We have had clients inform us they received penalty letters from the IRS for their 2022 Form 8955-SSA.  The Form was filed by our office timely and accurately.  We received notification from ftwilliam.com today the IRS goofed.  Below is the text from the ftwilliam.com email:
 

Dear ftwilliam.com Customer:

We recently contacted the IRS due to several customers receiving erroneous penalty notices for filing late or incomplete Form 8955-SSA for the 2022 tax period. If users receive this letter, and the batch was filed timely, IRS representatives have advised that the Plan Sponsor request an abatement of penalties.

If the batch filing shows ‘Completed’ with a timestamp prior to the deadline within the ftwilliam.com software, the IRS FIRE records indicate the filings were completed timely and processed accordingly. Plans Sponsors are advised to contact the IRS at the number on the CP283C notice (877.829.5500) or fax a signed letter for request of abatement as well as the IRS notice to ATTN: Employee Plan Account at 877.792.2864.

We have included a sample fax coversheet letter to provide Plan Sponsors to send the IRS at the following Link: Request for Penalty Abatement Under Reasonable Cause

Please note the letter needs to be signed (including the signer’s title), and dated by the Plan Sponsor before faxing to the IRS.

Thank you for using ftwilliam.com, a product suite of Wolters Kluwer Legal & Regulatory U.S. If you have any questions or concerns, please feel free to contact us at 800.596.0714 or via email at support@ftwilliam.com.
 

Hi. I always struggle with issues related to controlled groups. A hospital wants to start a joint venture with another group. The hospital will own 51% of the JV. Does that level of ownership allow the hospital provide benefits (retirement, health, etc.) to the employees of the JV?

Thanks.

2024 increases to $7k. Suppose plan currently uses 1K. Can the plan operationally go ahead and use the 7K for 2024, or must it amend to 5k, which then increases to 7k? The latter seems absurd, but an interesting question...

Need some help.

Plan has 1 year of service, 1000 hours and dual entry.  FTW Document -  Rule of Parity & 1 year hold out is not elected

i have an employee hired 8/2020 termed 3/2021.  Worked over 1000 hours

Rehired 8/2022

Since she worked over 1000, would she enter on rehire date?

Appreciate your help.   Thanks!

Participant died in 2022 prior to his required beginning date.  Surviving spouse is sole beneficiary and current employee and would like to roll over his balance into her account in the same plan.  Assuming the plan allows this, any concerns?  Would she have 10 years to fully distribute the amount attributable to the deceased participant or would it be consolidated with her balance and subject to her own RMD requirements?

Employer contributes a specified dollar amount each year to an HRA on behalf of each participant, which money can be used for deductibles and co-pays under its high-deductible health plan.  As a group health plan, the HRA is subject to COBRA, but the premium is not entirely clear.  I understand that there are a couple methodologies for determining the premium for COBRA purposes (e.g., actuarial method and past-cost method), but is there an argument that the premium is the employer contribution itself on top of which an administration charge up to 2% could be added?  It does not seem that former employees should be eligible for continued employer contributions to the HRA; that should be limited to current eligible employees.  

Professional office with a 401k safe harbor cross tested plan is being sold to larger company, with sale date set for 9/1.

All employees will become part of purchasing company with immediate participation in new owner's 401k plan.

Both plans are calendar plans. The plan itself is not part of the sale and is intended to be terminated, rather than merged.

Both plans also have 1000 hours and last day worked requirements.

So there will be no employer ps contribution in seller's plan since no 12/31 eligibility, though they will be making their 3% safe harbor.

The new company (I have not seen their plan doc) has informed their intent to provide a ps contribution based on 9/1-12/31 compensation, honoring hours worked all year, but not pay.

How is this usually resolved that there seems to be no PS contribution for 1/1-8/31? I note that this info has been provided to my company, we have not been involved in any discussions until now.

Group:

Over the years I've seen Plan Sponsors (for ESOP's) setting up

sinking funds to pay for future participant benefits.

Where do I find the citation/authority for types of assets

a plan sponsor can use to fund the repurchase obligation? Is there a specific DOL citation? Treas regulation?

I was thinking about this awhile back at a conference for civil/criminal tax matters and one speaker

referenced that there's no guidance even on investing in Crypto.  Other than a DOL letter/notice (?)

with a stern warning that retirement plan investments in 'crypto' may be a breach of fiduciary duties.  I don't have the date

readily available.  I may be conflating the two items as this didn't per se relate to ESOP's.  But,

could a ESOP trustee invest in crypto as their asset for the repurchase obligation?  Seems the IRS/DOL

leaves this in a grey area on purpose.

Thoughts and comments appreciated. 

An individual works full-time as a private school administrator. She receives 20% of her income from her employer and the other 80% from a separate grant organization. Each pay period she receives two checks, one from her employer and the other from the grant organization.

Both sources of income are considered taxable income.

She is eligible to participate in the employer's 403(b).

QUESTION: Can then money from the grant organization be considered compensation for calculating her contributions as well as for purposes of determining includible compensation (415c limit)?

I assume further guidance is required, but The Secure Act text states that the lookback 145k compensation for determining the HPEs  is from the employer sponsoring the plan.  

So if a worksite onboards with a PEO and the PEO sponsors a MEP, and the worksite adopts the MEP, then could we make a case that the lookback compensation is based on the compensation under the PEO only?

Otherwise, the operational processes of onboarding a PEO, collecting  prior-year  FICA wages, and possibly year-to-date compensation plus deferrals (if HPE) will be a bigger administrative lift given that employers join PEOs continuously throughout the year.

Consideration:  Worksite now receives W2 from PEO EIN.

Does anyone know what the IRS user fee is for requesting a change in funding method that does not get automatic approval? It is classified as a letter ruling request but the fee schedule does not specifically show changes in funding methods and actuarial assumptions. I see changes in accounting method at $11,500 and then all other requests at $38,000 - big difference. The IRS does not make this easy!

If a bonus is paid out to a participant after they have already entered the plan, but the period for which the bonus compensation was earned was before they had entered the plan is this eligible compensation to defer? 

A 401k plan's eligibility requirements are age 18 and One Year of Service.  Let's say an employee without a Year of Service earns 500 hours in 2021, 2022, and 2023, is age 18 on January 1, 2024.  Is the plan permitted to continue to exclude the employee until after they have attained age 21, or does the plan's age 18 requirement apply for purposes of the LTPT rules.

Thank you.

The IRS entered into a closing agreement with plan sponsor agreeing to treat their DB plan as disqualified.  Plan sponsor filed Form 5500 with an explanation stating the Sched SB is not required due to the provisions of the closing agreement.  The IRS is threatening penalties for non-filing of Sched SB.  Based on the instructions and the regs is a Sched SB required for a disqualified plan?  Thanks!

We have a SH plan where the business has sold. The employees now work for new company and all have rolled over to the new company's plan.  Only the former owner remains and wants to keep the plan - so it is essentially back to being a soloK next year for 2024.  I have reviewed the instructions for the 5500SF and EZ and only see the requirements for being eligible to file 5500EZ.  Does the owner have to keep filing 5500SF or can he start filing 5500EZ?

Hello - I have a client with an enhanced safe-harbor match 401k plan ($1 for $1 up to 6%.)   When negotiating salary contracts for new employees, the client wanted to tell some employees (none are excluded) that their negotiated salary will be reduced by the 6% safe-harbor match as well as the 6% deferral if they sign up for the plan.  I told them they can not do that, and as there's not rhyme or reason to the employees that the plan sponsor wants this to affect, it can't really be fixed by excluding a class or some other document provision.  The client asked me where these rules are written and to provide in writing.  I can't seem to find anything that specifically says a plan sponsor can't reduce an employee's pay in order to receive an employer contribution.  (Obviously the salary is reduced by employee deferrals.)  Any help with written guidance would be appreciated.

A previous employer (whom we acquired, but didn't take on their 401(k)) had a short limitation year, and, thus, a small 415(c) limit.  Accordingly, a few employees hit the 415(c) Limit and the previous employer reclassified some as "catch-up" (even though they hadn't hit their deferral limit) so they could max out on 415.

I don't think that affects us, but does anyone see any issues?

An employer is terminating their POP early (plan runs Jan 1 - Dec 31 ... they're terming it 8/31).  The company itself is completely dissolving and there will not be any employees left.  Do they still have to conduct the POP non-discrimination testing before the plan is dissolved?  

Under the IRS hardship distribution "safe harbor reasons", one safe harbor reason is for "Burial or Funeral Expenses". Payments for burial or funeral expenses for the employee's deceased parent, spouse, children, or dependents. What is the definition of children - for examine is it limited to biological and legally adopted children. Or would a stepchild qualify. Assume the stepchild is not the primary beneficiary. Is there a distinction between your stepchild and your biological child for this purpose? I am not sure if they are a dependent but I can look into that because it would seem a dependent would qualify.

I appreciate any input.

Hi

Might be a stupid question, also made up numbers to understand the method.

Assume all calculations are for 2022.

73 year old has a prior db distribution, let's say $15,000/month after all actuarial calculations. done many many moons ago.

The new salary average for 2022 is $24,444.44/month - 100% of compensation limit (385k+290k+305k averaged)

415 dollar limit is $30,000 - made it up.

What is his 415 maximum AB?

1. Is it $24,444.44/month less $15,000/month i.e. $9,444.44?

OR

2. Is it $30,000/month less $15,000/month i.e. $15,000/month?

If it is (1) then the 415 LS would be $9,444.44 * APR @ 2022 417e table @73 @5.5% (assume plan AE assumptions provide much higher LS)?

What am I missing here to determine max 415 AB and LS?

Thanks