Accountant filed the 6/30/2021 5500 late to stop the running of penalties. Do you think it can be refiled under DFVC program with outstanding 2022 5500 now since no notice has been received yet? The accountant wants to 

Is it oversimplifying the concept that plan with an elapsed time eligibility provision is not subject to the LTPT rules?  I seem to have picked that up somewhere, and I haven't seen it debunked at any webcast.  Thanks.

Plan has immediate eligibility.  However, Part Time and Seasonal Employees are excluded.  Obviously if the employee in these groups complete 1,000, they were eligible for the plan. There seems to be different opinions if the LTPT rule applies to groups specially excluded from the plan.   

Question, if the plan specially excludes a group (part time and/or seasonal/interns etc.), does the new LTPT rule apply to this group.

Thank You.

I have a client (Company A) that sponsors a 401(k) and a DB plan.  A couple of years ago they acquired another company (Company B) that sponsors a 401(k) plan.  The transition period funder 410(b)(6) has now expired and they may have a testing issue unless they can obtain QSLOB status.

In testing for QSLOB status, both companies meet the 50 employee requirement and the administrative scrutiny requirements under 414(r).  Next up is the Gateway test under 1.414(r)-8 which is causing a potential problem.  I believe that each of the 3 plans has to satisfy 410(b)(5)(B) on an employer-wide basis, and can do so by each having a coverage ratio greater than the unsafe harbor percentage.  While each of the 401(k) plans satisfy this requirement, the DB plan unfortunately does not.

Based on this, does that mean Company A fails to be a QSLOB based on the DB plan's coverage failure?  Or can Company A's 401(k) plan at least be tested on a QSLOB basis since that plan does meet the coverage requirements and the sponsor satisfies all of the other QSLOB requirements.  In that case at least we'd be good for the 401(k) plan and the DB plan could then explore other options (hard freeze or open up to new entrants).

A colleague suggested that Company A as a whole could be tested on an employer-wide basis, not each individual plan.  The argument being that it's the QSLOB itself that needs to be tested, not the plans of the QSLOB.  But that did not sound correct to me.

Any suggestions are welcome.

A participant makes a subsequent deferral election. Before the 12-month period before it will be effective elapses, can she void that subsequent deferral election and make a different subsequent deferral election or is she locked in until the 12 months expire?

I need some assistance determining the Vesting Percentage for a former Employee, please.  This client has revolving door of employees and sometimes makes determining what service qualifies for vesting a little complicated and need some help in making sure I am counting vesting service correctly.

The employee in question has Original Date of Hire was 6/25/2014 and he worked 1,000 hours in 2014.  He termed in January, 2015 and was Re-Hired in November, 2016 so neither of 2015 or 2016 plan years did he work the 1000 hours. He termed on 5/20/2017 having worked his 1,000 required hours for the year 2017.  He was Re-Hired on 9/18/19 but worked less than the hours required during the remainder of 2019.  Now he has termed again on 7/1/2023. I believe he gets vesting service credit for 2014, 2017, 2020, 2021, 2022 and 2023.  Does that sound right?  

This was just released thru BL today.

Issue Snapshot — Deductibility of employer contributions to a 401(k) plan made after the end of the tax year | Internal Revenue Service (irs.gov)

Not a 401k expert.

Example 5 is an interesting one, is it correct though?

SECURE 2.0 section 317 states for plan years after 2022.

What am I missing here?

Thanks

Beginning with 2024, new Internal Revenue Code § 401(k)(16) sets up a new kind of individual-account retirement plan—a starter 401(k) deferral-only arrangement.

For relief from top-heavy treatment and from actual-deferral-percentage nondiscrimination constraints, the price is providing no contribution beyond elective deferrals, and limiting them to $6,000 (or $7,000 for those 50 and older).

Under which conditions would an employer prefer a starter 401(k) over sending payroll deductions to Individual Retirement Accounts?

Is it about saying, in recruiting workers, that the employer has a “401(k) plan”?

Under which circumstances would it be rational for an employer to pay (instead of letting participants bear) all or some of a starter 401(k)’s plan-administration expenses?

I understand that not all plans allow for in-service distributions.  And I understand that you must die, become disabled, be terminated or reach retirement age.  But all that aside, can a participant request and can a plan make an in-service distribution to an active participant that isn't considered a hardship in-service distribution?  Of course the payout would be taxed and coded early.   Is this possible?

Here's a odd one for this afternoon - We are TPA on a plan that requires the independent audit report for the 5500 due to size.  The plan is with a large recognized national 401k vendor.  The auditors are currently doing a review of selected participant distributions.  They were unable to match the amounts forfeited on two individuals based on the vesting so of course came to me for explanation.  I also could not match the amounts that were paid out/forfeited so I checked both my system and the participant hard copy distribution form.  Both of those reflect the proper vested percentage for each participant.  I then went to the vendor for explanation as to how the vested percentage was computed.  In both cases the participants had taken a Coronavirus withdrawal back in 2020 and the vendor is telling me that affected the final payment and subsequently the forfeitures for each participant.  That would indicate to me that a portion of the Coronavirus distribution was made from non-vested funds.  We're not talking about a lot of money here because this particular client limited the CVD to $3,450 per participant.  Both participants had deferral accounts and for one of them the vendor didn't even take 100% of the deferral account before taking from the Employer sources.  It's pretty confusing to me anyway.

Ultimately I guess my question is - I was unaware that it was even allowed at the time to take non-vested funds as part of the CVD distributions.  Does anyone know if this was a thing?

Thanks in advance!

With the new 2023 forms, this number will be required. The IRS has informally indicated that this will be available as part of the 5500 data sets. So, anyone can look up the opinion letter serial number for a given TPA, and essentially obtain your client list for 5500 filings under each pre-approved plan you sponsor.

Is the ARA raising any hell on this? Seems pretty serious to me! 

Hi. Client is terminating a 401k Plan. There is a sizable amount in the forfeiture account. Even after paying expenses, there will be a balance left over. The document says that forfeitures are allocated first to restore previously forfeited amounts to participant accounts. Thereafter, remaining forfeitures are used to:

• offset Plan expenses
• reduce future matching contributions
• reduce future nonelective contributions

Since we are terminating, and thus there will not be any future contributions, how should we allocate the remaining forfeiture balance? Pro-rata to participants according to??

Thanks.

Looking for a citation for the following:

For a new entrant into the plan who receives the safe harbor contribution for only part of the year, i.e. while a participant, the top heavy contribution should be for the entire year and thus, such a participant would require an additional top heavy contribution.

Participant entered in July, but received a safe harbor from date of participation.

We're having a difference of opinion in my office regarding whether the eventual grant of a meaningful benefit (via an 11(g) amendment after the year ends) is an appropriate actuarial assumption for purposes of running the beginning of year valuation.

For example, when doing the 1/1/23 valuation for a cash balance plan the actuary is aware that less than 40% of participants will be accruing a meaningful benefit.  The actuary determines that 8 additional participants, who would not otherwise accrue any benefit during 2023 (due to a current classification exclusion), will need to accrue a meaningful benefit and includes them in the valuation on the basis that that reflects his best estimate of plan liabilities.  Others believe that the meaningful benefit accrual for those participants should not be reflected as of 1/1/23 since there is no current amendment granting the accrual.  It's possible that when the amendment is adopted the meaningful benefits may be granted to different participants.  As an aside, the increased contribution for the additional normal cost (which is about 10% of the overall normal cost) would still be within the plan's maximum deductible limit even without these benefits.

What do you think?  Opinions and/or specific citations would be appreciated.

Thanks.

Suffering from Friday brain cramp.

John Doe owns 100% of corporation A, Sponsors Plan (X) - calendar year plan. During 2021 calendar year, John sells ASSETS of corporation A to Edward Doe. Edward has corporation B  - keeps the same corporate name, but now under new employer id# (he's 100% owner) and assumes the assets and liabilities of plan X and sponsors the plan. The former owner John Doe continues as a non-owner employee in corporation B.

For 2022, John would appear to be a Key employee, since for part of the PLAN year containing the determination date (2021), he owned 100% of the corporation sponsoring the plan, which was subsequently taken over by corporation B. Have I got that right? Then in 2023, he's a former key, and his balance is excluded from the top heavy test. Have I got that right?

Thjis is probably one of those things where I'll come in on Monday, look at it and say, "Duh, the answer is simple" but I'm chasing my tail at the moment.

Thanks!

I'm supposed to be able to dump into Excel or whatever format a listing of all plan provisions.  It's under "Data Export".  Anyone know how to do that?  I cannot get it to work.  I'm waiting for Relius to provide some direction but figured I would ask y'all!

FYI I am trying to very efficiently figure out which clients dont have Roth or who are affected by LTPT rules.

IRS Publication 560, p. 15-16 says an employer must make salary reduction contributions to a SIMPLE IRA within 30 days after the end of the month in which the amounts would have otherwise been payable to the employee.  Then it says "Certain plans subject to DOL rules may have an earlier due date for salary reduction contributions." What are these "certain" plans? Is this referring to the DOL safe harbor rule that provides the employee contributions deposited to retirement plans with fewer than 100 participants must be deposited within 7 business days following receipt or withholding by employers? When would the latter not apply since SIMPLE plans apply to businesses with 100 or less employees? 

"Simple" question: the instructions in IRS Publication 560, Retirement Plans for Small Businesses, say that contributions to a SIMPLE IRA will not affect the amount an individual can contribute to a Roth or traditional IRA.  However, I thought that if you participated in a qualified retirement plan, that affected the deductibility of contributions to a traditional IRA?  

In addition, I have a question re contributions to IRAs. On page 7 of publication 590-A, it says a trustee or custodian generally cannot accept contributions of more than the deductible amount for the year.   But I thought folks may make nondeductible contributions to traditional IRAs, subject to the dollar limits and applicable filing status limits?  

The employer's HSA plan starts September 1, 2023.  Can an employee contribute the maximum allowed HSA contribution for 2023 and 2024? 

Hypothetical : 2022 retroactive CB plan to be set up.  Potential sponsor already filed 2022 corp return but will amend for reasons other than this but wants to include if possible.  In CA we have an automatic extension for all counties due to weather except 2 (client located in county under extension).  We have time to file 5558 still.  Rev Rule 66-144; 1966-1 C.B 91 seems to support this:

"Section 404(a)(6) of the Code provides that a contribution for a taxable year made by a taxpayer reporting on the accrual basis shall be deemed to be made within such taxable year if paid within the time prescribed for filing its return plus any extension of time in which to file. Therefore, a contribution paid within an extended filing period is deemed to have been made during the taxable year. Thus, a contribution made during such extended period, as provided for under section 6081(b) of the Code, is deemed to have been made during the taxable year regardless of when the return is filed."

Guess the question is does the filing of the 2022 corp return trump the automatic extension granted for CA thru 10/16/23?

Thanks for any input.