Hi All, I am new here and hoping to get some guidance.

I just received a $150K bill for 5500-EZ. (attached)

Its notice CP 220 for my Form 5500-EZ (Solo401K & I am the only employee in my company) for year ending 2020. I called the number on the notice, I was told this $150K amount due is for the penalty for late filing. But I had mailed my 2020 5500-EZ on time in 2021, but I dont have the proof of mailing. For all required years, I have always mailed on time. 

Also, earlier this year, I had received "Compliance Check Information Request letter" stating they dont have 2020 & 2021 forms (attached). So I had faxed them the form I had originally mailed. Per the agent on the phone today, for 2020, they uploaded my faxed 5500-EZ but with the filled date as the date they received my fax (May of this year). So they are treating it as filled late and $150K is penalty for the late fee.

What are my options?

- the agent suggested I write a letter and explain this and hope they remove the penalty.

- I am worried what if my letter of explanation is rejected and penalty is not waived ? Do I have any other option to pursue ?

- My company hardly makes any money, (I now work at a different company). My company does not have the funds to pay this. Would I have to pay it from personal funds ?   

- Since the notice is CP 220, and Not CP238, should I just file the "5500EZ Delinquent Filing Penalty Relief" and pay $500 ? or I am no longer qualified for this due to the notice I just received?

Where can I find right professional to represent me sorting this out. 

Appreciate any help. Thanks !

New Plan:

• Adopted 5/1/22
• Effective 1/1/22
• 401(k) and Match only as of 7/1/22
• No Employer Contributions which are allocated based on the 1/1/22 date
• Participants with Balance Count at 12/31/22: 150

I believe that they do not qualify for any of the exceptions to filing as a large plan with a set of audited financial statements, but curious of other thoughts.

• Short plan year exception - although the plan only had contributions moving forward during part of the plan year, the plan was declared effective as of 1/1, so no exception here
• Over 120 - There were more than 120 participants at eoy, so no exception

I saw an article in the Newsletter the other day regarding LTPT.  The article said (paraphrasing), that in general the IRS has said that all years of service must be taken into account when determining vesting for an LTPT.  

Wasn't it SECURE 2.0 or some other more recent guidance that allowed 401(k) plans to not count years prior to January 1, 2021 for vesting?

Thanks.

I left my former company a few years ago and, unfortunately, the ESOP plan has been losing value every year since.  I did take a distribution when I turned 55 last year and, in a few years, I'll be able to start collecting payments every year (20%/year for five years).   I just received a letter stating that the ESOP plan was recently amended to allow for a one-time offer to terminated/vested employees (which I am) to receive a distribution from the plan.  The amount they are offering is roughly 40% of the amount I have left in the plan (which is all in stock).  I've reached out to other people who have left this company and they've also received the same letter (with the flat rate same amount).  Since the plan has been going down ever since I've left (probably down about 25-30%) I'm very tempted to take this offer (I have until mid-November to decide) but I'm curious as to why it would be offered in the first place.  I know that there are no more shares to allocated to new employees so this could be a way to buy back shares for them.  Would it also be advantages for the company to buy back shares in they were looking to sell it?  Curious to see what other people think and what they would do in this situation.

I am in the process of launching my own TPA firm and looking for best practices on software and/or programs that I should obtain. Any input would be extremely helpful!! 

I am in the process of starting a new TPA form and looking for a mentor. Staff will be just me. I have loads of experience on the investment side of the business but administration is new to me. I have a QKA designation and will be obtaining the QKC and QPA. 
 

I am looking to find a mentor that I could refer to if I run into issues on the administration side. 
 

If a client wanted to give our firm the authority to sign the Form 5500 on their behalf (I guess signing it under my ID), what do they need to sign to authorize that?  Would our firm just be listed as the Plan Administrator on the Form 5500-SF?

We've always had the client sign themselves, but for some reason one client doesn't want to do it and would rather have us sign.

Ok, so after 40+ years in the TPA world I retired at the end of 2021. In 2022 I terminated my small solo-k which I sponsored as a sole prop for some side income, plan was alway under $250k.  I rolled it to an IRA and in January 2023 I filed a 2022 EZ marked as both the first, and the final return.   Today I get a letter 1072C from the IRS telling me that my EIN is XX-XXXXXXX and that I should always use this number in filing the EZ.   Well, duh!  Yes, I know that’s my EIN, that’s why I put it on the EZ form in the first place.  I checked my copy, the number on the EZ is correct and matches the number IRS states in the letter as well as on the original EIN assignment letter I received years ago.  The letter doesn’t say I have to do anything, and it acknowledges receipt of the 2022 EZ filing.  So Whiskey Tango Foxtrot?  I don’t recall any of my clients over the years getting a letter from the Service like this.   
 

anyway, just thought I’d put this out there in case some of you start getting client calls about such a letter.  I think IRS has a special department to create correspondence designed to waste TPAs’ time.   Definitely helps remind me why I was ready to retire (and enjoying it immensely, especially most days where there’s no IRS envelope in my mailbox!)

We filed for EFAST credentials back in 2010 for a plan with two Trustees and several employees, credentials under the name of one of the Trustees, who has retired, and since then remain Trustee plus one new partner are the trustees.

There are now 3 plans sponsored by the Employer, one for each Trustee, one for the Employees.  

I believe the credentials go by the Employer/Plan Sponsor.

If so, I assume we do not need to refile for EFAST credentials.

Deleted.

Owner-only plan value exceeds $250,000 for the first time as of 12/31/2022.  We were asked to do the 5500 in late September.  The plan sponsor ( a sole proprietor) had his 1040 extended to 10-16-2023.  So we marked the 5500-EZ "Automatic Extension."    There was no 5558 filed before July 31, 2023.

It seems dubious the IRS would just trust that this 5500 is properly extended since there is no 5558 filed and I'd expect a notice.  If there is any question about this, the sponsor could just file under delinquent EZ procedure and pay $500 before the IRS notifies.  We've never filed a 5500 under the automatic extension option. 

I'm probably concerned for no reason right?

Starting a general discussion rather than a specific question.... As we know returns during 2022 were bad, 2023 is still iffy but not exactly great either....Which means that PBGC premiums for 2024 using a lookback (1/1/2023 for BOY vals and 12/31/2023 for EOY vals) might be a quite unpleasant surprise especially for plans that started 3-4 years ago and are just hitting the "vested" point.  So, I am curious what others think about the "opting out of look back":

1) Is it realistic for PBGC to approve?

2) Does the 60 days advance application to PBGC mean October 31st deadline?

3) I realize that for EOY val date it is not practical (valuation results are not available until 2.5 months AFTER the premium is due) however:

1. I believe PBGC filing can be done on an "estimated" basis with the subsequent "true-up".  Yes, it is an additional work but might be worth it?  Or not?
2. Is it likely to get approved by the PBGC?
3. Has anyone ever done something like this?
4. Are there any other considerations or concerns?

TIA.

Hi

May be taking over a DB plan where prior TPA is most uncooperative.

Client does not have any prior PBGC filings and got a premium payment that seems to be high, according to him.

He does not remember what happened in the past 2 years.

Like EFAST for 5500SF, is there a way to find a list of prior PBGC filings?

Thanks

I would be most appreciative if anyone is willing to share some information with me. I am aware of two main staffing structures for TPA firms:

1. One or more employees are assigned to a block of plans. They handle everything for that plan soup-to-nuts. This is the “Relationship Manager” approach.
2. Segregated departments (i.e., conversions, compliance, distributions, etc.).

I believe the former is more prevalent for TPA-only businesses, though I know some TPAs that use the second method. I am more interested in the small to mid-size TPAs that also handle internal daily recordkeeping (say on the Relius, SRT, or Datair daily platform). What structure are you using - or is it a combination of the above? If I am a new client starting or moving my plan, and you will be handling TPA and recordkeeping, who am I dealing with for implementation and ongoing communications over the entire year?

I appreciate any help you can provide.

A governmental 457(b) plan that allows employees to designate their normal retirement age wants to establish normal retirement ages of 55 for "special risk" employees and 65 for all others.  Normal retirement age under the plan is meaningful only for purposes of the special 457(b) catch-up.  It does not play a role in vesting, as all contributions are 100% immediately vested; waiver of any allocation conditions, as there aren't any; or as a distribution trigger.

What limitations, if any, apply to the employer's ability to make this change?  For example, would its application be restricted to new participants only?

The CPI-U for September 2023 was published with a value of 307.789. Based on Tom Poje's spreadsheet, the dollar limits for 2024 are projected to be:

Almost all increased (NOT Official yet, of course):

Deferral limit: $23,000 (up from $22,500)

Catchup: $7,500 (unchanged)

Compensation Limit: $345,000 (up from $330,000)

Annual Addition Limit: $69,000 (up from $66,000)

DB Limit: $275,000 (up from $265,000)

HCE: $155,000 (up from $150,000)

Key Employee: $220,000 (up from $215,000)

Just for reference, the unrounded figures are:

Catchup: $7,793.00

Deferral limit: $23,379

Compensation Limit: $345,220

Annual Addition Limit: $69,044

DB Limit: $276,176

HCE: $155,984

Key Employee: $224,393

Terminating Plan.  Participant who has been in pay status for about 25 years, who was divorced sometime after his benefits commenced in the form of a QJSA, and who never informed the Plan that he was divorced, is now complaining about benefit information received from the annuity provider that his former spouse is his joint annuitant as he does not wish his former spouse to receive anything.  The divorce occurred after benefits commenced and the participant never notified the plan administrator that he was divorced.  Based on current information, the divorce decree did not specifically address pension benefits and no QDRO was entered.  The plan does not provide for substitution of a joint annuitant after benefits have commenced.

I am leaning towards responding to the participant that his former spouse remains his joint annuitant unless he can provide evidence of a court order that his spouse is not entitled to survivor benefits if he dies before his former spouse, or at least the date and court in which the divorce was granted if there is any obligation for the plan administrator to search for an order.  I cannot imagine that such an order would be granted, but you never know. 

Thanks for any helpful insight.

OK, this one is on me - I started a new 403b plan for a NFP that was winding down their 401k, and I accidentally used plan number 001 in my document.  Of course, the 401k plan is using that number, so I should have used 002.  Therefore, 002 was not extended for the 12/31/22 5500-SF.  Whoopsie.

Isn't there a thing where you can use the corporate extension instead of the 5558?  And doesn't an NFP have an initial filing date of 5/15, which then gets extended until at least 10/15?  This sounds familiar.  Is it available for a NFP?

Thanks.

I have a cross-tested profit sharing plan where the client is considering adding a Safe Harbor 401(k) feature for 2024.  Will auto enrollment features be required?

I may have missed it, but has the 417(e) applicable mortality table for 2024 lump sum distributions been published?  Thanks!