LLC taxes as an S Corp.   Taxes have been filed by March 15th.  I do not know yet if the extension has been filed or not.  Is there a creative approach to install the Plan retro to 1/1/2022?

A plan came to our attention that has been making the same discretionary matching contributions for the past three years at least. The first formula is 100% of the first 3%, but they also pay 100% of the first 6% if a participant is employed longer than 10 years. I've never seen this before. I thought the maximum service requirement for an employer allocation is 1000 hours. Would they need to pass ACP testing on each formula separately? 

Hi

Looking into a proposal, all plans are calendar.

DC Plan already exists. Provisions are 401k+NESH+PS

Entry is first day of the month following completion 1 YOS

Compensation is defined as from DOP

CB plan will have 1 year wait, dual entry and full compensation

For all purposes, all top heavy.

DC plan top heavy provision states last day rule. PS states last day rule+1000 hours

EE data for DC plan:

• DOH 3/15/2021
• DOP 4/1/2022
• DOT 5/1/2022
• 2022 w-2 $12,000
• Salary from 4/1/2022 to 5/1/2022 - $3,000

From above, never eligible to enter CB plan so top heavy is only 3% and under DC plan only

Gateway is 7.5% (3% NESH+4.5% PS)

For gateway, $3,000 salary is used and thus $225.

Top heavy is based on full salary i.e. $12,000*3% = $360 however, plan has last day rule.

What amount is supposed to be allocated?

Thank you

Need some clarity here.  Dealing with a typical A-org ASG for a professional service organization.  The partners of an accounting firm (LLP) are each individual PCs.  The PCs receive K-1 share of profits, and then pay W-2 salary to the owner of the PC.  The individual PCs have each adopted the 401(k) plan maintained by the LLP.

Suppose Jane Smith PC owns 4% of LLP, and Jane Smith owns 100% of Jane Smith PC.  Through 318 attribution, Jane Smith is deemed to own 4% of LLP, but she also owns 100% of Jane Smith PC which is a participating employer in the 401(k) plan.  Is Jane Smith a 5% owner for purposes of determining HCE status?  The plan uses top paid group and she falls below the top 20% in salary.

We have a difference of opinion here.  Is there any authoritative guidance on the correct analysis?

Thanks.

          I have a client composed of husband and wife doctors and 4 employees. The assets in their defined benefit plan as of 1/1/22 were about $5,260,000. Due to investment losses, the 12/31/22 balance dropped to about $4,500,000. In 2021, there was a surplus in the plan of about $235,000. In order to bring the surplus down, no contribution was made into the plan for Plan Year 2021. Given that the plan is going to be terminated early in 2025, we were hoping that this would lower the surplus. Due to the large investment losses in 2022, not only did the surplus disappear, but, a minimum contribution of almost $100,000 was generated. At this point, the medical practice is not generating very much income and coming up with the $100,000 for the contribution is a problem. To avoid having a potentially large contribution in 2023, the plan is being frozen before anyone accrues a benefit for 2023.   My question is, what are their alternatives for getting the money to make the required contribution of almost $100,000?

Potential alternatives:

1. Have the doctors personally lend the money to the PA and then have the PA make the contribution. What are the tax consequences if the PA can't pay the loan to them back? Are     there other tax concerns to be aware of?

2. Amend the plan to allow for in-service distributions. This would seem like there could be double taxation. Again, what other tax concerns could crop up?

3. What if the contribution is not made by 9/15? Aside from paying the 10% penalty, is there any advantage to this?

        I would appreciate any advice on this.

Apologize in advance for the rudimentary questions, have already tried searching previous threads for my answers. 

In my limited understanding when doing new comp, my goal is to maximize the HCE's total contributions. The remaining gateway to eligible NHCE is the lesser of 5% of comp or 1/3 of the highest allocation percentage of an HCE.

Upon 401(a)(b) failure, is it in my best interest to allocate more to the elder NHCE's? If so is there a general formula to achieve the correct amount?  In my experience the 401(a)(b) seems really finicky and feels almost arbitrary at times. Once again I'm sorry if this isn't the correct place to ask, my previous resources weren't helpful for me.

I'm sure this is easy but want to confirm anyway -

5500-SF filer - pooled fund plan - termed 10/31/2022.  Participants were notified and paid out/rolled over in late December.  Plan has a very small balance at the end of 2022 due to residual earnings that will be disbursed to participants in early 2023. 

As far as Part VII; question 13 -  13a is "yes" and "0.00" reverted - I assume that for 13b "Were all the plan assets distributed..."  the answer is "no" because the final residual payouts have not yet been completed?  It strikes me that answering "no" might create issues although I can't for sure say why I think that.  Reading to much into it I suppose - i.e. you termed the plan but didn't pay out yet?  why is that?  

Of course that question will be marked "yes" on the final 2023 filing.

Suppose a Section 125 plan provides only FSA and DCAP. They also have a "cash in lieu" option where anyone eligible for the company group health insurance can either have a certain amount contributed to the 125 plan to be used for benefits, or they can elect to receive it in cash, taxable in their normal paychecks.

The COBRA provisions, if applicable, are "administered" by a third party. Is it allowable for the employer to attach to the SPD a written COBRA explanation provided by the third party? Or must it be in the SPD as part of a self-contained single document?

I don't, EVER, have anything whatsoever to do with COBRA, so I essentially know nothing about how COBRA information must be presented.

Employer is a retirement plan client of ours, so I'm trying to assist them somewhat with questions, but this is out of my bailiwick. I don't think the the third party "administrator" is apparently being very helpful, or necessarily even doing documents - not like a typical TPA in the retirement plan world. Their 125 document provider from way back is long gone.

Thanks for any thoughts.

P.S. - while we are at it, same question for a governmental plan (state municipality). Although not subject to ERISA, still subject to COBRA, so other than the "SPD" not really being an ERISA SPD, but rather a "Summary of Plan Provisions" or whatever you want to call it, COBRA information still required. But maybe more flexibility on how it is communicated?

Can a plan impose a service condition that is longer than 12 months for receive safe harbor matching contributions?  

Hi

Another new one for me.

PBGC covered plan, terminated 12/31/2022

500 is not yet done/filed with PBGC.

Sponsor changed their mind, wants to continue.

Can a simple notice to the participants stating "we decided not to terminate the plan" would be sufficient?

I will amend the plan later to unfreeze the benefits.

When terminated all became 100% vested (plan was only 3 years old and all would have been only 40% vested if not terminated). I cannot find any written document of making everyone 40% again with the reversal of termination. Anyone knows if possible?

Thank you

Hello all,

This is a first for me. The plan terminated and assets have been liquidated from record keeper. The plan failed ADP/ACP testing with two participants requiring employer match funds to be returned to the plan. My understanding is once the two participants transfer the employer match funds back into the forfeiture account (via rollover from participant's IRA), those funds will get evenly distributed amongst participants who had balances as of the date of the plan termination. Is this correct?

Alternatively, what would happen if the plan decides to do nothing? What penalties will incur? The employer funds only total $900 and if distributed amongst participants, the participants would receive very low amounts. 

Any insight would be helpful!

Last year, someone was generous enough to post the 12/31/2021  actuarial equivalents for a J/S and an individual life annuity for an account balance at age 67.  I was wondering if anyone would do the same for 12/31/2022?

The central issue is whether or not a family member can be excluded entirely from the plan (0 deferral, 0 SH 0 PS)?

An ESOP has a standard distribution policy, 5-year wait, payment thereafter in 5 equal installments (no acceleration below $5K, no segregation of stock accounts, fees fully paid by the Sponsor).  Last year the installments were incorrectly counted and participants who should have received their 4th installment (i.e. 50% of the available balance), their payment was calculated based upon a 3rd installment and received only 33% of the available balance.  While this may be an operational failure for not following the terms of the document, is there a correction to be made?  If future company stock gains are neutral or positive, I don't see that the participants were disadvantaged in any way that would produce a basis for a correction. 

What about a participant who was due their 5th installment(100%) but only received 50% of their available balance and now will need an additional distribution?  Are they harmed vs a comparison to the broader stock indexes? 

How should future installment amounts be calculated, does the missed amount all get made-up in the next payment, or are they calculated normally based on the remaining periods?

We may or may not take over the administration of this small defined benefit pension plan.

I know this is somewhat common but do not know the solution. What happens when a company adopts and funds a non-model SEP on December 1, 2022 for the 2022 year and adopts a qualified Defined Benefit Pension Plan on January 15, 2023 effective for the 2022 year?

Does this work like if a SIMPLE IRA were adopted in the same year as a qualified plan. I think in that case there is an exclusive plan rule where the SIMPLE would be invalidated and distributed under VCP.

A non-model SEP and qualified plan cannot be maintained at the same time. Is the SEP or the qualified pension plan invalidated?

Thanks.

Hi

Here is a new one never dealt with before.

I found out that the client (over age 50) has an excess situation and not sure how to tackle it

The plan has the following features: 401k+NESH (3% mandatory)+PS.

The plan is also used as a QRP - qualified replacement plan

During 2022, $136,000 was deposited with the following breakdown

• April 2022 - $6,500 - from biz - 2021 catch up
• July1 2022 - $58,000 - from QRP - 2021 NESH+PS
• July2 2022 - $6,500 - from biz - 2022 catch up
• November 2022 - $65,000 - from biz - towards 2022 NESH+PS

The July2 and November deposits created a $4,000 excess deposit during 2022 i.e. over the 415(c) limit. (71,500-67,500 (max 2022 415(c) limit) = 4,000

How is this to be corrected?

Any suggestion/pointing to the right direction is appreciated.

Thank you

Plan defines compensation as 3401(a) wages.  Participant receives payment under a state paid leave law.  Payment is actually made by the insurance company, but the income will be reported to employee on a W-2.   It is my understanding that this would generally count as compensation under the plan even if paid by the insurance company.  Does that sound correct?

Plan does contain 414(s) exclusions, but I don't see that a paid leave program is a fringe or welfare benefit.  Does that sound correct?

Thanks for any guidance.

When are 457(f) contributions actually payable? I know it depends on the document, but under the regulations, when can a 457(f) plan allow for distributions? Is it permissible to distribute  upon full vesting, if the participant is still employed? I don't see anything in the regulations that allow actively employed participants to withdraw vested amounts, other than for unforeseeable emergencies, taxes, or attainment of age normal retirement age, or at a stated event. 

Would becoming fully vested be considered a "Stated Event"?

I have an expansion of the work force as of January 1.  These newly covered employees were previously excludables. Is it reasonable to disregard them with regard to the prior benefit structure under 401(a)(26) since they were not eligible to have accrued anything prior to 1/1. The cash balance book I have discusses this issue with regard to new plans; the same issue is involved here. Hard to imagine the force of 401(a)(26) is somehow to require the granting of past service credits upon entry to satisfy the prior benefit structure test. Short on time to research this in depth so any existing knowledge or thoughts would be appreciated.

A collective bargaining agreement calls for a regular hourly contribution to a multiemployer profit-sharing plan. A contributing Employer is having difficulty with employee retention and would like to negotiate a lump-sum payment for each employee. This mandatory payment would be made 90-180 days after the new CBA is signed and only for those actively employed on that date.  Are there any issues with this payment?

Thanks in advance.