Hi - I have a new EBP audit where the predecessor completed 103(a)(3)(c)/limited-scope audit with only certain investments certified and then had a note breaking out certified vs non-certified investments and disclosed in the notes that they did full-scope procedures on those non-certified investments. The report reads that same as a limited-scope normally would but just references the 2 custodians that certified statements were received. The 5500 is marked as limited-scope.

I don't believe I've ever seen this and was wondering if anyone had and if this is even allowable to apply limited-scope procedures to certain investments and full-scope to others?

The participant changed their election in 2021 from 3% to 0% but the payroll continued to deduct 3%.  The failure was discovered in 2023. The plan has no match and is subject to ADP testing.

How should we correct. technically, these were impermissible deductions.  Are we supposed to return the contributions + earnings/losses to participant and re-run the ADP testing?  

Is there a way to code people in Relius who work less than 20 hours a week to NOT show up in the coverage teating?

Other than an override?

I have a plan that is freezing on 3/4/23 with 100% vesting of all account balances as of that date, and then terminating on 3/31/23. There are small accounts $5000 and under for terminated participants that have not been cashed out yet and the recordkeeper informs us that there is no time to do the normal cash-out process where a distribution package is mailed to the terminated participants (with normally a 30 day period to respond or the account will be automatically rolled over to the IRA) and therefore the non-vested amounts cannot be forfeited. My question is - can we forfeit the non-vested amounts prior to the 3/4 freeze date without a corresponding cash-out process? They will get the termination package after the 3/31 termination date. Issues/comments? Thank you!

Hi

DB plan with whole life insurance. Calendar plan

Insurance contract/effective May 2022 and with 30k annual premium, no other illustration was provided.

In December found out that premium payments were being made monthly 2.5k/month so during calendar 2022, 8 payments were made for a total of 20k, all from the corporation.

I have always used premiums paid only during the plan year but now the agent is pushing me to use 4 additional payments made/to be made in 2023 so that the total of 30k is applied to 2022.

I understand that they are contributions to be discounted to val date but my concern is the valuation of the CV as of the val date - EOY val.

I have the 12/31/2022 CV from the insurance company and did the RP 2005-25 calculation. No issue if I was using what was paid in 2022 only.

How do you incorporate the payments made in 2023 to 12/31/2022 val date and determine what the 12/31/2022 CV would be under RP 2005-25?

As they are planning to make the minimum required contribution, a proper determination of all assets is imperative.

Hope my question makes sense.

Thanks

We have a participant who intended to make a salary deferral election effective January 2023, but submitted it too soon so it was implemented effective December 2022.  They asked us TODAY to refund it.  I can't find any legal justification for refunding it to them--it was a valid, although premature election; they did not exceed any IRS limits and they have no distributable events.  They are under 59 1/2.  Is there a loophole I am missing?  

I have had 2 different clients receive a Notice saying they did not deposit their 945 taxes timely.  One for 2021 and one for 2022.  The 2 different clients' letters are each dated Feb 20, 2023.  Is anyone else seeing this?  Just curious.

We (TPA) created a new calendar year-end plan with a 9/1/2022 effective date so there is a short initial plan year.  There was no predecessor plan because it is a new company formed in early 2022 and we were using the dates requested by the plan sponsor.  Upon receipt of the year-end census data we found that nobody was eligible until 11/1/2022 due to the service requirement in the plan, and that there are approximately 350 eligible participants on 11/1/2022.  The plan sponsor operated the plan properly and those employees were enrolled on 11/1/2022.

I know an audit is not required due to the plan year being less than 7 months, but I am also considering whether we should file a Form 5500-SF since there were technically 0 participants on the first day of the plan year, or if a long Form 5500 should be filed.  It feels "off" to file a 5500-SF simply because the plan sponsor asked for a plan effective date that was earlier than anyone would be eligible for the plan, but I've never had this happen before so I'm hoping someone may have an opinion and would be willing to weigh-in. 

HCE's participate in the 403b plan to avoid the ADP test. All employees are eligible for a match and we're failing ACP Testing.  Someone in the office asked "can we shift deferrals to the ACP Test".

Any Seinfeld fans out there - "You just blew my mind."  Because of course the only deferrals in the ADP test for this plan are for NHCEs so I can shift 100% of the deferrals to the ACP test which will basically exempt this plan from ACP testing.

Aside from the sheer obnoxiousness of this really cool idea (I might be terrified to do it in practice), what is to stop me?

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...?