What kind of time frame are we looking at here?

If someone has been working 18 hours a week for half the year, but then summer kicks in and they work 25 hours a week for a few months, are they in the plan?

Also, how do you measure?  Is it an average?  Over how long?

What if someone works 35 hours a week every other week?

It averages 17.5 hours a week.  But each week they actually do work, it's 35.

When an employee obtains a second 401k loan, is this a separate repayment schedule or can the initial loan get paid off and "refinanced" into the new loan?

I am the owner of a small business (2 employees, including myself) and am the administrator of our Safe Harbor 401k plan.

Hardship withdrawals and In Service Distributions are not allowed under this plan but loans are.

My employee obtained a 401k loan about 3 years ago and his remaining loan principal balance owed is about $4000.

His current 401k plan value is about $32k (100% vested) so he should be able to obtain loans totaling up to $16k against his plan.

He again needs money and needs to tap into his 401k again (I already explained this is unwise).

If he needs $10k now, and this is possible (I believe it is), what is my better option?

-a) Continue his current payroll deduction (3 more years, $4000 + 5% interest) and create a 2nd loan/payroll deduction (5 years, $10000 +9.25% interest)

-b) Create a new loan/payroll deduction combining both loans (5 years, $14000 + 9.25% interest) and distribute $10000 to him, effectively paying off the 1st loan.

-c) Something I haven't thought of

Looking back, I wish I had known that being the administrator of our plan could get complicated.  More work than I expected but I've sure learned a lot!

Thanks in advance for any input or insight!!!

Any thoughts are appreciated:

A participant in a 401k is a US citizen.  Her spouse is not a US citizen and does not live in the US.  She wants to name her 2 children as beneficiaries for her 401k account.  Would spousal consent be required to do so in this case?

Thank you

My memory is failing me here.

I recall that 401(k) and safe harbor plan eligibility are best kept with the same eligibility requirements.

I can't remember the drawback to having them different.

A DB plan utilizes a pre-approved document and intends to terminate before the end of the year. Given we are now into the Cycle 3 restatement period for pre-approved DB plans, does the plan need to restate onto the Cycle 3 document or can they continue to rely on the prior restatement assuming they amend for any mandatory changes since the last restatement? 

Starting with the applicable plan language:

Rehired Eligible Employee who had not satisfied eligibility. If any Eligible Employee who had not satisfied the Plan's eligibility requirements is rehired after severance from employment, then such Eligible Employee shall become a Participant in the Plan in accordance with the eligibility requirements set forth in the Adoption Agreement and the Plan. However, in applying any shift in an eligibility computation period, the Eligible Employee is not treated as a new hire unless prior service is disregarded in accordance with Section 3.5(d) or (e) below.

Ok. The underlined language does NOT apply (that is, 3.5 (d() or (e) don't apply) in the following scenario, so we can ignore the underlined clause.

This is concerned with entry date. Plan uses age 21, 6 consecutive months with at least 500 hours for eligibility, entry date quarterly. If eligibility requirements not met in the initial specified time period (6 consecutive months with at least 500 hours) then the employee is subject to the 1 Year of Service requirement.

After the initial 12 month eligibility computation period, the computation shifts to Plan year, which is calendar.

Original date of hire, 6/6/2017 - Date of termination 8/20/2017. Had 200 hours of service. 

Rehire date of 8/2/2021 - had 833 hours in 2021, over 2,000 hours in 2022.

So, since the employee had not met eligibility prior to termination, then what is the entry date? Is it 4/1/2022? 1/1/2023? Other? It appears that since the employee is not treated as a new hire for the eligibility computation period shift, then the eligibility computation period shift has already occurred, and is now Plan Year 2021, then 2022, etc. 

Thoughts? 

We have more and more clients from NY and MA for instance who want PFML reported in the Form 5500 for health and welfare. It is deemed as self-insured. We need to list the benefit code on page two. Would you suggest using 4Q and note list PFML? We assume to list PFML in the SAR as well. Any thoughts/feedback? 

The secure act 2.0 allows plans to fund matching and nonelective contributions as Roth.

1. I believe the participant must be 100% vested to do this correct?

2. What about safe harbor matching and nonelective contributions. Can they be funded as Roth?

Thanks!

A plan had numerous prohibited transactions over a number of years, with very large excise taxes due. The PTs were only recently discovered. We are now filing 5330s. I believe there is reasonable cause and would like to request the IRS to waive interest and penalties on the late filing of 5330s. I am unsure how and when to request the waiver. Does anyone have experience with that? If so, please let me know.  Feel free to reply by private email: jkirtner@hershnerhunter.com. Thanks for any help.

If we have a company that is currently a LLC taxed as a S corp but they are changing their structure to be a LLC taxed as a C corp is there anything specific that we need to keep an eye out for in their plan? I assume we need to make an amendment to update the tax structure and the EIN for the plan sponsor. Outside of that is there anything in the plan design that needs to be updated if a tax structure is changed? They don't want to change anything else in their plan such as vesting, eligibility, ect. 

Hello,

I need to switch investments in plan specs to allow the use of an allocated link on a balance forward plan. After making the changes (added Voya as investment and generated accounts for everyone), I am unable to run a profit sharing transaction, and I am not sure where the disconnect might be. Also, how should the brokerage account assets be transferred over to the new record keeper platform accounts within relius to reflect the actuality of the account balances at their new record keeper platform? Any guidance is greatly appreciated

Is a enhanced safe harbor match (6%) still exempt from top heavy and ADP and ACP testing?

We have a profit sharing plan that was terminated effective 7/1/22.

Most participants rolled over by 12/31/22, the remaining participants, exclusive of the owners were paid out between 1/1/23-5/12/23.

After the owners rollover, there is an excess of roughly $2,500 sitting in the plan master account at Schwab and the client is asking what to do with it.

Usually the excess is paid to the TPA as an administrative expense, but they are complaining because they had paid my fee 12/22; this is the only plan I have that the excess probably will not be paid as an administrative expense.

To whom would the excess be reallocated, those that were paid after 12/31/22 or all participants of the plan that were paid out.

Looking for opinions on what to do with DB RMD when marital status is unknown.  IF you were going to force someone into payment, and did not know if the participant was married or not, would you set up with a life annuity form of payment or a QJSA with spouse date of birth the same as participant's?  What if the normal form of payment in the plan, for an unmarried participant, is a 10-year certain and life?

Hi

Looking at a potential takeover for 2022.

Although 5500EZ was filed for 2021, no valuation was done and no SB signed. Forget the AFTAP for a sec.

Looks like some contribution was made, not sure if satisfies MRC.

As I have never seen this before, what are corrective steps to be taken? If anyone has experience with this and can share it, would appreciate it.

Thank you

I have a plan that apparently has decided to terminate.  It is an owner only plan and he has no comp.  The plan's assets are around 50k.  Plan was created in 2018 and has never had to file a 5500-EZ.  Do I need to file one for the final plan year, even though the assets are still under $250k?  

Hello all, hoping for some advice/clarity on this topic.

A few years ago, my spouse and I started self employed activities. After checking with our CPA we opened two solo 401k plans (one for me and another for my spouse). We did not contribute our self-employed income to our solo 401(k). At that time, we were changing our w2 jobs and we had to move out of our 401k funds. We could put 410k funds in trad IRAs but it would block us from backdoor roth conversions. So we used our solo 401k accounts and put our funds there (my spouse's 401k funds went to her solo 401k and my 410k funds went to my solo 401k). 

We continue self-employment activities and recently opened an LLC (taxed as qualified joint venture) for new project. 

I talked with TPA and they said that all self employed activities and LLC income should go under one solo 401k plan. So now we are starting to think about a way to fix this situation and consolidate our solo 401k plans. 

TPA suggested the following course of action:

1) You will select "restatement on the application," You will use your current plan name. However, you can input your new LLC and EIN. On the application you will choose your desired trust name and we will obtain and EIN for that trust name.

2) We will be giving you a new adoption agreement.

3) Do trustee-trustee transfers from Fidelity solo 401 accounts

4) Close Fidelity solo 401 accounts

I have a concern regarding this new solo 401(k) plan that you described above. It says this plan would be linked to the LLC and its EIN. Does it mean that the solo 401k plan will not be protected by "limited liability" and that anyone who may sue LLC may claim the new solo 401k plan funds as well (assuming there is no "piercing the veil")? What would happen in the event that an LLC is disallowed (closed)? Is it possible to create a "general purpose" LLC plan that would allow my spouse and me to contribute earned income from the LLC as well as from self-employed activities and not depend on the LLC?

I am asking this in a half rhetorical manner.  Client had been a single employer for 5500 filing and filed under 001.  Then employer became a related employer due to an acquisition and joined parent's plan as adopting employer.  Initial 001 Form 5500 had a final filing when the assets merged into the parent's plan.  A few years later and due to ownership change, they are no longer related so the current plan is a MEP and the Client is spinning out their portion of the MEP into a stand alone plan (June 1, 2023).

My experience has been that the effective date of the newly established spin-off plan should be June 1, 2023.  The Client would use 002 since 001 had been previously used.  Since this is a spin-off, there are protected benefits and no distributable events (that is not the issue).

The service provider is insisting that the effective date be 1/1/2018 (effective date of the prior parent's plan).  My concern is that once filed, the EBSA is going to ask about all of the missing prior 5500 filings, which could be avoided with a new effective date and I also believe that the 5500 must be marked as "First Year Filing".

Any experience out there with using a prior effective date and what notices get generated?  I vote for the 2023 effective date and 002 for the plan number.  Thanks!

Hi. We had both a 403b and 401k plans. We decided to freeze our 401k plan (no contributions) a few years ago and use the 403b as our sole DC plan. The question is what does this plan freeze do to our vesting (3 year cliff)? I had thought we could just continue with applying our vesting schedule. But I read that the IRS may view a 401k freeze as a "complete discontinuation of contributions" and require full vesting of all participants. I couldn't find anything official, but did find the language below on an IRS website. I also found this: https://www.irs.gov/retirement-plans/no-contributions-to-your-profit-sharing-401-k-plan-for-a-while-complete-discontinuance-of-contributions-and-what-you-need-to-know

Does anyone have experience with this? Any thoughts?

Thanks.

We haven’t made many contributions to our profit-sharing plan. How will this impact our plan termination?

Although employers are not required to contribute every year to a profit-sharing plan, contributions must be recurring and substantial. If the amount is not significant enough to show an intention to continue the plan, the IRS will treat the contributions as discontinued.

A plan is treated as terminated for vesting purposes if the employer completely discontinues contributions. The employees affected by the discontinuance must become 100% vested. Generally, you must vest all affected employees no later than the end of the taxable year following the taxable year in which you made your last substantial contribution (IRC Section 411(d)(3)).

The IRS presumes that an employer has completely discontinued contributions when the employer fails to make substantial contributions for at least 3 years in a 5-year period. If this happens, the burden shifts to the employer to show that a complete discontinuance has not occurred (Announcement 94-101).

This IRS article has me a bit confused on what filing is required:

https://www.irs.gov/retirement-plans/financial-advisors-are-assets-in-your-clients-one-participant-plans-more-than-250000

Quote

$250,000 combined plan assets - Many plan sponsors didn’t know the $250,000 in plan assets is a combined total for all their one-participant plans. Sponsors must file a Form 5500-EZ for each of their one-participant plans when the total assets at the end of the plan year for all one-participant plans they maintain is greater than $250,000. Some plan sponsors incorrectly thought the $250,000 filing requirement was per plan, per participant or per investment.

Let's say a person has two solo 401k plans setup:

1) Sole proprietorship - solo 401k balance of $1,500,000

2) S-Corp - solo 401k balance of $125k.

Both companies have separate EINs and 401k accounts. Since the individual is the sole participant in both plans would they be required to report the smaller account balance on Form 5500-EZ since in aggregate they are over $250k or is it not required since these are two different sponsors and the 2nd account is under the $250k threshold?

If required, would it be wise to file and request late filer relief and pay the fee?