Large plan filer with payroll integration to the recordkeeper. Originally safe harbor match 100% up to 5%. However, signed an amendment for 2021 plan year to change to safe harbor basic match and distributed the participant notice as such. The plan information on the recordkeeper website and materials were updated to safe harbor basic match.  This is where I get the plan without any of the knowledge of the amendment. Plan was restated later (effective date 1/1/21 signed 2022) with the prior safe harbor match 100% up to 5% and have provided the annual notices accordingly to plan sponsor to distribute to participants in 2023.  The plan sponsor never changed the safe harbor matching formula in their payroll and has been matching 100% up to 5% for 2021, 2022 and 2023. Before and after the determination period was on pay period basis. Since the restated and signed plan document matches the operation of the plan, is there anything to correct?

We have a client that was using a Custodian that allowed for participant loans to be repaid using ACH. The Plan permits a terminated participant, making payments via participant ACH, who has elected to defer receipt of a final distribution, to continue making scheduled installment payments on the participant's outstanding loan. 

When the Plan document was restated as a Post PPA document, the ACH/terminated participant repayment loan provisions were not maintained. Since 1/1/22, the Plan has not been operating in accordance with their written loan policy. (They continued to allow for ACH/terminated participant repayment because it was never their intent to remove this provision. The Post PPA loan policy change was a Scrivener's error.)

We are thinking about doing a retroactive amendment to return the ACH/terminated participant repayment loan provisions to the Post PPA document. Is this an appropriate correction? It almost seems too straightforward. Am I missing something?

Hoping for confirmation if the below is correct:  solo 401k plan.  Owner doing the mega backdoor Roth.  Contributes $30,000 after-tax in 2023, converts $30,100 to a Roth IRA in 2023.  The 1099-R would be as follows:

box 1:  $30,100.00

box 2a taxable:  $100.00

box 5: $30,000.00

Box 7:  G

Does this look correct?

Thank you

Group:

It's been a while since I filed a Declaratory action for retirement plan disqualification filed in USTC. 

In the Reply to Govt Answer am I correct the only paragraphs I should reply to relate to where the Govt has burden of proof.  Under USTC rule 213 says:

Rule 213 Form and Content:   "In response to each material allegation in the answer and the facts in support thereof on which the Commissioner has the burden of proof, the reply must contain a specific admission or denial; however, if the petitioner lacks knowledge or information sufficient to form a belief as to the truth of an allegation, the petitioner must so state, and that statement will have the effect of a denial. "

I've always thought that unless there's a new issue under US tax court rule 142 the burden almost always stays with petitioner. Or of course if the court shifts burden under 7491. Which seems to be very rare. 

Thoughts on how do you prepare your Reply? 

Do you Reply to each Answered paragraph? 

Thoughts and comments appreciated. 

Husband owns his S corp, Wife owns her S corp.  Business are not related (different fields).  Can one DB plan cover both H&W?  State NC.  Just trying to keep the admin cost on a low side.

Everyone's favorite subject...I just want to see if I'm understanding this correctly, with regard to safe harbor plans using Otherwise Excludable Employees exception.

So, in a safe harbor plan that does NOT use the OEE provision, LTPT employees can be excluded from all employer contributions, and the plan does not automatically lose its top heavy exemption, assuming only contributions made are deferrals and safe harbor match or nonelective. 

However, the loss of top heavy exemption remains in place if the safe harbor plan uses the OEE exclusion, even though LTPT employees are still permitted to be excluded from safe harbor and top heavy if the plan is top heavy.

Have I got that right? For some reason, I'm finding this very confusing.

Client missed filing Form 5500 SF in 2019, 2020, 2021, and 2022.  According to the DOL's current penalty of $2,670 per day, the total penalty could come out to over $7m -- the IRS penalties would be almost $500k.  

We can't use the VFCP (at least not without permission) because we've already been told by the DOL that we are delinquent.

This is not a big plan.  A $7m penalty would be WAY more than the plan is even worth.

What should our expectation be?

Having informed a small business owner who plans to retire in 2024 that they cannot start a pension plan for 2023, contribute for 2023 and 2024, then retire and terminate the plan, since there is no long term intent for the plan and it would create a significant audit risk of disqualification, she is asking if she can instead create a 401k/ps plan for 2023-2024.

I feel like the answer is the same, but I'm really not sure if the risk exposure is as great as if it were a pension plan.

DBP with limit on lump sums (PVAB < $50k)

In a separate interest QDRO, would this apply individually to the participant's and AP's respective portions or to the pre-split benefit in total? Checking if the plan's QDRO provisions have any exceptions to that LS limit, but looking for opinions in case there are no exceptions.

I can see both sides - AP is treated as a separate participant with separate benefit, so apply separately, but the flip side is if total PVAB is >$50k, say $80k for example and participant can take a $45k LS and AP a $35k LS, then the plan will have been forced to pay a LS total on the one (albeit split) benefit in excess of the plan's $50k limit.

I have a plan participant that is requesting a hardship distribution under the down payment for purchase of primary residence.  When evidence was requested, it turns out that it is for down payment and rent for a home that the participant will be leasing.  If I am not mistaken, in order to qualify for a hardship distribution, the amount requested must be necessary to cover costs directly related to the purchase itself and not a deposit and first month rent.  Is there any wiggle room for leasing other than for reason of eviction?

I wasn't aware of this case until just this week. Have other folks been following it? 

What do people think? Its so rare that I hear about a participant getting in trouble for a bad self-certification, so I find this one interesting!

I know that likely if lots of other circumstances weren't also at issue the perjury one case likely wouldn't have been brought, but maybe I'm wrong. I know many of you have interesting insight and opinions so was just curious. 

https://www.justice.gov/usao-md/pr/former-baltimore-city-states-attorney-marilyn-mosby-convicted-two-counts-perjury

Does anyone know of any companies/sole proprietors who offer defined benefit administration & actuarial software/platforms for lease or purchase? This would be on a smaller scale - plans with less than 3,000 lives typically. Thank you. 

Does anyone know how to request that the IRS abate the now 10% penalty tax on a missed RMD for 2023? I know no one knows if they will abate now that they have reduced it but I still think that the same logic of "don't stick it to an octogenarian living off of social security for a silly mistake" should still rule the day...  Regardless I'm going to give it a shot but curious if anyone knows how it is done!

Plan switched investment platforms and during the switch, the way fees were paid got changed.  The client usually pays the fees directly from the company not the participant accounts, but when it moved it got set up to pay from participant accounts.  This has been going on for about 4-5 months.  Client realizes this and wants to fix but platform says you signed the form, it's not a mistake so we can't reverse this.  Client wants to find a way to rectify this mistake.  Any suggestions?  It involves about $3000, averages about $50-$100 per person.  my thought it to do a small profit-sharing contribution for that amount to each participant assuming it passes testing, which i think it would.

A client of mine had an employee who requested a loan which was approved for $20,000 The employee received and cashed the check a couple of days after being fired. It is unlikely that the employee could afford to repay the loan to the plan, but, if he could afford it, is there a period of time during which he could repay the loan?

Hi,

I assisted with one of the plan termination and the sponsor as reached out asking for 1099s to the people that switched employers but stayed with us.  I'm not really what this means, why would we send a 1099S? I believe 1099s was more with self-employment however could anyone help me understand when a 1099s is sent? 

Hi

Looking at a takeover and a combo plan design.

Existing plan has deferrals, basic match, EACA and PS.

PS is comp-to-comp with last day rule but no hour requirement so not a good option for combo plans.

I was asked to look into a possible 2023 CB plan addition.

Is it possible to add a new PS only plan and not utilize the existing plan's PS provisions?

Also, as I never worked with EACA, does it affect any combo designs? Do not think but checking.

Thanks

We are using batch reports to run many of our compliance tests, combine into a single pdf, and store on our network. We have done so successfully for several years without any issues. Recently, the job started failing and we are receiving a "482 Printer Error." I was able to narrow down the issue to the default printer being assigned by the batch. When I change the default printer to Adobe PDF, the job runs successfully and will run successfully for all users the remainder of the day. The next day, the same issue presents itself. The parameter file for the batch has been saved to our STP folder. Other times, it does not allow me to change the default. I make the change in print setup, but when I go back in, the wrong default is once again set. Is there another way I should be defaulting the job's printer so it does not change? Thank you!

Small employer group health policies have, since ACA, been allowed to impose no more than a 90-day waiting period on new employees before they must be offered coverage.  42 U.S.C. 300gg-7.

Can a small employer offer coverage in that time frame to a new employee, but it would require the employee to pay all of the premium expense until say 1 or 2 years of employment have passed?

 A newly eligible participant is filling out her DOB.  She and her husband have been separated for 16 years.  They file their taxes separately.  She listed her son as the beneficiary of her 401k balance.  Is there any reason why she can't list the son as primary?  Does separated spouse need to sign off on that?   Any ideas or sites that I can go to to clarify this issue?  Thanks!