Here's the data:

Company #1 owner A = 50%; owner B = 50%

Company #2 same owner A = 25%; same owner B = 25%; owner C = 25%; owner D = 8%; owner E = 8%; owner F = 4%; owner F wife = 4%

Owners A, B, D, E and F are brothers, owner C has no family relationship.

Company #2 does 100% of it's work for Company #1 (no outside companies).

Would this be an affiliated service group relationship or any other?

Our firm serves as counsel to the local union and the associated pension fund. The union asked the pension fund staff for mailing labels (name and address). The union intends to give the information to a third-party so that participants will be mailed information (unrelated). Issues?

A client (husband and wife) that was a single member plan for many years in 2021 became a plan with a rank and file employee.  Naturally due to this added employee they are required to have a full administration performed and a form 5500-SF filed electronically.  For 2021 the relationship was peachy. Come the 2022 annual administration and the client balks at the price-tag of the annual admin work performed.  A back and forth via email ensues where I explain everything.  Old emails are used to show that she was accepting of the cost, even offered to pay me more for all the back and forth questions.  Yet now she is being cheap.  Her excuse?  She thought the 2021 fee was only for that year due to the added work.  Here is the kicker, my process is to email the client the form 5500 and efile authorization form along with my invoice.  The client returns the form signed and upon payment in full I would file the return electronically and then forward on the complete bound report.  I hear nothing from this client so I file an extension since the 7/31 filing deadline was approaching.  Just now I looked at the DOL website and can see that the return was filed on 7/21.  I am guessing she took my completed form and filed the return herself.  I'm sorry, WTF!

Here is my question, the DOL site says on the form 5500 that the return was "Filed with authorized/valid electronic signature" in the signature space.  Is there a way to find out who exactly filed the return? Who's credentials?

I'm so angry.  You work your @ss off researching, helping someone, holding their hand to get everything the way they want it, you are more than fair to them and then you are taken advantage of.  I need to be more cutthroat and business strong.

And, to head off the inevitable question, no, a current contract was not executed (my bad).  This unfortunate event is making a review of all client contracts a priority. But on that subject, it is in writing that she is ok with the cost quoted and she did pay the first year setting a precedent, right? 

Anyone have a sample notice they have seen / prepared that they are willing to share?  I assume some of the big providers have put something together...

Just saw a brief article from Fred Reish on this.

I'm wondering why an employer would want to get involved in this, if approached by a recordkeeper, etc.? Seems like yet another possible fiduciary issue, yet another possible complication or item that may bring up questions, etc.

From my viewpoint, a participant has been notified about the cashout. They haven't responded, so account is rolled to IRA. Period. No further involvement - wash your hands of the whole thing. The participant then can do anything they want with the IRA.

Don't know what other thoughts folks might have? 

Where or what details can be provided by ERISA guidance that say allocations must be deposited into the investment election that the participant chose or was defaulted too? I know this is a Plan Failure but does it disqualify the Plan? 
example - company provides small catch up profit sharing contribution. It was requested for these funds to be deposited into specific accounts that do not follow the QIDA. 

We have an employer with 100% of employees in its 403b plan that is considering terminating the 403b plan in order to accomplish two things:

1. Start up with a new 403b

2. Provide access to cash for one of the employees

My understanding is that a termination results in a distributable event for employees, where they can either get the cash or rollover to another institution.

If a rollover to another 403b is possible, don't the regulations state that the employer cannot participate in another 403b for 12 months starting the date the funds are liquidated due to termination?

Meaning the funds that make it to the new 403b institution will need to just "sit there" for a year and employees will lose out on contributions that would have otherwise been sent to the initial 403(b). Is my understanding correct? 

Participant died in 2023.  He did not receive his 2023 RMD.

Who would receive the RMD.? Who pays the tax and receives the 1099?

We're planning an early retirement program, and want to make sure our 401k plan synergizes with the new program. We do currently have an early retirement provision in the plan document:

"Early Retirement Age" means the later of: (i) attainment of age 55, and (ii) the 5 anniversary of Plan participation. If a Participant terminates from service before attaining age 55, but after the 5 anniversary of Plan participation, the Participant will be entitled to elect an early retirement benefit upon attaining 55.

Our current match vesting schedule is 3 years (profit sharing is 6, but we don't do that) - I'm wondering if the vesting provision in the above is providing any additional benefit - doesn't seem like it. Is it standard to have that provision match regular vesting, or offer an accelerated vesting? If our goal is to have an attractive early retirement package, woul dit make more sense to not have a plan participation requirement?

I'd love to hear anyone's thoughts who has an ERISA early retirement program!

I am helping my former employer (TPA) do a DFVC filing for a client with several years 5500 filings due.  Rather than signing an E-signature authorization for each year, what they want to do is get a form 2848 giving me the POA to sign and file all the years.  I would have to of course get the EFAST credentials to do this.

Q:  If I have POA and e-sign all the 5500 filings on EFAST, am I opening myself to any liability? 

I have a Cash Balance Plan that is looking to buy an investment property and renovate it, hopefully as an asset of the Plan. 

The property is about $1.35 million, then they would want to spent $1.5 million to renovate it and create a multi-unit rental.

I know owning the property and generating income via rentals isn't an issue, as long as all revenue goes back into the Plan since it is a Plan asset (at least that's my understanding)?

Can they also pay for the renovation out of Plan assets?

The plan document for the ERISA 403b plan says that distributions are only allowed in lump sum payments.  However, the RK is allowing participants to take RMDs in installments or annuities (and in excess of the RMD amount, which is a separate issue).  Is there an overriding provision somewhere that allows this regardless of what may be in the plan document?  Or am I going to have to amend my document to line up with the RK (which is probably the easier solution, but I am interested in the actual answer, too!).  Thanks.

For a Form 5500... let's say the year end 2022 plan assets (snapshot as of 11:59PM on December 31, 2022) was $652,325.  

However, profit sharing contributions / contributions attributable to the 2022 PLAN YEAR are made on March 2nd of 2023 FOR the 2022 plan year.  Those assets deposited on 3/2/23 for the 2022 PLAN YEAR... SHOULD THEY be included in the "year end plan assets 2022" for the 2022 Form 5500?  I just want to double check question this with the wisdom of the crowd here.

A client sent us their census information this past week, and naturally their ADP Test failed miserably for 2022.  

I am preparing a communication explaining the owners' the option of amending the plan retroctively to provide for a 4% Safe Harbor Nonelective for 2022, or take a sizable refund of their deferrals.

Question:  We're well past March 15.  Assuming the client will elect to contribute a $12,000 Safe Harbor contribution to make this go away, is there still a requirement that they also pay the 10% excise tax on the excess deferrals, or is the concept of an "excess" gone by providing the 4% Safe Harbor?

I met with a new client this week.  It is a trustee-directed pooled plan.  They are moving to a daily platform with us as TPA.   It is a Sept 30 plan year end.  They've used an insurance company as record keeper/administrator for many years who did testing, 5500 and an annual statement.  

The plan sponsor mentioned she wanted a long separated participant out but they had a loan.  I ask are they making payments - answer no.  I said oh the insurance company did a 1099-R then?  She said no they don't do that, she does 1099-Rs.  So there is a long delinquent loan.  

Our engagement letter says we are not responsible for anything prior to our engagement which is Oct 1, 2023.  I want to wash my hands of this.  Once it transfers to the new record keeper the loan will be on the books unless they can convince this person to take distribution before Oct 1 of which I am hopeful.

I'm not that in tune with error corrections.  Our clients are generally small and clean.  I don't want this loan correction process with the IRS to fall on me.  How can you go back years and default a loan with 1099-R?  I will ask how long ago has this been going on.  I know it is not good to say - pay it off fast and forget the whole thing.  Payoff is questionable anyway as it is about $15,000.  I is a very successful company with high earning owners - the responsibility for not defaulting falls on them so they could owe the penalty but I'm surprised this insurance company did not say something - they have the record keeping, issued the loan, do the testing, admin and 5500.

Comments?

Tom

Hi

DB plan effective 1/1/2021.

Owner was 73 years old in 2021 and the vesting was 100% as of 12/31/2021.

Plan was not signed till July 2022.

So, when is the RMD due?

Thanks

• a plan is frozen in 2022 - both accrual & participation are frozen, and
• the plan is not underfunded - not qualified for 401a26 exemption
• at the same time, there are some employee meet the eligibility requirements before the valuation date which means they are eligible to enter the plan if the participation is not frozen

in this case, should these employees be counted as non-excludable employees in 401(a)(26) (ignoring the minimum participation relief in SECURE Act)?

appreciate all replies and helps.

I have a new prospective client that currently has a SIMPLE IRA plan that has been in place for over 5 years and has 15 employees. I want to make sure that the advisor is relaying the correct information to the client. The advisor has told them that moving to a 401k would allow them to receive the start up credit plus the employer contribution credit plus the automatic enrollment credit.  Does this sound right?  

If you withdraw from conversion amounts in a ROTH IRA before age 591/2 and have not met the 5-year rule, the conversion amount is subject to the 10% penalty tax because you are not age 591/2 and the earnings on the conversion amount would be taxable, as well as subject to the 10% penalty, correct? But if you are over age 591/2, then no tax or penalty amount applies but you will be taxed on the withdrawal of any earnings because you have not met the 5-year rule, correct?

If you withdraw money  from a Roth  401k account and you are under age 591/2, you can withdraw contributions without tax or penalty but earnings will be taxes and also subject to 10% penalty, correct? 

Any advice is appreciated.  This may be loan administration 101 but I am not clear on what happens when a participant stops making loan repayments, mostly centered on what happens after a loan is deemed to have been distributed.

Example:

A participant has $100,000 account balance and takes a loan for $20,000.  She repays $5,000 but then stops payments.  The loan goes into default and triggers a deemed distribution.  The participant is still employed.  The outstanding balance (lets say that is $16,000) is taxable in the year of the deemed distribution.  But there is accrued interest of $2,000 remaining on the loan at the time of default.

I keep reading that the deemed distribution amount plus accrued interest must still be accounted for after the deemed distribution.  But when a distributable event does occur, the accrued interest is used to offset the participant's non-loan account balance.  Is that correct?  So if a few years after the deemed distribution, the participant terminates and now has $200,000 non-loan account balance.  She also has an additional $2,000 in accrued interest from the loan.  Is it the case that the participant is paid $198,000?

Thank you for any advice.