I had a pension from many years ago. The company was bought and sold a few times.  When I tried to collect it in 2023, I was told that I received a payout (under $5000) in May of 2001.  I never received said payout.  I obtained my 2001 tax transcript from the IRS and my wage statement from my employer of that year.  Clearly shows a 1099R was never issued and the only income I received that year was from my W2.  Pension administrator has never been able to show any documentation that the payout actually occurred.  We are in appeal now.  Just wondering if anyone else has had a situation similar to mine and what the out come was. 

Thanks

Administer a 401(k) plan that utilizes salary deferral, SH Nonelective and Profit Sharing. Salary deferrals are self-directed and everything else is pooled.

Sponsor is a corporation. Calendar Year 2022:

All salary deferrals were funded by 12/31/2022.

They funded employer contributions of $110,000 in 2022 and forgot to fund all remaining contributions.

There were Safe Harbor allocations of $110,000 for 2022. So the $110,000 deposit in 2022 covers that.

They intended to fund a profit sharing contribution of $200,000 for the 2022 year but mistakenly never funded it. They filed by March 15, 2023 and took a deduction for employer contributions of $310,000 ($110,000 SH + $200,000 PS). However, they forgot to fund the final $200,000 deposit.

They will need to amend their 2022 corporation tax return and show $200,000 of additional taxable income.

They want to make this up to their participants and deposit the additional $200,000 now. All 2023 year contributions have been funded properly. I believe they could fund the additional $200,000 now and have it along with the 2023 year employer contributions as deductible for 2023 (still under the 25% deductible limit).

If this is the case, should the $200,000 profit sharing be allocated as of 12/31/2022 (on the 2022 report) or should it be allocated as of 12/31/2022 and combined with the 2023 profit sharing allocation (on the 2023 report)?

Thanks!

Does anyone know if there is an IRS Revenue Procedure that requires cycle 3 DC plans and Cycle 2 403b plans to hard code the CBA language into the plan document? I know it is in the pre-approved document but trying to find a cite as to why it has to be. Appreciate any insight. Thanks!

We sometimes have to spend significant time getting a Summary of Accounts produced in our admin software.  We are able to download financial activity into the software on most plans by far.  But there are several record keepers where this does not work well or we just haven't figured it out.  My question is - how many of you do not use record keeping software to produce a summary of accounts?  The only two benefits of the software record keeper link that I can see are top heavy determination and 5500 participant count.  I'd say 90% plus of our plans are either top-heavy already, are safe harbor contribution only plans or are DB combos where the actuary confirms the top-heavy amount.  The very few where we need to watch top heavy continue to be linked with the record keeper and just several without a link are done outside in Excel.  I have a good Excel solution. It takes some time to get all the adjustments in but the benefit is that you really have to think about what is going into the test.  We already have a few clients where their year-end reports are census, contribution summary, all the testing reports and we include the investment company record keeper summary of accounts.  Spending time getting our record keeping to match theirs for some clients can be very tedious not to mention the time in setting up a new plan in the admin system.  My staff will balk at what I'm suggesting here because when fully in the system, it works very well.  But they don't necessarily think about time/billing.  Admin software is invaluable in confirming eligibility, contribution calculations, and all the testing, etc.  But I questions the value of the summary of accounts updating.  We are not daily obviously and are small and work with about 15 record keepers.  We have 3 or 4 record keepers with a large number of our plans but then there are the others with just 1-5 plans so we deal with all the different record keeper processes.  I imagine most everyone in here does as well.

Just thinking here and wondering what others are doing.

Thanks 

We have a client selling June 30.  Employee payroll will stop at that point.  The plan amendment may say the termination date is Dec 31, 2024.  Owner wages after June 30 would be eligible for plan contributions and the 415 limit would not be prorated.  However if they amend to freeze contributions June 30, I assume the 415 limit is cut in half even though the plan will have a full 12-month 5500 filing assuming the plan is not liquidated until December which is likely.

Also this is a safe harbor nonelective plan.  I believe a change in the business such as this allows safe harbor treatment for the final short year? 

Thank you for your comments.

Plan admin send 3 letters to the defense asking for the pre approved DRO sent back signed and certified so his client could be paid also stated that the was no hold on the account due to ERISA rules so if the Participant filed the paperwork to remove they would have to follow through with that. So they were taking a risk of that. 2019, 2020, 2021. All 3 letters were ignored. Plan admin calls and ask if I wanted to roll the funds out as ERISA rules state they had to return the money back to me. I agree and the money is rolled out on the 7th of Oct. Plan Admin had received the sign DRO from the defense on the 6th of Oct. She returned it and asked for a few changes, nothing big and said it would need to be signed and certified and sent back. Well on the 14th of Oct. nothing had been sent back yet. So she call the defense and explains that the money was returned to the participant. The defense gets the QDRO signed on the 18th of Oct. by a new Judge and sends it back to the plan admin. Not certified? Anyway this Judge was being told that I did this willfully to kept my ex wife from receiving her share. That was so off the wall as well as the contempt charge he gets from the Judge because I willfully took all the funds and thumbed my nose at the court. When I tried to explain I was was shut off. Video court. So I retired on a disability retirement.Chief, Merchant Marine. They had me arrested and put in jail I'm over 72 years old and they beat me shoved me in a car and now I am on medication for fear of jail again. Now the Judge is saying that they will get a warrant of commitment for holding the money from his client, if I don't pay them $132,000. No bondsman. Cash only. I have asked about the statutes and the Judge told me to get a good attorney. Well can't do that as they have frozen all my accounts. Can't even buy a stick of gum, unless I borrow the money. QDRO Masters did the QDRO for the defense. In fact in 2018 he had it made in the Order that his client would be responsible to get the QDRO done and he has had me in court on contempt charges for not doing what the decree stated. He gets the court fee from his client and then the attorney fees out of me so he is making bank here on the both of us. I have tried to explain and now the Judge is stating the approved DRO back in 2016 that was never signed but plan admin pre approved it was done but now she signed the new one in 2021 so that made it a new transaction? Has anyone heard of this before?

Some employers and administrators use a dependent eligibility verification to find people not eligible for coverage under a health plan.

These find participants who enrolled as a spouse someone who was not the participant’s spouse.

But how often does this find participants who enrolled as one’s child someone who was not the participant’s child?

BenefitsLink neighbors, any experiences you can describe (with anonymity)?

All of my clients have less than 50 employees, so the idea of an audit is not something I'm too familiar with. But I will be pitching my services to a new client soon (will be a takeover plan for me), and they have about 144 employees, 81 of whom are active (401(k) with match only, so if someone doesn't make deferral, they have $0 balance).

Does someone have a checklist or yes/no flowchart they would share with me about determining whether or not an audit is necessary?  I've started my own, and compiled 6 pages of my own typed notes, and I now feel like I may be over-complicating the matter.  Reinventing the wheel, as it were.  I started with "5500 vs 5500SF", and gone through Sch H & I of the 5500 further down in my flow chart.  

I appreciate any direction you can give - but please dumb it down 🤯  Thank you!

Participant X is a participant in A's profit-sharing plan. After completing a few years of service, X quits when he is 40% vested and takes a distribution of his vested account balance. For simplicity's sake, let's say that the X's account balance is $10,000 and that his vested portion is $4,000. A's profit-sharing plan provides for the immediate forfeiture of the non-vested account balance upon distribution of the vested portion, subject to a repayment provision. Two years later, A rehires X. Let's say that X repays his $4,000 distribution and has the previously forfeited $6,000 portion restored. A few years later, X terminates his employment with A and receives a distribution of his fully vested account balance, which was then $20,000.

A couple of questions: (1) in the year when X repaid the $4,000 to A's profit sharing plan, was the repayment made with after-tax money or was it made with pre-tax money? Was the repayment amount treated as a rollover? (2) when X took a distribution of his then fully vested account balance, was the taxable portion limited to $16,000 or was it the full $20,000?

A form 5500-SF was inadvertently submitted, when a Form 5500 should have been submitted.  Does anyone know the amendment procedure for this issue?

Hi, 

We received a DC 401k plan for termination in 2020, since they had filed for 5310 the termination was on HOLD.  In 2022 they received a determination letter and was good to start the termination.  The plan has 32 deceased participants the Plan termination notice was sent to the deceased address as well there was no response and since the named beneficiary did not respond with the sponsor's direction the check was cut to the estate.  There was a tax deduction on $90,000 the check was cut in September 2023 and the spouse received the check and responded in Feb 2024.  I'm looking for some guidance how the tax record can be corrected?  also is there a 5 years payoff rule for deceased account? 

Taking over a plan, and the plan sponsor mentions the profit sharing allocation.  "I usually contribute $60K to be split among the participants at location A, and $50K to be split among the participants at location B."

Oh, must be a class-based allocation, right?  I look at the plan document, and the AA language says:
 

Quote

<<this is written in a provided blank space - AC>>The Employer's contribution shall be allocated as an amount taking into consideration amounts contributed
to Social Security using the four-step Excess Integrated Allocation Formula as described in the attached addendum <<this is the standard "3% of comp, then 3% on excess comp, etc." - AC>>.

NOTE: Under Question 30.B.i. <<this response is 30.B.i. - AC>>, the Employer will describe the allocation of Nonelective Contributions from the
elections available under Question 30.B. and/or a combination thereof as to a Participant group or contribution type (e.g., pro rata allocation applies to Collective Bargaining Employees; contributions to other Employees will be allocated in accordance with the classifications allocation provisions of Plan Section 4.3(b)(3) with each Participant constituting a separate classification.) The following four parameters must be met to utilize this section: 1. The formula described must satisfy the definitely determinable requirement under Reg. §1.401-1(b)(1)(ii). 2. The groups cannot be designed in such a manner to where the only NHCEs participating are those NHCEs with the lowest amounts of compensation and/or the shortest periods of service and who may represent the minimum number of these employees necessary to satisfy coverage under IRC §410(b). 3. The language of the formula must require the employer to notify the trustee in writing of the amount of the employer contribution being given to each group. 4. In the case of selfemployed individuals (i.e., sole proprietorships or partnerships), the requirements of Regs. §1.401(k)-1(a)(6) continue to apply and the allocation method should not be such that a cash or deferred election is created for a self-employed individual as a result of the application of the allocation method unless such election has been created for all eligible employees & the full 401(k) requirements have been provided. If the formula is non-uniform, it is not a design-based safe harbor for nondiscrimination purposes.)

OK, I guess this supports a separate integrated allocation for each location (though a review for top heavy is plan-wide, not location-specific).  My real questions are:

1. What about someone who is getting comp in both locations.  I suppose it's not a big deal if the total is less than the SSTWB (or whatever lower amount the integration is based on), but let's say one has $110K in each location?

2. Does this have to be tested in any other way?  Normally, integrated tests are all good if they follow the formula... but since all participants aren't party to the same allocation, it seems additional testing is needed.

I intend on restating this to a class-based individual-level plan ASAP, but that doesn't help me for the Plan Year I'm inheriting.

Thanks.

Can a COBRA participant discontinue coverage for a dependent beneficiary mid-year without a qualifying event and continue their coverage and other dependent beneficiaries. If no, is this specified in the COBRA regulations?

In the 2022 plan year, a plan failed ADP, and 20 HCEs had refunds. Total refunds were around $40,000. 
One participant's distribution was not processed, and this was brought to our attention in 2024.  The distribution form was sent to the record keeper but could not be processed as requested. I don’t know where the communication breakdown happened to let someone know. Participant had requested full distribution amount be withheld for federal taxes so they were not expecting a check. 
The plan has liberal eligibility requirements so testing was done on a separate basis to split excludables from non excludable. 
I am being told that the correction now is VCP if run on separate testing or if using SCP we have to test All Together.  The refunds with All Together are triple the amount that were originally processed. So the participants all would need another distribution and a one-to-one QNEC would need to be made. 
This seems like a huge penalty for one participant's distribution out of 20 not being processed. 
Any advice?  Does this sound correct?

Thank you!

Hi

Owner wants to contribute 50k and borrow 50k from DB. Instead of actually makings the contribution and then taking it out as a participant loan, can he just put the 50k into his account with a memo that there was a contribution and then taken out as a loan? Thank you, as always, for any insights.

A large investment company plan/record keeper initiated a forfeiture in Feb 2024 for a participant who terminated in 2018.  This participant never took a distribution from her account and was 20% vested in her profit sharing source.  The record keeper initiated an 80% forfeiture of her profit sharing.  I know a plan can have a provision to forfeit a zero % vested terminated participant.  This participant also has elective deferral and safe harbor match sources. I did limited research within the plan's basic document but didn't see anything right off.  I assume there is some such provision to allow for this as I highly doubt this record keeper would not do this correctly. Thank you for any comments

Is it required that a profit sharing contribution be deposited before the business tax return is completed?  The same question with form 5500; is it required that the deposit be made before the form is filed?

Thank you

We have 2 plans (A and B - they are part of a Controlled Group) that we are trying to test separately.

They fail Ratio Percentage Test when tested separately.

My question is how should the Average Benefit Test be done? Based on my research, the correct approach is one of these 2 ways:

1) Average Benefit Test is done on an aggregate basis (so, the contributions of all employees in both plans are taken into account). If the ABT is passed this way, then the plans can be tested separately.

2) Average Benefit Test is done by considering all contributions of Company A and $0 and 0% for Company B's participants (since none of the participants of Company B are benefiting under Company A). And, the test is also done for Company B (in which case, all contributions of Company A participants are counted as $0 or 0%).

Which way is the correct way to test Average Benefit Test for a Controlled Group where we would like to test each plan separately for compliance testing?

Thank you!