I am using Code 3D no matter what you say but someone pointed out that the instructions say as follows:

"Pre-approved pension plan - A pre-approved plan under sections 401, 403(a), and 4975(e)(7) of the Code that is subject to a favorable opinion letter from the IRS"

There is no reference to 403bs.  I personally think it is merely the fact that there was no pre-approved document for 403bs when someone wrote this but wasn't sure if the IRS ever clarified that, etc.  Also curious what you guys are doing (indicating 3D or not). 

We have a client who is on extension till 9/15.

Accountant filed the tax return recently showing $0 contribution although we advised the client he could have established a new plan, as long as it was set up and funded by the due-date of the corporate tax return.

Wouldn't IRS be suspicious of an amended return claiming a deduction after the initial tax return was filed with $0 deduction?

We have a client needing to do a DFVC filing for multiple years and we need to sing the return on their behalf.  Will the IRS allow on signed E-File Authorization for multiple filing years?

Where can I go to get help/ pay someone to create custom crystal reports for Relius ASP?  Auditor requests and ESOPs currently have us pulling data out of Relius and creating in Excel.  Has it be a better way!  

Hello all

Generous Employer LLC is the sponsor of a Profit-Sharing plan AND a Cash Balance Plan.  Jim owns 100 % has 20 employees. 

Generous Employer, INC is adopting employer of same plans (PS and CB). Jim owns 80%. another 10-15 employees

So, one DC plan, two related sponsoring companies and one Cash Balance Plan, two related sponsoring companies. 

They make a generous annual contribution to the DC and Cash Balance plans adhering to the 25% aggregate deduction limits.

The question: does it matter which tax return takes the deduction if the contributions are going into the same plan owned by same owners?

TX

We have administered a profit sharing plan sponsored by a corporation for more than 20 years. The 100% shareholder owns a large home on many acres of land. The place is so special the upkeep (including horses) requires 5 full time employees. He wants to offer and cover these 5 employees in a profit sharing plan similar to the company (that he is the 100% shareholder of) plan. He made it clear that this needs to be a separate plan.

Question: It seems like a plan can only be sponsored by an entity with earned income (sole proprietorship, partnership, LLC, LLP, corporation). In this case he is just an individual paying household employees. I don't believe an individual can sponsor a qualified plan.

Does anyone agree? Disagree? if so why?

Thanks.

This is/was my understanding of the rule:

A small plan filer can elect to file the same form until the participant count is over 120 and when over that must file as a large plan.

A large plan is considered a first year plan over 100 or over 120.

And that plan must file as a large plan until the count gets below 100. (*) see blow

The 80-210 rule allows any plan to file the same form (large or small) is the count is between 80 and 120.

But  once under 80, the plan must file as a small plan.  Not even allowed to file Schedule H.

I am seeing some internal correspondence here, that a plan, once that it is considered large, must still file as large until the count dips below 80.

So this goes against my (*) above.

When can a large plan filer move from Schedule H to Schedule I?  At 99 or 79 participants?

We have a client that is in the process of winding down a MEWA / VEBA and are trying to brainstorm a bit about how best to efficiently handle the remaining VEBA assets once all plan liabilities are satisfied.  It appears there may only be ~$250k left over for a VEBA that covered a number of different participating employers of varying sizes and who have now all gone in many different directions so it's not as if there is one or two employers that could easily orchestrate a premium holiday, etc.

While the trust can still get in touch with most all of the former participants, it seems trying to do anything along the lines of prepaying a portion of their new health or other benefits costs or trying to make distributions back to the former participants where possible will consume a lot of time and money and be an inefficient use of limited assets.  

Just curious if others have seen other VEBAs with limited surplus assets at termination find an acceptable and efficient way to address.

Thanks

Hi,

As always the insights are appreciated. Frozen plan with two owners. Their PVAB is in the 800k range. Next year with the 417(e) rates going up dramatically, the PVAB will be in the 600k range.  I understand only the AB cannot be reduced, however, the pvab can. However,  will clients be upset that their PVAB is decreasing? Thank you .

Hi there,

We are a TPA taking over a 401(k) plan that has a handful of self-directed brokerage accounts at Fidelity (the "F" word).  The existing Fidelity accounts are "non-prototype retirement accounts".  Has anyone had any luck in getting a hold of knowledgeable representatives at Fidelity in the correct department that can answer questions about these types of accounts, and if so, what phone number (and extension) have you been successful with?  I've tried different numbers and have had mixed luck with general questions.  My goal is to try and save the Plan Trustee some time on the phone by getting him connected with the correct department / representatives from the start.

800-544-5373

800-756-0128

800-835-5095

800-544-6666

800-343-3548

What about a fax number (years ago we used to use 800-347-2805 but this may no longer be valid according to a few people I've spoken with).

What about an e-mail address for the Service Support Group (SSG)?

Thank you!

I was asked the following (this is out of my realm):

Partner A in Plan Origin terminated and had assets that required some attorney's involvement for liquidation (do not know the details) and Plan Origin is located in State A.

Now ex-Partner A moves to State B and starts a PS plan - Plan Destination.

While in Plan Origin, with the help of the attorney, ex-Partner A was able to liquidate the assets within Plan Origin (1M dollars) and the attorney's fee was 20k i.e. 2% of the assets.

Once all settled with Plan Origin, 1M dollars were rolled over to Plan Destination.

This ex-Partner A now wants to pay the attorney's fees from the assets which are now in Plan Destination.

Can he do that and if yes, is there a cite for it?

My comment would be, no, as all events took place within Plan Origin and once rolled over to Plan Destination, it is no longer a Plan Destination related expense.

Curious what others have to say.

Thank you

Can a small group (1-49) offer Stand-alone Telehealth-Only Plan / Benefits After the End of the COVID-19 Public Health Emergency May 11, 2023, to Full-Time, Part-Time, Seasonal, 1099 Employees?

I understand that relief is allowed for large employers (ALE) to continue to provide (stand-alone) solely telehealth and other remote-care benefits to employees or dependents who are not eligible for coverage under any other group health plan offered by the employer to the end of the 2023 plan year, including those benefit opt-outs, per Q&A #14, FAQ FFCRA Part 43 https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/faqs/aca-part-43.pdf , also written about by Thomson Reuters and Mercer more generally in https://www.mercer.com/en-us/insights/us-health-news/bipartisan-bill-seeks-stand-alone-telehealth-for-all-workers/.

Since telehealth only and other remote-care benefits are not listed as excepted benefits per https://www.law.cornell.edu/cfr/text/45/148.220, a stand-alone telehealth or remote service plan offer after the end of the COVID-19 Public Health Emergency would need to meet many rules applicable to group health plans under ERISA, COBRA, HIPAA and the Affordable Care Act (ACA) minimum essential coverage rule per Thomson Reuters and Q&A #14 above, even if offered by an small employer (1-49 FTEs), although a small employer (1-49 FTEs) is not required to offer ACA MEC or MVP coverage? Like restrictions of offering a stand-alone Health FSA without ACA MEC coverage by a small or large employer, of which the stand-alone Health FSA would not meet group health market reforms and ACA requirements for 100% preventive care benefits.

I am interested to know other's thoughts or research for small employers on this subject. 

We have a 401(k) that includes no pension source funds nor does it have any annuity distribution options.

The plan document in the past required spousal consent to take a loan or distribution.  I inquired about this when restating the document and was told the plan sponsor just liked the idea that the spouse would want to know when money was coming out.  This was pre-daily platform.  Now they are on a daily platform and they want things more automated and no longer want to require spousal consent.  I believe since this was something they administratively opted to include in the plan but was not required, it would be fine to remove this requirement.  I assume it is not be a protected benefit since it is not a required.

Would you agree?

Tom

Group:

I'm aware of the requirements for the appraiser to sign and declare certain statements on the valuation report annually for an esop. 

An esop adopted in 2007 is under audit and the appraiser has passed away. 

One issue the IRS had brought up is that the appraisal didn't have a statement indicating they hold themselves out to the public and conduct appraisals for other plans. And that the appraisers identifying number which I believe would have included it's EIN were not provided as well. 

I've had other audits where these issues were not relevant. And the IRS didn't disqualify the plan. 

Since this Taxpayer can't call the appraiser to testify what is the solution to prevent disqualificstion of plan? 

Seems odd the Govt would disqualify a plan merely because an EIN wasn't stated on summary or appraisal itself. 

And that a court would disqualify a plan, depriving participants of their benefits, for such a minor error. 

If the irs does disqualify the plan my thoughts were to have taxpayer testify that the trustees were provided the appraisers' identifying number when they hired the company. 

Thoughts and comments appreciated. 

Group:

I may not state this properly.

The facts as I know them.

* ESOP owned by an S Corporation was adopted and set up in 2013 by clients ESOP advisor. (no longer

working with TP)

* The original sale of stock was 100% of corporate stock sold for $20k to the ESOP.  (I'm not concerned about this $20k value, fyi)

Promissory note, loan agreement, security agreement prepared and signed

by Plan trustee.

* Terms state the note will be paid off over 10 years in a balloon payment.

* Client audited for 2013 and 2014 years.  IRS issues no-change letter accepting all filed returns. (final notice issued early 2015.) 

The IRS during that audit didn't address or bring up as an issue the non-payment of the note.  

* A 2nd audit ensued in 2018.  The TP had not paid the ESOP note.

The most recent revenue agent report states part of the rationale for disqualifying the

plan was because the $20k note was not paid.

* TP is not in Court for this plan.  There's a few other IRS issues that are defensible.

* The disqualification of the plan may result in a large tax for a number of reasons not germane

to this inquiry.

Related to the $20k note, my initial argument (I haven't began much research just yet) is that since the TP was

still under audit and the TP asked to pay off the $20k note as a corrective action, the IRS should have allowed the TP the ability

to pay off said note.

Even if the IRS didn't allow the payoff, the TP was still within the terms of the note.

The IRS did not allow TP to pay off the loan. 

Q:  Are there no defenses available to a TP who (for one reason or another) did not pay the

original ESOP note?  even though the terms hadn't come due yet.

Q:  Are having the terms of a 10 year balloon payment in violation of ERISA 4975?

What's odd is I've represented other ESOP's where - during an audit -the TP was afforded the ability make

catch up payments for the original note on the sale of stock. 

Seems like the Govt - which may have the right - can be selective depending on what day of the week it is.

There's no rhyme or reason to which TP's are afforded the right to make catch up payments.

Thoughts and comments are appreciated. Or cases on point or any other regulations that

may assist TP would be much appreciated.

I shouldn't have to ask this question for as long as I've been doing this but here goes.  We have a plan sponsor - an S Corp with 2 owners covered by a new plan.  There are no other covered participants.  I assume they are exempt from the ERISA bond coverage? 

Most things I read indicate plans covering only a single-owner (and potentially a spouse) or a plan covering only partners of a partnership (and spouses) are exempt.  

The longer I do this, the more I question myself.  🤔

Thank you,

Tom

Has anyone applied for or engaged in a pre-submission conference with the IRS before filing a correction under VCP? If so, what was your experience like? We are considering applying for a pre-submission conference on behalf of a client and are looking for any and all insights and suggestions about application strategy, likelihood that the IRS will approve a request for a pre-submission conference, how the conference is conducted, etc.

Thanks!

We submitted a VCP correction back in February, 2023 for a 401k plan that had about 60 missed deferral opportunities.  We followed the recommended calculations to determine the MDO amount, the corresponding match and then the lost earnings.  We deposited these amounts into individual participant accounts where the plan account balances are held.

Its been 4 months and we have not heard back from the IRS.  These affected participants are getting antsy, some of whom are terminated and want to take their money out now.  We'd prefer to wait until the IRS says everything looks good.  

Checking whether everyone would wait until that final OK or would anyone move ahead with allowing distributions from these deposits (for terminees) since we feel we did an accurate job with the calculations.

Thanks

I am not an expert in Form 5500 but I am very curious about one question here: I thought all large groups (>50 enrollees) are experience-rated to some extent (premiums depending on their past claims). But why most Form 5500 Schedule A filings are nonexperience-rated? Is this an option that employers can choose? If yes, what kind of employers are more likely to file as nonexperience-rated? Thanks!

Maximum participant loan (residential) was granted at the end of 2021.  Due to turnover at the plan sponsor repayment was not set up.  Error was detected during 2022 plan audit.    Recordkeeper is proposing correction by amortizing the loan over the remaining term using the original $50,000 loan as the loan balance with interest only payments until the accrued interest is repaid (entire amount of loan payment applied to interest for the next 13 months).  Is this permissible or should the current accrued interest be repaid to the plan now?   With accrued interest the balance is about $53,000.  if this loan was not already at the maximum limit, I believe their correction would be appropriate.   However, I am not sure it is OK when the loan plus accrued interest is over $50,000.   Any guidance would be appreciated, I can't seem to find anything that is on point.