I have some general knowledge on this - I know property can't be contributed to a DB plan - but can't seem to figure out where to research more deeply. A sole proprietor is asking if he can contribute CDs by transferring them. I think the answer is no but need to be pointed in the right direction. There are certainly issues having to do with potential gains and losses at the point of transfer, but might CDs be considered "cash"?

just wanted confirm my understanding that if a plan does not provide meaningful benefits to enough eligible employees for the plan year, but then adopts an amendment after the year end but before 10/15, that this does not impact the valuation for the year preceding the amendment. For example, 10 eligible ees and only 3 have meaningful benefits for year X.  In year X+1, a timely amendment is adopted to correct the (a)(26) error for year X. There is no change to the valuation for year X and the 5500 for year X, yes?

Can you make is so that employees that were terminated in the year will not receive a QNEC or a QMAC for that year? 

I have became aware of recent bulletins from the insurance regulators in several states that appear to require health insurers to cover treatment (and testing) related to monkeypox without cost-sharing during the public health emergency (PHE) declared by the federal government for monkeypox.  I am not aware that the federal PHE declaration for monkeypox requires insurers to cover testing and treatment for monkeypox, so this appears to be an action initiated by state regulators.  Unfortunately, some of these bulletins provide no exception for HSA-qualified plans so I'm concerned that both bulletins are problematic for HSA account owners with state-regulated HDHPs.  Has anyone else come across these situations?

CA All Plan Letter 22-019 - Health Plan Coverage of Monkeypox Testing, Vaccinations, and Therapeutics.pdf NM Bulletin 2022-17 Monkeypox PHE.pdf

Anyone else tried playing around with the ChatGPT AI system by asking employee benefits questions?  Not perfect, but you can definitely see where this is heading.

https: //chat.openai.com/

I have a few clients who provide an unfunded death benefit for their retired employees.  It is a relatively small amount ($2,000-3,000), but not small enough to qualify for the remembrance fund exception under ERISA.

I am curious how other handle the 5500 filings for these benefits.  These are larger employers, so there's a high participant count. Do you typically see these programs having their own filing, or wrapped with other welfare benefits?  Does the large participant count create issues? (Since it is difficult to track the number of retirees at any given time and enrollment is not required to be covered.)

Couple of questions on this, as we aren't a PPP.

We are TPA on a plan sponsored by a corporation, (a controlled group with one other corporation which signed on as a participating employer) where a financial advisor convinced them to move all the funds to a PEP. Fine. This happened a couple of months ago. (Calendar year plan.)

We have been asked to complete the plan administration for the 2022 plan year. Is it ok for the PPP to farm out the administration to a TPA like us? In addition, any thoughts as to why we might not WANT to do this admin, or is it just carry on as usual - We've never been involved with a PEP/PPP yet.  All thoughts appreciated!

95% of our our plan clients use record keeping platforms fortunately.  But there are those with brokerage accounts.  We normally charge $125 for a distribution (we provide election form and tax notice, letter to plan sponsor to request the funds from the custodian, we write the distribution checks or issue ACH, withhold taxes and pay through EFTPS and do the 1099-R.  We charge more for EFTPS, each 1099-R and 945 if needed.  Very time intensive obviously.  We are struggling with residual balances that come in once someone's account has been closed.   We provide the fee disclosure each year as participants pay the $125.  We had a policy of reducing our fee so as to be no more than 10% of the distribution - didn't want any DOL attention.  So I'm ready to write off balances less than our fee.  I guess those funds would go into an unallocated suspense account.  Curious what others do.

Hi,

similar to question below. Small headcount plan where only HCE's actually made DCAP contributions. Company does employ NHCE's. Not worried about 25% concentration test. Would this plan fail 55% Average Benefits Test just because zero of its NHCE's make contributions? I would also appreciate a source if anyone has one.

Calendar year 401(k) plan provides for a 3% safe harbor nonelective.  Employer wants to change to safe harbor match for 1/1/2023.  Discussions started weeks ago, but employer got side tracked with personnel changes, including board members who were supposed to be making this decision.  They still want to make the change, but now that we are passed the safe harbor notice period what is the risk if they proceed with amending the plan and giving out the notice of the safe harbor match say, next week.

The RK supposedly already sent the 3% notice, although that has not been confirmed.  

Forgive the very basic question, but is it permissible for an employer to pay, on a tax-free basis, all or a portion of one employee's fully insured group health premiums outside of the employer's cafeteria plan? Assume the one person is highly compensated. 

No nondiscrimination rules would be directly applicable because the group health plan is fully insured. Would the cafeteria plan nondiscrimination rules cover this type of payment?

In other words, does the existence of the cafeteria plan (and the other non-HCEs' requirement to pay a larger premium under the cafeteria plan) eliminate the ability for the employer to make tax-free premium payments under section 106?

This is related to a question I asked a few days ago about interpleader, but let's put the interpleader issue aside.

Treas. Reg. 1.401(a)(9)-5, Q&A-4 is pretty clear that the year of death RMD for an individual who was past his or her RBD must be paid to the decedent's beneficiary in the year of death.  But suppose that the plan really can't determine who the beneficiary is, because there are competing possible beneficiaries each of whom raises significant fact issues against the other. These fact issues cannot be resolved by the end of 2022 and it would be imprudent to pay the 2022 RMD (which is a significant amount) to either party by the end of the year. So the plan probably won't pay it to anyone until 2023.

I'm confident that the plan's failure to pay the RMD as required under the regs will be corrected under SCP next year when it pays the amount to one of the parties. I'm also confident that the recipient can easily get the 50% excise tax waived following the normal procedure. If anyone thinks I'm wrong about either of those judgments, please let me know, but otherwise my question is whether anyone is aware of any formal or informal guidance on this subject from IRS (I have not been able to find any) or faced the situation themselves and discussed with someone at IRS. If so, inquiring minds want to know what they said.

Thanks.

Situation:  Plan is Top Heavy

2 HCE, one owner, one not )and non-Key)

2 NCHE

owner defers max

2 NHCE defer enough to get 3% match

Non-owner (N/O) HCE does not defer at all so no match

N/O HCE is due 3% TH contrib.  That gets contributed to the discretionary source.

Is there a problem here?  No NHCE getting a 401(a) allocation.

What's the remedy?

Is there any harm in keeping it that way?

At the brokerage house, they would have to create all new accounts with a trust id and transfer them from the old accounts.  Evidently there's lots of paperwork involved.

I have a question regarding the calculation of the cushion amount under 404 for a cash balance plan since the plan was amended to freeze and then to increase benefits (for HCE’s).

The facts are as follows:

- only 2 participants in plan are HCE’s

- cash balance credits; 85% of salary for both participants; salaries for both participants have been in the 240K range.

- plan was amended in early May 2020 to freeze benefit accruals (contribution credits); There is a 1,000 hour requirement and neither participant received an accrual in 2020.

- plan was amended effective 1/1/2021 to unfreeze benefit accruals (adopted at the end of 2021); new contribution credits are a flat 250K for both participants.

Since the plan was amended to increase benefits in 2021 for HCE’s, the cushion amount in the maximum contribution calculation cannot reflect the increase in benefit formula for 2 plan years.  This would affect the maximum contribution calculation for the 2022 and 2023 plan years (the funding target for the 2021 valuation used the frozen accrued benefit).  Please correct me if I’m wrong.

With respect to the cushion amount for the 12/31/2022 valuation, my inclination is to use the 85% of salary formula through 12/31/2021 for the funding target (for the cushion calculation) with $0 cash balance contribution credit for 2020.    My confusion comes from the fact that the plan was frozen before the increase in benefits to the HCE's. 

I need some help with this.  Participant turned 70 1/2 on 11/16/2019.  DOT 12/31/2003.  Deferred RMD to 4/1/2020.  RMDs were suspended in 2020. Did not take one in 2021.  Should the first one have been in 2021?

Thanks in advance! 

Client asked this and I'm hoping for someone to confirm my findings.

Beneficaries of a Roth 401k are subject to the 5-year rule based on the decedent's first deposit year. Non-Spouse Beneficaries of a Roth 401k must withdrawal the funds within 10 years. 

Assume a participant converted funds in 2022, then passed away in 2023. The Beneficiary could make tax-free withdrawals beginning 1/1/2027, and the entire account must be distributed by 12/31/2028. 

In other words, I'm hoping to confirm that a beneficiary may only have a 5-6 year window for tax-free withdrawals in this example. OR, is the 5-year rule eliminated for beneficiaries?

If a plan has a start date of 1/1/2022 but elective deferrals are not allowed till 12/21/2022 and eligibility emails were sent out on 11/21/2022 for participants to determine their contribution %'s. If an employee was fired on 12/1/2022 are they considered participants in the plan or because they were fired prior to the first elective deferral being allowed are they not considered participants? If they employee has to make a safe harbor contribution to save the plan would that employee receive that distribution? Also will they be considered in the calculation of ADP and ACP? 

Please help. My wife and I run a small business with no employees.

We save as much money as we can in a one-participant 401k plan that is now required to file a Form 5500-EZ each year by July 31 as it has accrued over 250k in assets for myself and my wife.

We had a tough year this year and with everything going on we filed our Form 5500-EZ a few weeks late, hoping it would not be a big deal. We received a CP 283 notice with an enormous penalty that would be a real financial hardship for us.

I understand that, having received a CP 283, we're no longer eligible for penalty relief under for Rev. Proc. 2015-32. Do you think there is some way we could try to file an amended return to still be eligible for this relief?

Is there a way to beg for some kind of one-time abatement of penalties? If we're in the grey-area of "reasonable cause" due to personal issues is there anything we can do to be more likely to get relief? By phone or by mail? Talking to multiple agents?

If the due date for the fine without interest is coming up, but we haven't figured out how to get abatement yet, is it better to pay the penalty and hope it gets refunded later, or incur interest if that makes it any more likely to be able to eventually be able to reduce the penalty?

Thank you all so much for your help and advice.

John

How are other TPA firms handling this new notice requirement? Will your firm be taking responsibility for filling out the notice and sending it to all your clients who have this flexible discretionary matching feature in their Cycle 3 document? When would you distribute the notice- at the beginning of each plan year to all the affected clients?

Thank you.