Participant dies without a beneficiary.  Estate is the beney under the plan document.  CA has a small estate affidavit to help small estates avoid probate court.  By using the small estate affidavit the death proceeds could be made payable directly to the beneficiary of the estate rather than the estate.  

Should the plan sponsor be concerned that creditors might have a claim?  Creditor claims do not appear to be specifically addressed in the small claims affividavit.

Thank you for any guidance.

Hi

This is a general question.

A DB (one lifer) plan did not fund the 2021 MRC - minimum required contribution - by 9/15/2022.

The MRC was 25k as of 9/15/2022.

It was not funded by 12/31/2022 either.

Let say they want to fund 2021 MRC by 7/1/2023.

How is the amount calculated? Using EIR (effective interest rate) for 2021 all thru 7/1/2023 or 2021 EIR until 12/31/2022 plus 2022 EIR?

Assuming that there will be room for it under 404, this amount can be deductible for 2022, correct? (assume corporate tax return is on extension)

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As for excise taxes, from 5330 under 4971, it is very clear.

It would be 10% for 2022 plus 100% for 2023.

Schedule D. Tax on Failure To Meet Minimum Funding Standards (Section 4971(a))

In the case of a single-employer plan, section 4971(a) imposes a 10% tax on the aggregate unpaid minimum required contributions for all plan years remaining unpaid as of the end of any plan year.

Additional tax for failure to correct.

For single-employer plans, when an initial tax is imposed under section 4971(a) on any unpaid minimum required contribution and the unpaid minimum required contribution remains unpaid as of the close of the taxable period, an additional tax of 100% of the amount that remains unpaid is imposed under section 4971(b).

So is there anyway to have the IRS accept 10% for each year or 2023 has to 100% which is very steep?

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Hello!  Looking for some help.

i have an plan on an FTW document.

the eligibility is 7g.  completion of 3 consecutive months of service (not to exceed 12; hours of service failsafe applies)

Entry dates are 1/1 & 7/1

I have an employee hired 4/3/2023.  Would they enter the plan 7/1/2023 or 1/1/2024?

I am thinking that if they they worked at least 1 hour in April, May and June, they would enter 7/1/2023.

Appreciate your thoughts.

So, now that we have self-certification for hardship reasons for hardship withdrawals...

Some plans allow loans only for hardship reasons. We generally draft the loan procedure to define "hardship" as one or more of the 401(k) "safe harbor" hardship reasons. Occasionally, there are other oddball hardship reasons which are added due to a specific participant situation - furnace died, dog ate the homework, broke a fingernail, etc....

Anyone see a problem with allowing employee self-certification for a hardship reason that is one of the 401(k) "safe harbor" hardships? I feel quite comfortable with it, but perhaps I'm missing something.

Thanks for any opinions.

     1.   I am stumped trying to determine whether a plan that contains this language would be permissible:   

The amount of the loan is limited to the lesser of $50,000 or 50% of the account value of a date when the loan is issued.  

This would seem to comply with 72(p) but I don't see many plans phrased this way.  Is it incorrect?

     2.  Also, most plan loan applications request dollar amounts and not percentages. Why is this?

Any help appreciated.  I went down the rabbit hole on this one!

Hello Benefits Linkers! 

We have a self-funded client whose attorney mentioned the DOL recently subpoenaed a TPA regarding plan documents that exclude Marriage & Family Therapy. The attorney feels the self-funded medical plan may want to be amended to cover it based on the DOL's subpoena/the topic being on the radar. Does anyone have knowledge of which case this is in reference to? If so, can you please link it? 

The TPA (BUCA) hasn't heard anything of such a subpoena and have no clients that cover Marriage and Family Therapy. I've got e-mails out to our internal Compliance Team and the TPA's. Any other advice? We do not have a client with any carrier that covers this type of therapy at present. 

Thank you!

I've always found the following requirement somewhat scary, as it is subjective on the part of the IRS:

An explanation of how the failure occurred and a demonstration of the existence at the time of practices and procedures reasonably designed to promote and facilitate overall compliance.

Obviously, even if you have great procedures, mistakes can happen, which is one reason that EPCRS exists. I'm curious if anyone has ever had a plan audited, where SCP was used, and the IRS disallowed the SCP due to a perceived defect in such "reasonable" procedures?

We have several non calendar year Plans.  A discussion recently came up as to the due date of the AFTAP certification.  One opinion is that the due date is based on the exact date of the end of the Plan Year; just nine months later.  A 3/27/2022 Plan Year End would have a due date for the AFTAP of 12/27/2022.

However, the other opinion is as such.  The instructions say that the AFTAP must be certified by the first day of the 10th month.  Could the 10th month be interpreted to be April?  In this case the AFTAP would need to be certified by 3/31/2022.

I cannot find anything specific to a non calendar year plan.  Any insights would be appreciated.

This plan has a triple stack match. If the owner doesn't defer any money for a particular year, does the triple stack match still need to be applied to the NHCE's? Or are they just given the 4% safe harbor?

I just took on a one-participant plan, the guy does not want an electronic filing and has less than 10 tax return due for the year.

From what I can tell by looking at 26 CFR § 301.6058-2, Form 5500-EZ can remain a paper form and is not mandated to be filed electronically.

I file all my plans under EFAST as the "return receipt" is immediate, so this one seems a bit odd to me.

Is anyone familiar with guidance regarding the setup of a Master Trust Investment Account (MTIA)? 

One of my main questions is - should the plan sponsor's EIN be used on the DFE 5500 filing for the MTIA?  And then, say the sponsor only has plans 001 & 002 (that will be investing in the MTIA), would the MTIA then assume plan number 003?  It would appear so, according to the Form 5500 instructions, which seem to be the only source of instruction.  If anyone is aware of specific MTIA guidance outside of the Form 5500 instructions in general, it would be much appreciated.  Thanks!    

If the rank and file employee terminates and gets paid out during 2022 leaving only the owner/sponsor as a plan participant as of 12/31/22 would the filing

for 2022 be a 5500-SF or 5500-EZ? Would it matter if the terminated participant got a contribution for 2022 thus benefiting under the plan for 2022?

We recently moved our plan to a new RK. There was one beneficiary of a former employee who was missed from the blackout mailing. Can we send a copy of the original blackout notice that was sent?  The plan just went live with the new RK last week. 

I was reviewing the Form 720 the IRS revised in March 2023 and noticed in IRS no. 133 has last year's data listed (date and fees). Has anyone else noticed this, too?  Or am I missing something?   If I am not losing it does anyone know when the IRS plans to send out an updated version?  https://www.irs.gov/pub/irs-pdf/f720.pdf  

From what I read the 10% penalty is still due on a hardship withdrawal unless the participant is 59 1/2.  The participant asking for the withdrawal is only 40 and it is a construction expense (he said he over-built) for his prmary residence.  This is from a qualified plan.  Is there any relief from the 10% for this participant?  

I just want some more back-up because he is relentless on the WHY?

If the participant isn't electing to withhold anything now (understanding that withholding isn't mandatory on a hardship), can the amount taken still be grossed up to include an amount to cover taxes to be paid later?  I see discussions here on how to actually figure out how much is an appropriate amount to gross up - we're going with a simple 20% of the amount requested, for better or worse.    But I don't see anything that says that if you're not electing to have the taxes withheld now, that takes away the ability to have the distribution increased for the taxes that will be due, so long as you're still under the amount that you have available under the terms of the plan.  Right?  Thanks.

Just trying to decide how many years worth of old emails to save.

Hi All.  I have searched for my answer, to no 'recent' avail.

I have a small business owner (himself, his wife, and 3 employees) in a 401(k) plan who would like to invest his balance in a Limited Partnership (which holds real estate).  This group is already in segregated accounts, but the owner's investing of almost 100% of his own balance is still way more than 5% of plan assets.

The plan would still need an independent audit, correct??  Obvious answer, I think.

Besides this question, can someone please point me into some reliable source for learning more about question #6 a & b on the 5500SF - ineligible plan assets and the subsequent plan audit requirements?

I greatly appreciate it.

Hi All.  I have searched for my answer, to no 'recent' avail.

I have a small business owner (himself, his wife, and 3 employees) in a 401(k) plan who would like to invest his balance in a Limited Partnership (which holds real estate).  This group is already in segregated accounts, but the owner's investing of almost 100% of his own balance is still way more than 5% of plan assets.

The plan would still need an independent audit, correct??  Obvious answer, I think.

Besides this question, can someone please point me into some reliable source for learning more about question #6 a & b on the 5500SF - ineligible plan assets and the subsequent plan audit requirements?

I greatly appreciate it.

We have direct seller who get a W-2 from us; the majority pf what they do for most is 100% direct sales. They are excluded from H&W & 401k benefit plans.

Must these direct sellers be counted in ACA testing?

thnaks

Alexa