Ok, here is a new one I have never seen from the IRS

For year end: 12/31/2020

Letter dated 2/13/2023

Re: 5500/8955 filing.

Letter states that the 5500 must be filed by 10/15/2021 (you are not reading wrong)

The 5500-EZ was filed on 10/7/2021 with an ACK

What am I missing here?

Thanks

The 5500EZ can be used if it(the plan) is for only a owner and spouse or only partners and spouses..It seems this extends to the bonding coverage exempton as well. If we swapped partners for members of an LLC would this work or are we stuck with a pure partnership concept?

I am not knowledgeable with regards to the investment question I was asked.  The client wants to invest in some type fund which has a US investment side  and an offshore investment side.   The fund recommended offshore due to tax reasons... UBTI.  No UBTI if it is foreign? 

Anyone follow me?  I'll try and get more info. 

https://benefitslink.com/boards/index.php?/topic/28629-offshore-investments/&do=findComment&comment=114865

Hello, I typically do the annual match calculation and lump sum contribution for my company in late January in the year following the plan year, but the company has a lot of expenditures in Q1.  They have asked if the match could be paid later in the year like, for example June 30.  I offered April 1, but they declined that date as it's too close to Q1.  They countered with April 30 or later, like June 30.  I believe a match paid after April 15 would mess up compliance testing, am I right?  Especially 415 testing, which is an issue for my company as we do after-tax voluntary contributions/Roth conversions.  I will offer to do quarterly matches with a last day of the quarter requirement.  Right now we have a last day of the year rule.  By going quarterly it will increase costs, but spread out the payments like they want.  What does the community think?  Is a match payment after April 15 not a feasible idea?  Besides 415 testing, what other tests are impacted so I can defend my position?  Thank you!

I realize it won't be an issue right away - but does anyone know if the long term part-time employees contributing will need to be counted as participants w/balances for 5500/5500-SF purposes?  I know they can be excluded from testing, but haven't been able to find information as far as the 5500 return counts. 

Thanks in advance!

Thoughts? 

"After considering the public comments, the Agencies decided to adopt the proposed counting method change for defined contribution individual account plans by adding a new line item on both the Form 5500 and Form 5500-SF for defined contribution pension plans to report participants with account balances at the beginning of the plan year (there already is a line item for reporting the number of participants with account balances at the end of the plan year). Instead of using all those eligible to participate, defined contribution plan filers will look at the number of participants/beneficiaries with account balances as of the beginning of the plan year (the first plan year would use an end- of- year measure) when determining if they are eligible for small plan reporting options, e.g., the Form 5500-SF. Conforming changes are also made to the short plan year filings and the “80-120” Participant Rule instructions to reflect this new counting method. See Appendix C for details on changes to forms and instructions related to this audit related participant counting method change."

Plan has assets with one of the big 401k vendors as well as outside pooled managed funds.  Owner participant (who was already receiving RMDs, born in 1939) passes away.  Past RMDs have been calculated by the TPA on the entire balance and distributed from the pooled managed funds.  Spouse is the beneficiary and plans to roll the decedent's balance out of the plan to an IRA.   Vendor wants to process RMD prior to rollover.  Anyone ever been able to convince the vendor that the beneficiary can roll 100% of the account that they hold and the RMD will be made from the outside plan assets?  I would think that if the Trustee of the plan directed them to pay out 100% of the deceased participant's account to the beneficiary they would have to do that.  It will probably end up that the vendor will take the RMD anyway for their portion and then the TPA will calculate and have the Trustee pay the balance of the RMD from the pooled funds but it would be nice if the beneficiary only had to deal with one total RMD payout.   

DB Plan owner only . Plan effective 1 1 2014. Owner was working since 2003. Frozen after 12 31 16 year (3/1/2017 frozen) Avg salary 263,000. Terminating Plan now and overfunded. Plan provides to allocate excess assets to the participant up to the 415 limit. Is the 415 Accrued  Benefit $5,250 (as the 415 benefit at 2016 was 17,500 and three years of participation at the freeze date of 3/1/2017)? Or is possibly higher due to increases? Thank you very much for any insights.

I have seen references to HRA funding that recite that a HRA must be: "funded solely through employer contributions or mandatory employee contributions."   

But the vast majority of commentary and even the IRS' own publications say that HRA funding is solely through employer funds.

Are there any instances where one would provide for mandatory employee funding in a HRA Plan? Would the tax treatment of employee funds be the same as employer funds? Are those employee funds at risk? Capable of being withdrawn under certain circumstances?

Any guidance on this category of funding would be appreciated greatly. Thank you!

Participant has been taking distributions for a few year based on the pre-2022 IRS Table.

What does he do for 2022 and forward?

Generally, if a plan disaggregates otherwise excludable employees to satisfy the coverage requirements of IRC §410(b) its my understating it must do the same for nondiscrimination testing.  My question, if the plan does NOT disaggregate for coverage CAN it be disaggregated for nondiscrimination testing i.e., ADP/ACP.

In other words 410(b) would not be disag'd but ADP would be...?

It's been a long time since I've worked on a non-safe harbor 401(k) plan, so a refamiliarization is in order.  A plan that has been using current year testing for >5 years fails both the ADP and ACP tests for 2022 and switching to the prior year method is being considered.  The plan was amended in mid-2022 to eliminate the eligibility requirements, effectively permitting about 20% more employees to become participants when compared to the prior year.  Is it safe to presume that this would not be considered a plan coverage change pursuant to Treas. Reg. 1.401(k)-2(c)(4) and that it would be OK to change to the prior year testing method and just use the actual NHCE ADP/ACP results from 2021?

Also, my understanding is that earnings for any refunds made by 3/15/23 should only be calculated through 12/31/22 using any reasonable method - is this correct?  Thanks in advance for all assistance. 

Have a client plan, 5 life case, Deferrals with basic Safe Harbor Match, so no testing, there are no automatic contributions, no profit sharing contributions.

Employee made Roth deferrals and did not exceed the 402(g) limit, when the client uploaded the final payroll deferrals for 12/31/2022 instead of entering $4,500 they entered $5,500 for this employee therefore submitting $1,000 more then they should have. W2 box 12 reflects the correct Roth deferral for the year.

From what I have read about using "mistake of fact" the $1,000 would be considered a typographical error and therefore the money can be returned to the Employer

Was just looking to see if anyone has any additional thoughts or has used mistake of fact for return of erroneous contributions 

Michele 

I have a plan sponsor that bought a small company that participated in a multiple employer plan, and whose 401(k) plan is going to be accepting a spin/off transfer of assets/liabilities from a multiple-employer plan that offered QBADs.

Notice 20-68 says that a plan that issued a QBAD must accept repayment of one. However, it doesn't address what happens if the participant is no longer a participant in the same "plan" that issued the QBAD (such as when a plan spin-off or transfer of assets and liabilities occurs after the QBAD is taken that causes the participant to no longer be part of the original plan that distributed it).  When the account is spun off/transferred to another plan, does the requirement to accept the repayment move with the transferred assets?    

My thoughts are as follows: it appears that the right to take a QBAD is a protected benefit under 411(d)(6) with respect to the assets transferred (and it is not excepted from 411(d)(6) anti-cutback rules like hardship withdrawals are).  Therefore my client's plan will need to add QBADs, and will need to accept repayment of QBADs (even if they were taken from the multiple employer plan before the spin-off/transfer). 

Do you agree? Or, do you think repayment of QBADs made to the prior plan would not need to be accepted by the plan accepting the spin-off/transfer (since the prior multiple employer plan still exists, the person who received the QBAD is no longer a participant in it and that plan wouldn't accept a rollover from a former participant)?  

For purposes of determining ownership, are ESOP shares counted? We have a disagreement here...

Section 316 of Secure 2.0 seems to allow the adoption of discretionary amendments improving accrued benefits up until the tax filing due date including extensions. IRC 412(d) seems to only allow reflection of such an amendment in funding if adopted within 2.5 months after the close of the year. Do we think that these new amendments adopted after 2.5 months but before the date indicated in secure 2.0 will fall in the same camp as 1.404(11)(g) amendments adopted after 2.5 months? Does this now trisect the window for retroactive plan amendments in terms of their effect for defined benefit plans?. The secure 2.0 provision is not effective until 2024 years so we have time to digest this...

Owner over age 50 defers $6,500 and receives a Profit Sharing contribution of $61,000.  Does the $6,500 get testing for ADP?

For many years (and before turning 50), Jane has been, and still is, a partner in a business organization. With many partners, Jane’s capital interest and her profits interest both have been always less than 5%. Now in her 90s, Jane remains an equity partner, still has her capital interest, and gets a draw on her profits interest. Jane still performs some personal services in the business.

Assume the business organization’s individual-account retirement plan requires no more than is needed to meet § 401(a)(9) to tax-qualify.

When is Jane’s required beginning date?

The plan document for a new 401k plan is written with a January 1, 2022 effective date, even though the deferrals do not commence until a date which is later than January 1, 2022, in order to avoid an initial short Plan Year, and the plan document does not include a special effective date for the deferrals.

Does this result in a missed deferral opportunity?

2022 excess contribution to * Bank HSA. The HSA account has a "cash" component and an "investment" component (segregated and listed separately on the monthly statement) - the cash portion earns .01% APY and the investment component is in mutual funds. Excess deposited in cash account on 12/19/2022, distribution from cash account on 2/14/2023 - interest for 1/1/2023-1/31/2023 was about 4 cents. Taxpayer requested distribution of excess, and * Bank calculated excess earnings. * Bank used the entire account balance (cash and investment portions) to calculate earnings on the excess, and distributed $110 earnings on a $1,825 excess. 

 The excess was a result of a severance from service and the taxpayer no longer participated in a HDHP - * Bank told taxpayer he could fund the remaining HSA contribution available from private funds as opposed to payroll deductions (this was not correct). Upon severance, taxpayer was able to draw down from cash/investments, but the investment account was frozen for additional contributions.

I understand the HSA excess/earnings rules follow IRA rules, but is there a different calculation for earnings when the contribution went into a segregated cash account and distributed from that cash account (.01% APY), and never subject to investment experience in the mutual funds?

Thanks for reading!