Hi,

There is an existing DB Plan with the only participant being the owner. The Corp then hires an employee and wants to join a PEO. How dies this effect the existing DB Plan? Is the new employee really an employee of the Corp? Thank you. 

Good afternoon,

CPA here auditing a plan and hoping to run by an error encountered in the first-ever audit of a 401(k) plan. Facts are as follows:

• From inception 1/1/2019 through 12/31/20, the effective plan document had a 1 year service requirement with monthly entry and an autoenrollment feature. During this period, the plan operated as if the eligibility was immediate upon hire. 
• Effective 1/1/21, the plan was restated to change the eligibility/entry date provisions to immediate and removed the autoenrollment feature.

My question is: Can the plan sponsor correct the error related to the 2019 and 2020 plan years through the SCP under Revenue Procedure 2021-30 by retroactively amending the plan's service and entry date requirements to immediate to conform to how the plan operated during 2019 and 2020? 

Based on my reading if the Rev Proc, I would think the answer is yes as the amendment resulted in "an increase of a benefit, right, or feature", but am wondering if I am missing something?

Thank you!

I apologize in advance if the question is not formulated clear enough.  I am trying to establish the framework to analyze the coordination of multiple employers, so the high level summary and IRC sites/links will be appreciated as well as reference to educational materials not in violation of proprietary information policies.

Let's assume we have one person who works for an organization sponsoring 403(b) plan making in excess of $330,000 (just to avoid the math) as a W-2 employee. The person is under of 50. The same person also owns a single member LLC taxed as a sole-proprietorship that sponsors a "solo 401(k)" plan.  Let's assume there is no CB/DB plan in a picture for time being.

Scenario 1 - The organization is a non-profit hospital.  Then the 403(b) plan is deemed to be controlled by that individual.  The individual also has his own medical practice (no common law employees). Therefore, the maximum benefit will be $22,500 in 403(b) deferral and $43,500 in PS allocation in solo401(k).  Both 403(b) and solo 401(k) are integrated for purposes of 415.  Do you agree?

Scenario 2 - everything is the same as above but the business is NOT a medical practice.  Let's say it is a medical technician type of activity.  Does the answer change?

Scenario 3 - the organization is NOT a non-profit hospital but rather the educational institution (University of State for example).  Does the answer change?

I am looking to understand the general framework when the non-profit 403(b) MUST be aggregated with the individual 401(k) and what are the exception to that exception of "separate employers" rule.  I think there are some exceptions to exception and that is where it gets very muddy for me.  Help and education are appreciated as always.

Medical practice with SH 401(k) lists two groups of HCEs - one for the doctor and another for non-physician HCEs (doctor's wife).  A third group is for all other continuing employees and a fourth group for terminated employees.

Doctor's adult daughter now working for the practice and became eligible for the plan in 2022.  Is it possible amend the plan retroactively to put the daughter in a separate group from the doctor's wife?  Giving the daughter the same percentage allocation as the wife is killing my non-discrim test.

Thanks for any help!

For the Roth catchup provision for off calendar plans,  is the $145,000 look back comp based on plan year or calendar year? Also since this is starting in tax year 2024, does this provision start earlier for off calendars.   For example, a 4/1/2023-3/31/2024, would the Roth requirement start with contributions made in calendar year 2024?  

I have a dental practice (PA, in the State of New Jersey) that sponsors three profit sharing plans, each with individual accounts. One for each dentist (Dentist #1 profit sharing plan; Dentist #2 profit sharing plan).  The third plan is Plan #3 is for the employees of the PA.

Keeping in mind, the plans are all sponsored by XYZ, DDS, PA.

One of the dentists (Dentist #1) had decided to invest a portion of his account in a limited partnership and I've been on his case to see the original paperwork to determine if the registration was done correctly. 

I have a copy of the K-1, apparently the account is registered under the name of the Sponsor, but there is nothing n the paperwork that mentions this as an investment of "Dentist #1 Profit Sharing Plan".

They way this account is registered, this is NOT a plan investment, the Entity should be "Dentist #1 Profit Sharing Plan and I think must be re-registered correctly.

OMG some clients just don't get it.    This guy is generous.  He wants to match everyone's deferral dollar for dollar.  But I don't think it will work.  

He only earns $67,000.  He deferred $27,000 so he wants a match for himself equal to that $27,000.  That doesn't work... does it?  I've got so many numbers bouncing around in my head.  What is the max that he can get?  Flat out 25% of 67,000 or $16,750?  Total deposit for him would be $43,750?  Is there any way to get him what he wants?

Thansk

The investment adviser of one of the 401k's that we manager would like to use his solo 401k retirement funds to invest in a startup. If he has no existing connections with the start up and no other investments in it is this an allowed transaction with their 401k funds or would this be considered prohibited? 

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)

---------------------------------------------

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?

-----------------------------------

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?