Plan is owner and spouse only.  They have 100% of assets (obviously). Is the plan top heavy?  I know this question sounds dumb, but I thought maybe top heavy was an ERISA requirement to which they are EXEMPT, but I don't see owner-only plans listed as a plan type not subject to top heavy.   I also considered that there would be no non-key employee balances giving us a denominator in our top heavy ratio of 0, making the plan not top heavy.  But I can't find what I thought would be an easy answer!

Here is why I ask - the plan was NOT written to exclude keys from the top heavy minimum and both the owner and spouse deferred the max, but they were not wanting to do an ER contribution.  Do they have to put in a top heavy contribution for themselves?

Thanks!

Hi, 

Should the Cycle 3 restatement be amendments to include the Plan Termination date?  is it a must or does a 5500 hold good. 

I have a plan terminating that had about $20k in the Forfeiture Account.  They used some of it to pay plan expenses, but even after that there's about $12k left in there.

So who does that money get split up between?  Is it:

1. Anyone still actively employed at the time of termination (I believe it was just the owner)
2. Any person who had a balance at the time of termination

Hoping someone could assist. I help oversee a 401(k) Split Plan. There is several complexities to the Plan which is why is makes me harder to administer.  Trying to determine which book is best to purchase. The options I believe I have is the ERISA Outline Book  or the 401(k) Answer Book by Empower. Both are super expensive so weighing options. 
thank you for your thoughts. 

So, here's 1.401(k)-1(d)(4) from the Cornell Law website folks

The fact pattern a co-worker gave me was interesting

DB/DC combo, plan needs to make DC allocations for 2022.

Plan sponsor's assets were sold/employees terminated in 2022.  DC plan has been already terminated, though, and everyone's paid out, maybe except for one straggler.

There's concern their big former DC separate recordkeeper would balk about opening the plan back up after termination/payouts.

Anyway, the "interesting part" concerns whether or not the sponsor can just start up a separate DC plan, retroactive to 2022, to receive these allocations for the testing.  This regulation seems to preclude distribution upon the termination of a plan when the sponsor's going to set up another plan within 12 months.  The thing is, in this case, all the employees' distributions are contingent upon their termination of employment with the Seller.  And the owner has a distributable event upon age 59½.  So none of these distributions seem to have the plan termination as the distributable event - does that mean a successor DC plan is going to be okay after all?

--bri

Company A merges with Company B.  Company A and Company B have 401(k) plans.  Company B terminates their 401(k) plan.  There are 5 employees total in company B, 2 of the 5 employees transfer into Company A's 401(k) plan but 3 of the employees take a cash distribution.  There is also a parent company, and they want to be conservative and file VCP for the failure.  How would you present this for correction under VCP?  Any thoughts would be appreciated!

Hello, 

We have been working to make corrections on missed deferrals from 2018 through 2022; this includes on the employee and employer side. Is there a general rule or guideline to make these corrections? We've been receiving information in pieces and it seems that every time we have it complete, something else comes up and we need to start over. 

We were instructed to look at each paycheck and determine the missed deferrals but it seems there's so many other contingencies, that we feel it would be easier to calculate on an overall basis. 

Has anyone had experience with this situation or can provide any better help?

Thanks!

This new client came to me and needs to update their ERISA bond coverage.   The plan had $800K in 2022... probably less now due to the investment performance.  I've attached a copy of the screenshot he sent to me.   What do people recommend?  Just a stand alone bond or a bond + Fiduciary Liability?   or maybe a bond + Fiduciary Liability + Cyber liability.   As you can see each option that he was given includes all 3 options.

Thanks

Bond Coverage Options - Copy.pdf

The Plan Sponsor made payment of back wages in 2022 pursuant to Department of Labor Wage and Hour Division investigation.  The Wages were reported on W2 form for 2022.  None of the employees elected to have deferrals taken from these back wages and no employer contribution was made to the plan for 2022.   In the 2021 Plan Year the Employer did make a matching contribution as well as a QNEC to correct the failed ADP test.  I understand that the Regulations discuss the back pay as it relates to 415.  Related to this back pay, my questions are as follows.  :

1.  Is the Plan required to rerun the 2021 ADP/ACP test to include the additional wages?

2. Is the Plan required to recalculate the Match for 2021 to include the additional wages?

3.  Is the Plan required to recalculate the QNEC allocation?

Thank you.

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