We filed for EFAST credentials back in 2010 for a plan with two Trustees and several employees, credentials under the name of one of the Trustees, who has retired, and since then remain Trustee plus one new partner are the trustees.

There are now 3 plans sponsored by the Employer, one for each Trustee, one for the Employees.  

I believe the credentials go by the Employer/Plan Sponsor.

If so, I assume we do not need to refile for EFAST credentials.

Deleted.

Owner-only plan value exceeds $250,000 for the first time as of 12/31/2022.  We were asked to do the 5500 in late September.  The plan sponsor ( a sole proprietor) had his 1040 extended to 10-16-2023.  So we marked the 5500-EZ "Automatic Extension."    There was no 5558 filed before July 31, 2023.

It seems dubious the IRS would just trust that this 5500 is properly extended since there is no 5558 filed and I'd expect a notice.  If there is any question about this, the sponsor could just file under delinquent EZ procedure and pay $500 before the IRS notifies.  We've never filed a 5500 under the automatic extension option. 

I'm probably concerned for no reason right?

Starting a general discussion rather than a specific question.... As we know returns during 2022 were bad, 2023 is still iffy but not exactly great either....Which means that PBGC premiums for 2024 using a lookback (1/1/2023 for BOY vals and 12/31/2023 for EOY vals) might be a quite unpleasant surprise especially for plans that started 3-4 years ago and are just hitting the "vested" point.  So, I am curious what others think about the "opting out of look back":

1) Is it realistic for PBGC to approve?

2) Does the 60 days advance application to PBGC mean October 31st deadline?

3) I realize that for EOY val date it is not practical (valuation results are not available until 2.5 months AFTER the premium is due) however:

1. I believe PBGC filing can be done on an "estimated" basis with the subsequent "true-up".  Yes, it is an additional work but might be worth it?  Or not?
2. Is it likely to get approved by the PBGC?
3. Has anyone ever done something like this?
4. Are there any other considerations or concerns?

TIA.

Hi

May be taking over a DB plan where prior TPA is most uncooperative.

Client does not have any prior PBGC filings and got a premium payment that seems to be high, according to him.

He does not remember what happened in the past 2 years.

Like EFAST for 5500SF, is there a way to find a list of prior PBGC filings?

Thanks

I would be most appreciative if anyone is willing to share some information with me. I am aware of two main staffing structures for TPA firms:

1. One or more employees are assigned to a block of plans. They handle everything for that plan soup-to-nuts. This is the “Relationship Manager” approach.
2. Segregated departments (i.e., conversions, compliance, distributions, etc.).

I believe the former is more prevalent for TPA-only businesses, though I know some TPAs that use the second method. I am more interested in the small to mid-size TPAs that also handle internal daily recordkeeping (say on the Relius, SRT, or Datair daily platform). What structure are you using - or is it a combination of the above? If I am a new client starting or moving my plan, and you will be handling TPA and recordkeeping, who am I dealing with for implementation and ongoing communications over the entire year?

I appreciate any help you can provide.

A governmental 457(b) plan that allows employees to designate their normal retirement age wants to establish normal retirement ages of 55 for "special risk" employees and 65 for all others.  Normal retirement age under the plan is meaningful only for purposes of the special 457(b) catch-up.  It does not play a role in vesting, as all contributions are 100% immediately vested; waiver of any allocation conditions, as there aren't any; or as a distribution trigger.

What limitations, if any, apply to the employer's ability to make this change?  For example, would its application be restricted to new participants only?

The CPI-U for September 2023 was published with a value of 307.789. Based on Tom Poje's spreadsheet, the dollar limits for 2024 are projected to be:

Almost all increased (NOT Official yet, of course):

Deferral limit: $23,000 (up from $22,500)

Catchup: $7,500 (unchanged)

Compensation Limit: $345,000 (up from $330,000)

Annual Addition Limit: $69,000 (up from $66,000)

DB Limit: $275,000 (up from $265,000)

HCE: $155,000 (up from $150,000)

Key Employee: $220,000 (up from $215,000)

Just for reference, the unrounded figures are:

Catchup: $7,793.00

Deferral limit: $23,379

Compensation Limit: $345,220

Annual Addition Limit: $69,044

DB Limit: $276,176

HCE: $155,984

Key Employee: $224,393

Terminating Plan.  Participant who has been in pay status for about 25 years, who was divorced sometime after his benefits commenced in the form of a QJSA, and who never informed the Plan that he was divorced, is now complaining about benefit information received from the annuity provider that his former spouse is his joint annuitant as he does not wish his former spouse to receive anything.  The divorce occurred after benefits commenced and the participant never notified the plan administrator that he was divorced.  Based on current information, the divorce decree did not specifically address pension benefits and no QDRO was entered.  The plan does not provide for substitution of a joint annuitant after benefits have commenced.

I am leaning towards responding to the participant that his former spouse remains his joint annuitant unless he can provide evidence of a court order that his spouse is not entitled to survivor benefits if he dies before his former spouse, or at least the date and court in which the divorce was granted if there is any obligation for the plan administrator to search for an order.  I cannot imagine that such an order would be granted, but you never know. 

Thanks for any helpful insight.

OK, this one is on me - I started a new 403b plan for a NFP that was winding down their 401k, and I accidentally used plan number 001 in my document.  Of course, the 401k plan is using that number, so I should have used 002.  Therefore, 002 was not extended for the 12/31/22 5500-SF.  Whoopsie.

Isn't there a thing where you can use the corporate extension instead of the 5558?  And doesn't an NFP have an initial filing date of 5/15, which then gets extended until at least 10/15?  This sounds familiar.  Is it available for a NFP?

Thanks.

I have a cross-tested profit sharing plan where the client is considering adding a Safe Harbor 401(k) feature for 2024.  Will auto enrollment features be required?

I may have missed it, but has the 417(e) applicable mortality table for 2024 lump sum distributions been published?  Thanks!

We have a client who wants to add a discretionary match to their existing 401(k) plan. They want to make the match on a payroll basis and then do a true up at the end of the year. Do they have to adopt the amendment before the first payroll with the match or can they wait to the end of the year?

I have a question regarding 2 corporations owned by the same person.  Company A is 100% owned by Owner A and sponsors a 401k/PS plan.  Owner A is acquiring a new company B with different employees in the same industry.  Company B does not currently sponsor a pension plan since it is a new company. Is Company B permitted to establish a separate 401k/PS for the benefit of its employees, or must these employees participate in Company A's plan?  Am I correct to assume NDT will include employees from both company's?  Company A has 60 employees and Company B will have 40.  I'm wondering if there is a plan design available to get around the large plan filing requirement.

Hello - a client has a new plan with a short initial plan year in 2022. (200 eligible; 20 participant account balances).  This plan can use the seven months or less rule for the the audit for the short plan year to be deferred until the following plan year.   

Since there are only 20 participant account balances (restaurant group), does this mean the plan does not have to have an audit for 2022 or 2023? 

Thank you for your thoughts and any guidance you may have - not able to locate anything addressing this situation.

A plan is sponsored by a 1-man LLC who's being taxed as a partnership, though the owner receives both SE income and W-2 wages (I've seen a thread on these boards regarding both types of comp being paid from such an LLC, and the consensus seems to have been that, though rare, it is possible.)  Plan Comp is defined as 415 safe harbor comp.  The TPA is asserting that Schedule E income (for the K-1 income he receives) should be included when performing the val, however, we weren't able to find anything in the regs specifically allowing its inclusion - does anyone know if this type of income can be included under the 415 safe harbor definition?  If possible, a cite would be most appreciated.  BTW, the K-1s did not show any Schedule E amounts in boxes 14, 4a, or 4b (they were all zero), and no Schedule C was required to be filed.  Thanks in advance for any assistance offered.

I'm not sure if this is the correct message board but here goes:

Company A buys Company B and each have their own 401k plan.  All Company B employees now participate in Company A;s 401k plan.  No new entrants or contributions to Company B's plan.  They will terminate company B's 401k plan, but have not done so yet.  

Can Company B employees, now working for Company A, take distributions from B's 401k Plan?  Have they had a distributable event?  

Thank you

Hi

Question for 401 gurus.

Non-HCE participant deferred $8,000 on 2022 w-2 (1,000 per paycheck) and terminated after 8 paychecks.

Just found out that they deposited another $1,000 without a paycheck i.e. $9,000 was deposited during 2022.

As only $8,000 was on the w-2, how is this corrected?

Earnings are pennies as all invested in cash.

Thanks

Plan makes a corrective allocation under EPCRS for a missed deferral and missed match in the form of a QNEC to the plan, plus attributable earnings.  The RK is partly responsible for the error and offers to cover the cost of earnings on the QNECs involved.  

Question - Can the RK fund the earnings directly to the Plan or should the RK reimburse the Plan Sponsor/Employer for the earnings amount by other means outside the Plan?  Clearly, a corrective allocation must come from employer non-elective contributions (including forfeiture account if the plan allows "use to reduce" method) but unclear part is whether the earnings attributable to the corrective allocation should also be required to be funded from ONLY employer non-elective contributions (including forfeitures).  Any help is greatly appreciated. Thank you!

From Rev.  Proc. 2021-30, page 31/140:

(4) Principles regarding corrective allocations and corrective distributions.  The following principles apply where an appropriate correction method includes the use of corrective allocations or corrective distributions:  (a) Corrective allocations under a defined contribution plan should be based upon the terms of the plan and other applicable information at the time of the failure (including the compensation that would have been used under the plan for the period with respect to which a corrective allocation is being made) and should be adjusted for Earnings and forfeitures that would have been allocated to the participant's account if the failure had not occurred.  However, a corrective allocation is not required to be adjusted for losses.  Accordingly, corrective allocations must include gains and may be adjusted for losses.  For additional information, see Appendix B, section 3, Earnings Adjustment Methods and Examples.  (b) A corrective allocation to a participant's account because of a failure to make a required allocation in a prior limitation year is not considered an annual addition with respect to the participant for the limitation year in which the correction is made, but is considered an annual addition for the limitation year to which the corrective allocation relates.  However, the normal rules of § 404, regarding deductions, apply.  (c) Corrective allocations should come only from employer nonelective contributions (including forfeitures if the plan permits their use to reduce employer contributions).  For purpose of correcting a failed ADP, actual contribution percentage (“ACP”), or multiple use test, any amounts used to fund qualified nonelective contributions (“QNECs”) must satisfy the definition of QNEC in §1.401(k)-6.

 Page 26/140:

.04 Earnings.  The term “Earnings” refers to the adjustment of a principal amount to reflect subsequent investment gains and losses, unless otherwise provided in a specific section of this revenue procedure.

So some advise eliminating a waiting period or making it very short for part-time deferral-only employees.  In the past if the plan was top-heavy they had to get 3%.  90% of our plans are top-heavy.  And I know SECURE 2.0 eliminates top-heavy for those otherwise excludable.  

So if a plan allows all participants entry into the plan say after 12-month wait and entry date, those with a Year of Service (1000 hours) will get a full employer contribution and those without will not - they can defer only. This will satisfy the LTPT requirement.  There is no testing on the deferral-only group, and no top-heavy required contribution.  This seems pretty easy except it's more enrollment for a plan sponsor.  I believe our clients generally will still want the 12-month waiting period.

Does this sound reasonable?

Also, if it is a DC/DB combo, are there any consequences?  I would think not.