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I haven’t filed a Form 5330 in decades and now need to file one for the 2024 year. From what I understand, paper filing is still allowed for 2024, but e-filing will be required beginning in 2025. Is this correct?

A couple of related questions:

1. Since the IRS will no longer accept paper checks after 9/30 (or will they?), what’s the best method to make an electronic payment, and under what “tax form” should it be submitted (I don’t see Form 5330 specifically listed)?

2. If paper checks are still allowed for now, what is the correct mailing address? The Form 5330 instructions list Ogden, UT, but I’ve also seen a North Carolina address.

I also understand there will be penalties since the payment wasn’t submitted by 7/31.

Thanks in advance for any guidance!

In a package of documents accompanying an adoption agreement to use a set of IRS-preapproved documents, a service provider furnished a “Discretionary Matching Contribution Notice” with this description: “This form describes the formula used if any discretionary matching contributions are made to the plan. This notice must be provided to each participant who received a discretionary matching contribution no later than 60 days following the date the last contribution is made to the plan for the plan year.”

The plan’s sponsor/administrator does not use the service provider’s assembled summary plan description. Also, it does not use a summary of material modifications.

Instead, we write and deliver an updated summary plan description before each year, and more often than yearly if there is a change.

Rather than a distinct “notice”, the plan’s sponsor/administrator would prefer to include the content about discretionary matching contributions in the SPD (and omit anything separate).

Does anything about reliance on the IRS’s opinion letter preclude delivering the information that way?

Does anything about in a basic plan document preclude delivering the information that way?

Is there another reason it would be unwise to deliver the information that way?

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An audited plan just told me today that there are 13 employees that did not have the correct amount of Roth withheld based on their elections.  The amount withheld was based on the after-tax net pay, not gross pay. 

From what I'm reading since it is just past 9-15 the missed Roth needs to be contributed AND QNEC equal to 50% of the missed Roth plus earnings.

Any ideas as to best way to credit lost earnings - so it is probably 26 pays, 13 employees.  SO I will find a way to estimate plan earnings - perhaps look at the entire plan earnings for the year reduce 50% since missed evenly through the year.

Thank you for any assitance.

Tom

title

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Hello All - wanted your thoughts on this issue. Effective 1/1/25 new 401k plan becomes subject to the EACA mandate rules - the plan applied auto enrollment at 3%. A provision in the EACA proposed regulations (pasted below) states that if a participant makes an affirmative election (opts out to 0% or elects 1 or 2%) and remains eligible,  then he cannot be re-enrolled unless his affirmative election has been in effect for a period of at least one plan year. This is my understanding. The plan has decided to become a QACA on 1/1/26 and they want to use the initial period (years 1-2) for increases rather than annually each 1/1. So my question is - can the QACA re-enroll these participants with affirmative elections in effect for less than one plan year on 1/1/26 at 3% with the first increase to occur on 1/1/28 the end of the QACA initial period? Can the QACA expiration of election rule override the EACA mandate rules? Thank you!

Section 1.414A-1 (iv) (C) Redetermination for employee 
who remained eligible and made an 
affirmative election. If, for an entire plan 
year, no default elective contributions 
were made solely because the employee 
made an affirmative election to have 
contributions made on the employee’s 
behalf under a cash or deferred election 
or salary reduction agreement in a 
different amount (including an election 
not to have contributions made), then 
the plan is permitted to provide that the 
initial period is redetermined so that it 
begins on any date specified under the 
plan that is later than the date specified 
in paragraph (c)(3)(ii)(A)(3) of this 
section.

ERISApedia Example -

Example 14.4.10 Assume the same facts as the prior example, except Dave was rehired in 2029. Because he was not ineligible for an entire plan year, the special rule does not apply. When he returns, his default deferrals are at 6% unless he files an affirmative election.

A different rule applies if a participant has been under an affirmative deferral election (including an election to defer 0%). The plan can sweep the participant into automatic deferrals starting at the initial period, effectively cancelling their affirmative election. Explaining this rule, the preamble observes:

For example, a plan is permitted to be amended to provide that, as of a specific date, the default election will apply to all employees who previously made an affirmative election that has been in effect for a period of at least one plan year to have contributions made on behalf of the employees under the plan at a rate that is below the uniform percentage that applies during an initial period (so that the uniform percentage that applies during the initial period will apply unless the employee makes a new affirmative election). An employer might adopt such an amendment to facilitate an increase in the rate of contributions made on behalf of its employees.

Have a 401(k) plan that is a safe harbor plan with salary deferrals, non-elective safe harbor and profit sharing.

Would there be any problems or additional testing requirements if the plan had the following eligibility requirements:

Salary Deferrals - immediate entry after working 100 hours.

Safe Harbor Nonelective - immediate entry after working 1,000 hours.

Profit Sharing - immediate entry after working 1,000 hours.

In other words, they want almost all employees to be able to fund salary deferrals soon after being hired but only want to provide employer contributions to those who who are full time and almost full time.

Thanks.

New client has solo-k for 15 years, didn't realize he needed to be filing returns once his assets exceeded $250K.  He thought all was well, until he tried to transfer his plan to a new custodian. He has hired employees and wanted to allow the employees to participate in the plan and thought the new bundled provider would be a better fit for that. Provider says whoa.. wait a minute...we cant take your plan (at least not like this). You need a TPA. So here we are...another solo-k gone wild.     Unbeknownst to the client, his employees current and past are already eligible for the plan because the solo-k has immediate eligibility (and immediate vesting).  So he's looking at some missed deferral opportunities, some top heavy failures, some failed ADP issues.  Not to mention his plan document has not been amended or restated since it was initially adopted with that cute little account application/adoption agreement...and he needs 15 years of 5500 filings to be completed.   

So my question for today is:  part of his filings should have been EZ filings and part of his filings (after adding employees) should have been SF filings.  Would you file all the late filings as SF filings under the DFVCP because he now meets title I of ERISA.  Or, should the years where he was truly a solo-k be filed on an EZ through the IRS's penalty relief program? 

Hi, we have a client with a Simple plan that is considering replacing with a safe harbor 401(k) plan.  We *think* that's not possible for 2025, because we would've needed to terminate and replace by 10/1 - and it's too late for a 30 day notice.  Are we thinking correctly?

Alternate option we were thinking is to open a profit sharing only for 2025.  We are getting conflicting information on whether you can have a PS only at the same time as the simple.  We searched online and came up with this, but aren't sure of the accuracy: Yes — allowed, but operationally awkward. Carefully decide whether to (A) keep the SIMPLE and add a separate profit‑sharing plan (two plans to administer) or (B) terminate the SIMPLE mid‑year and adopt a consolidated 401(k)+profit‑sharing plan (requires 30‑day SIMPLE termination notice and adherence to SECURE 2.0/IRS Notice 2024‑02 procedures).   

thanks!

If someone has an outstanding loan but has now incurred a hardship (notice of eviction), can they take the Hardship Distribution?  I'm probably overthinking this, I just wanted to be sure.

Thanks!

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I think this is a no-brainer; but wanted to get other's thoughts.  Plan A's base plan doc uses a 190 HOS as an equivalency and is merging with and into Plan B, which credits HOS on an hour for hour basis.  Plan A will merge into Plan B effective Jan 1 and both use calendar year computation periods.  Under Plan A's adoption agreement, all contributions made under Plan A were immediately fully vested and all Plan A participants were immediately eligible upon hire.  Plan B provides for a non-elective contribution for certain participating employers with graduated vesting schedules (but former participants in Plan A will not be employed by one of those participating employers as of the date of merger).  In the event that a former Plan A participant becomes eligible for a nonelective contribution under Plan B after the merger, I see no reason why Plan B cannot credit vesting service HOS on an hour for hour basis (even though Plan A would have used a 190 HOS equivalency).  To me this is a no-brainer -  but wanted to see if others agree; because, well, the service crediting rules are complicated and I'm not that smart.    Thank you for reading.

The contribution for a money purchase plan was made 2 days late. Will the client be subjected to a penalty for being only 2 days late?

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12/31/2023 was first plan year for an owner only 401k Plan.  No 5500-EZ filing needed due to assets under $250k.  In 2024, there's now an employee.  I will be filing a 5500-SF and indicate it's the first year to file.  There will be a 1/1/2024 beginning balance of $50,000.  Will the IRS look at a first year 5500-SF filer with a $50,000 beginning balance and send a notice to the employer wondering why a 5500-SF wasn't filed in 2023? 

Thank you! 

My first missed 9/15 deadline for MRC in well over 20 years. I want to make sure I understand what needs to be done per my research.

Client did not make the MRC by today, around 30k

I checked 5330 and looks like it is section 4971a related. Subject to 10% penalty - not sure when needs to be paid but will instruct as soon as filed.

According to instructions, 5330 is due by 10/15 and no extension was required.

It still needs to be paid by 12/31/2025 and if not then IRS could impose penalty up to 100% for subsequent years.

I have to do interest adjustment based on the date they will make the deposit (if they will)

Am I correct on all above?