 5% of their base salary, again they cannot defer on the $10k bonus. Calculating the match in this example if match includes bonus would mean the match is $2,062.50 ($6250/$135,000=4.63% deferral % they are deferring less than 6% so 135k*.4.36%*33% =2062.50)

However, in above example let's assume they were able to defer on bonus, the match would be $2227.50 (6750/135000=5%) 135k*5%*.33=2227.50.

Again we/I may be overthinking this but if they defer less than 6% and cannot defer on bonus, they truly get less of a match than if they deferred more than 6% they end up benefiting even though they can't defer from bonus.

So, for the new compliance questions, 14a, 14b, 15. (5500-SF)

The DOL instructions seem a bit ambiguous to me. Is a 403(b) plan required to input the opinion letter # on line 15? 

For 14a, as unlikely as it probably is, a 403(b) plan may use a qualified plan to pass 410(b), although the reverse is not true. So this could be checked "no."

14b - seems like it shouldn't need to be checked at all, but perhaps "N/A" would be appropriate, even if unnecessary.

15 - the instructions seem to exclude an opinion letter on a 403(b) plan. 

What are y'all doing on these? P.S. the EBSA electronic filing system "accepts" the 5500 on a 403(b) whether you fill these out or not... don't know whether there will be a kickback/inquiry at some future date depending upon how you complete it, or not...

We as a plan sponsor place a "hold" on a participant's benefits to prevent distributions when we receive notice that a DRO is being drafted.  Our record-keeper freezes benefits for a maximum of 6 months, but we have DROs that are submitted and qualified as long as four YEARS after we first receive notice that a DRO is being drafted.  How many times can we renew a freeze before we give up?  We send model DROs to the parties for their use but we have had changes in recordkeepers and fund lineups and if any of these years-old DROs come in based on obsolete models we are going to have a difficult time complying, not to mention that participants can still manage their investments and may no longer hold the funds they held at the time the DRO was first discussed.  

Our own DRO procedures do not contain a specific time that a hold will be in place.  It just states that the hold will last until the earlier of certain evens occurs--receipt of a DRO, notification that a DRO will not be requested, etc.  I am not sure this is compliant.

Thoughts would be appreciated.