Client's current administrator is moving in a different direction (read: Plan too small) and Client needs a new plan administrator. Client does not want to use its 401(k) Plan administrator. unless last resort. Any suggestions for Administrator that will take a small plan?? 

Has anyone's client received a letter from the DOL for a missing 2022 Form 5500 filing?  This is the second one of our client's that received a letter and we have ACK ID and the filing appears on the EFAST website.

Thanks!

Hi

This is a new one for me.

Law firm Partnership XYZ is splitting (no PBGC coverage). Currently sponsor a DB and DC plans. 2 partners and a bunch of employees.

Partner Mary wants to keep the current plans.

Partner Joe wants to set up his own DB/DC combo in his new company. Joe also will take a few employees with him.

Other than treating Joe and a few employees as terminated and carrying over the benefits accrued in the DB plan to the new law firm, is there anyway to transfer DB benefits for Joe and the employees coming with him?

Or new plan(s) has to be set up for Joe's new company?

For the DC plan which has deferrals+SH+PS, if a new plan needs to be established for 2023, can SH still be set up for 2023?

Any suggestions/experience with this situation is appreciated.

Thanks

I can't recall if there is a timing restriction for switching a plan's ADP/ACP test method of using current or prior plan year.  eg can the selection be made prior to the end of the plan year for the current plan year?

Plan Document for 401k Plan was created in the name of the now prior TPA.

New TPA uses the same platform/vendor for said Plan Document.

Can Plan Document be amended using existing Plan Document either of the following two conditions:

• New TPA has its documents under its name
• New TPA does not have its documents under its name

Note: Plan Document is going to be amended in full under new TPA, but certain errors in original TPA document need to be corrected retroactively, and trying to determine best approach.

existing 401(k) SH match is TH.  Starting a new combo (CB + stand-alone PS) effective 1/1/2023.  Owners are covered in all 3 plans.  Am I correct that my new (CB +PS combo) is TH (thus, I need to give 5% immediately vested TH allocation in the PS paln) in spite of the fact it is their first year?

What can I do? I retired on May 1st of 2022. I had applied for Medicare A&B prior. On may 5th, 2022, 5 days after retirement,  I had a home accident, and needed emergency care. Had to have 6 staples on my scalp. Am I covered by Medicare, or not. The emergency clinic claims I am not eligible. Please help!

Proposed regs released Friday morning 11/24 -- happy Thanksgiving, all!

Assume DB plan frozen in 2015, no future credited service or pay - hard freeze. 

Older participants working significantly past normal retirement have a solid chance of running into compensation limit even if they're well below the dollar limit (pleasant workplace and working very late age full time not uncommon).

When I read 415 regulations, I see that the compensation limit is described as being based on compensation earned during "years of service". When you follow the link defining years of service, describes service credited for benefits. Service to the company doesn't stop, but the freeze stops earning years of benefit service.   

Participants continue to get pay increases as time passes. Assume all participants are full time - no phony active participants "working late in life" but not actually showing up. When doing the final retirement calculation, which years of compensation are allowed:

1) only those earned prior to the hard freeze?

2) years that would've otherwise met the definition for service except for the freeze amendment through cessation of employment (as in, all years of employment, not just years before freeze)?

My wife is a participant in a cash balance plan as a partner in a medical practice. Some internal discussions have made it seem like the plan is underfunded even though the 5500 for 2022 shows over 120% funded status. She will be separating from employment next year and our plan was to rollover her vested benefits to an IRA. 
 

When others have left, there have been discussions about who should be responsible for the “make-whole” payment if the plan is truly underfunded at the time of separation. Some thoughts have been that the employee should just true up their own balance through an additional deduction from their P&L. That struck me as odd, so I was curious if there were any actual federal guidelines or regulations that would govern a situation like this where vested employees are seeking their benefits from an underfunded plan. 
 

The plan is covered by PBGC. Not sure what other details might be relevant, but thanks in advance for any assistance!

Hi all! I wanted to ask is this possible. If a plan has a lower minimum age/participation than 410(a)(1)(A), for ADP testing, the plan can exclude employees who are covered under the plan's lower minimum requirements but have not met the 410(a)(1)(A) minimums. Could the plan instead choose to exclude only a part of those employees?

Say the plan allows entry at 3 months participation and 21 years old, thereby allowing participation in the plan 9 months before required under 401(a)(1)(A). For 410(b) testing, could the plan exclude only the employees between 3-6 months participation while including those with 6+ months?

I often read about IRS noticed for non-filing with large penalties - folks are instructed to immediately file the voluntary way and pay the nominal penalty.  Then, send the proof of that to IRS for penalty to be waived.  Everyone also says once the DOL sends notice of non-filing there is no way to get any penalty relief (which could easily get into the millions after a few years).  I don't ever see anyone post that they received the DOL letter though.  Does the IRS one always come first?  or, does the DOL send some sort of gentle reminder that allows you to quickly do the voluntary program before their official letter?

I ask because if you look at publicly available enforcement data online there are only a handful of businesses TOTAL each year that have penalties issues above 100k by DOL (like 5-10 total) yet there are millions of businesses that are subject to 5500 filings and MANY that are unaware of filing requirements for various reasons so have multiple years of non filing and are none the wiser.

1) do notices always come from IRS first?

2) Are the large penalties really only assessed if someone ignores letters that give them the chance to do the voluntary program?  

3) Is there a reason every posting on here about non filing penalties references IRS notices as the ones they are getting and not DOL?  

4) If DOL did an audit of a small plan and discovered 6 years of non filing, would they really assess millions in penalties?  I ask because, while this is what they say they can do in documents, the metrics on their own enforcement site show this is not what is actually occuring.  Most non filer penalties it shows are the 5-15k range.  And, even those are not large in number,

Hi

CB plan excludes non-owner HCEs.

Joe has been an employee/participant for the past 3 years and getting CB pay credit.

He becomes an HCE for 2023 under lookback rules.

This means, for 2023, Joe does not get a pay credit, correct?

Top heavy provided under DC plan.

Thanks

Lets say I have some one age 83 what would max Lump sum be? Assume all RMDs have been made and distribution will comply with MASD based on prior RMDs. Will check that separately.  Trying to make sure my software is calculating max lump sum since participant is close to limit.

3 year high salary $200K

Plan AE 5% and current 417(e) table so 2023 Applicable Mortality Table. APR 6.44 * 200K = 1,288,000

But I also need to check against 5.5% and 417(e) Table which would be the same 2023 Applicable Mortality Table correct?

So APR drops to 6.30 and lump sum limit would then be 6.30 * 200K = 1,260,000

Do I have that right?

The IRS is not able to answer this question for me.  If a Plan Administrator is responsible for several ERISA plans, do they need to apply for a Plan Administrator EIN (thru SS-4) for each plan? Or does the Plan Administrator just receive a single EIN which is then used for all plans they administer?

Thank  you!

Marty Wayne

MartyWayne@ColonialFundingLLC.net

Direct: 847-971-1057

I did see other posts about this question but still need clarification.

We have a handful of large plan audits that fell under 100 participants with an acct balance as of 1/1/2023 but still have more than 80. All the plans in question filed as a large plan in 2022 (Schedule H audit etc). Based on our understanding of the 80-120 rule these clients can choose to continue to file as a large plan and file an audit OR they can choose to file as a small plan for 2023 and going forward until they go back up to 121 participants with a balance which will trigger an audit again.

We highly doubt the clients in question will want to continue as a large plan to avoid the cost of an audit and therefore will want to file as a small plan starting in 2023. Our concern is the few that fell right under 100 (lets say 90-99). They may have to go back to an audit soon once they hit 121 again so we want to make this clear to them.

We understand if they fall under to 79 they must file as small plan.

Is our understanding correct?

We administer an Owners Only 401k plan. Contributions for 2022 were $20,500 to Roth 401k and $40,500 in after-tax voluntary contributions.
Participant now wants to do an in-plan conversion of after-tax voluntary contribution to a Roth account.

1) How should this transaction documented? Does the plan issue a 1099-R showing a total distribution of the current after-tax balance, with only the earnings portion as taxable ?

2) Assets are held a Schwab. Does a separate sub-account need to be set-up for the various types of in-plan conversions e.g., after tax, employer match, profit sharing etc. or can they all be "lumped" into one account?

Thank you

I received an inquiry regarding taxation of distribution (more specifically ways to defer taxation) from a non qualified deferred comp plan (409a) - I have limited experience working with these plans.   However, I have what I think is a straightforward question 

What strategies are available (if any) to defer taxation from a plan distribution?  I am aware a IRA rollover is not permitted. 

Thank you in advance

It's a small business with 10 employees.  I spoke with my possible future advisor, and she said I had to merge the funds from my simple into the 401k.  Can I not just keep the funds where they are and start a new 401k?  I've read some rules, but I'm not clear.  It says you employer cannot have any other retirement plans.  I would only have one active retirement plan, but two accounts where funds are located.  She works for ascensus, but I want to make sure she is correct.  Thanks!

A US based employer has an employee who is working abroad; the employee quits and is remaining in that foreign country to live.  

1. What are our client's obligations in terms of offering coverage to this employee, considering their current international residence?
2. Does the issuance of a COBRA rights letter in this scenario entail any legal or compliance risks for our client, given the employee's non-U.S. residency?
3. Are there any specific steps our client should take to rectify this situation and ensure compliance with both U.S. and international regulations?

Thank you!