We have a plan that is to merge into a large corporation plan (not our client.)  I see our perhaps only responsibility is to file the final 5500 showing the assets transferred to the acquiring plan.

Other than that, I am going to ask that the acquiring company to produce any corporate resolutions, notices, merger documents, etc.  I believe that would happen without my prompting. I don't think the plan being merged would need to be updated for SECURE acts since it is technically not terminating.  I'm going to indicate that the acquiring company handle all required communications to facilitate the merger.

We don't deal with these types of issues since our clients are primarily small businesses and professional.

Your comments are appreciated.

Tom

What happens to nondeductible contributions at plan termination?  We have a plan sponsor that has negative K-1 income and 2024 is their final plan year (12/31/2024 plan termination date).  They have a minimum required contribution and want to know what happens to this money at time of distribution.  For what it's worth, it's an owner only plan and presumably, the owners (50/50) will be rolling over their funds into an IRA.  I don't have any experience with nondeductible contributions at plan termination so am feeling a bit lost as the TPA.

Assume an unfunded welfare plan has gone above and below the 100-participant threshold over time and is currently under the threshold - so that it previously filed a 5500 but has not in a couple years. The Plan will terminate and pay all benefits this year (and had below 100 participants on 1/1/25). Does it need to file a final 5500 even though it's under the 100-participant threshold? 

Hypothetical situation:

Cash Balance Plan terminated and paid out 2 years ago, final 5500 was filed.  Plan was never filed with the PBGC due to qualifying exemption as a professional service firm.  You are requisitioned to assist with facilitating report and documentation exchange to a potential buyer in an acquisition of the (former) Plan Sponsor as your former colleague who handled this plan is no longer employed. You notice that the plan exceeded 25 active participants and probably should have been covered for the last 3 years.  In their very thorough due-diligence, appears the potential buyer has also noticed. 

What is the potential exposure here?  How would one go about even starting a corrective action. At minimum, I'm thinking comprehensive premium filings and payments for the years coverage is obligatory.  I also see ERISA 4071 states the max per-day penalty, which looks very significant, but also that they would not likely charge that in a case like this.  Would one go so far as to say this is a qualification failure with a need to seek IRS remediation? Any other considerations?

View the full text of this job opportunity

View the full text of this job opportunity

Does anyone have any good resources, articles, webinars, links  etc on how testing is impacted when rank and file workers are handled through a PEO as their employer, but the owners are not? 
I've done some searches here on BenefitsLink but haven't some across anything particularly useful, but please feel free to share links to other related threads too. 

The PEO workers are covered by the plan offered by the PEO, the owners are not, and want the business to sponsor its own plan. 

I am fully aware PEO co-employment is NOT the same as Leased EE status, which is why I'm asking. I've had some sponsors argue that the NHCE are not their employees at all, which doesn't seem right to me, but I am not well versed in PEOs, and I'm sure there are varying flavors, so who knows. 

Think basic 401(k) plan with a safe harbor provision. 
Thanks folks!

View the full text of this job opportunity

I would appreciate any input on helping me think through the deemed Roth catch-up contribution feature with respect to the new mandatory Roth catch-up contribution rules for high earners.

Here is the scenario:

1.      Plan will adopt a deemed Roth catch-up contribution feature.

2.      HPI will be presented with election form no later than 12/1/25, and will be given the opportunity to elect out of the deemed Roth feature.

3.      HPI elects out of deemed Roth feature before first pay date in 2026.

4.      Plan allows deferral election changes at any time.  Employer does not want to limit deferral election changes to only one time per year.

5.      Mid-year 2026, HPI wants to revoke her election opting out of the deemed Roth feature.  In other words, HPI now wants her catch-up contributions be deemed to be Roth catch-up contributions.

Can HPI revoke her opt out election mid-year, thus electing to be subject to the deemed Roth catch-up contribution feature?

• If she can revoke her opt out election mid-year, are there different mid-year revocation deadlines depending on whether the catch-up contribution will be triggered as a result of exceeding the 402(g) limit (which will be known mid-year) vis a vis exceeding the ADP limit (which won’t be known until early 2027)?
• If there are no hard rules under the CODA regulations for this type of mid-year revocation, can sponsor take the approach (as a reasonable interpretation of the regulations) that the mid-year revocation is permissible as long as it is not known at the time of revocation whether a specific deferral limit has been exceeded?

I appreciate any thoughts.  Thanks.

Very simple question...

Husband and wife cpa business.  Both HCEs.  When they make the PS contribution do each of them have to receive the same percentage?  As long as the 415 limit isn't exceeded can we do that?  

Does anyone have thoughts as to whether the decision to change method for determining minimum contributions and/or related application for IRS approval is considered a fiduciary or settlor function? 

We had this question come up several times, but a search of the BL discussion boards did not turn up anything.  Here is the situation.

Different companies in a controlled group sponsor different 401(k) plans.  They intend to satisfy coverage separately.  One of the plans fails coverage even when the not otherwise excludable employees are tested separately.

The question is this:  can they expand the coverage group to bring in otherwise excludible employees of the employer or must they bring in not otherwise excludible employees even if they are from other employers in the group?

For what it's worth, and based on the language of the regs, we are leaning towards the latter approach - that the additional employees must be not otherwise excludible to comply with the description of the two testing groups in the regs.

I would appreciate any thoughts and insights!

Hi everyone,

Came across an interesting one!  Participant in a tax exempt 457(f) plan died and a portion of the benefit was previously included in the participant's income (i.e. the participant paid taxes for a portion of the benefit which vested in a prior year).  Trustee says that the total amount distributed to the beneficiary, including the previously taxed amount, will be reported in Box 3 of 1099-Misc.  I am familiar with the timing rules for reporting death benefits in the w-2 and 1099-Misc, and have thoroughly reviewed the 1099-Misc instructions. 

My questions are:

1. Whether the trustee should be reporting the total distribution in Box 3 of the 1099-Misc, or just the taxable portion?
2. If the trustee insists on reporting the total distribution (both taxable and non-taxable portion) in Box 3, how should the beneficiary avoid double taxation on the portion that was previously taxed?  Should we provide some kind of statement to the beneficiary that includes the portion of the distribution that was previously taxed? 
3. Bonus question- any thoughts on how the beneficiary could have the previously taxed portion excluded from income when the beneficiary files their tax return? 

Thanks in advance!

I have never seen this happen.  One of our participants had a contentious divorce.  Defendant spouse is filing and appeal of the court order finalizing the divorce.  Spouse is claiming that she needs to remain covered under our medical plan until her appeal is heard.  Participant is objecting.  Has anyone ever had this happen before?  I am purposely omitting the state involved and recognize that might make it impossible to answer but I figure it is worth a try.

I have a client whose previous TPA reported a late deposit on their 2023 Form 5500.

The deposit was for a payroll dated 1/4/2023.  The client provided the detail to the TPA on 1/11/2023 - the funds were not actually deposited until 1/17/2023.

The TPA - when preparing the Form 5500 reported this as a late deposit.

Should they have?

I know it is past the Small plan Safe Harbor 7 business day rule.  But the rule I thought needed be followed about "late deposits you would place on a 5500" is the "soon as administratively feasible, but no later than the 15th business day of the next month".   Now...I know if there was an audit the IRS is going to only consider the "soon as administratively feasible" part of this.  But...should this have been reported as a late deposit on Form 5500 (question 10a).  The missed earnings was $1.31.

Just want to make sure i am understanding the reporting requirements correctly.  I would have said no.

View the full text of this job opportunity

If a plan uses the W-2 definition of compensation, then it is pretty clear that tips and overtime are included in Box 1 of W-2 and thus the exclusion of overtime and tips will not affect comp.  But what about if the definition of comp is based income for purposes of withhdoling?  If the IRS clarifies that qualifying tips and overtime are not subject to withholding, won't that create a problem?  I am hearing that the IRS may do just that for 2026. I haven't seen anything written about this so I am very curious...

This is a legacy plan with a set of long time partners.

One partner has an LLC investment that pays out dividends, but the K-1 has shown a negative balance for two years now, with the most recent year even more negative. Not sure how to treat this for calculation of total assets in the plan?

Does anyone have a guide on how to download the correct file to be able to import year end data into the Allocated Link? Am Funds Recordkeeper Direct changed their reporting system and cannot provide us anything else. The .dat file no longer works. They advised us to contact Relius. Thought I'd check here first.

View the full text of this job opportunity