Client files 5500 without required audit and assume will file the audit shortly, well within the 45-day period required so that DOL will not impose penalties. Assume that as of the date the audit is received by DOL the client has not been contacted for late filing by IRS. Is there a legal basis for IRS to impose late filing penalties, and a risk that it will do so, even after the audit is filed within the 45-day period, in which case client should file the 5500 with audit under DFVC, even though not facing actual exposure to DOL penalties? Or does filing the audit within 45 days also get them off the hook with IRS?

This is new. Financial service companies are being held to a higher anti-money laundering standard and are demanding that a check representing a plan contribution to be deposited into a  new investment account have the same name on the check as the name of The Plan.

I have numerous clients with one participant plans who have numerous companies. They may have a plan with a name based on the company they own that was quite active 20 years ago but not very active today. That shouldn't matter since they could have named the plan anything they wanted. At least to my knowledge, they could name their planned SpongeBob if they wanted.

If an individual owns three or four companies, however, and company A started the plan 20 years ago with it's name on The Plan, that plan covers all the employees of all the companies he owns, he just happens to be the only employee so any of the companies could make the planned contribution, at least from what I've learned over the years. The CPA's never have a problem with this. I work with them closely.

This is causing a huge inconvenience from my clients who may be forced to run money through a company that's been dormant for some time. Or, I suppose the only alternative is to change the name of the plan to the name of the company writing the check. Witch is stupid, because no such thing is required in qual plan rules.

Or, what I'm going to try first, is adding the name of the company writing the check as a cosponsor of the plan (which it is a de-facto Co-sponsor by virtue of 100% common ownership anyway) and send the investment company the corporate resolutions and adoption agreement effectuating the Co-sponsorship of the plan with company A's name by the company B who is writing the check.

Anyone have any thoughts on this?

We still prep some distribution forms for plans that are not on a platform. For RMDs, we have a box where they tell us how much to withhold, or if they want to elect out. We've always considered this as a substitute W4-P; not sure if it is totally legit or not but it gets the job done.

Do we need to do something differently starting next year? I get the idea that this is more about carving up the form into two, one that generally applies to periodic payments (W4-P) and the other for RMDs and rollovers (W-4-R). I'm not sure I see a problem with what we are doing but logic never has anything to do with it in this business.

I have a plan that has four participants that maxed out pre-tax deferrals, all of them also made after-tax (non-roth) deferrals, and all received some safe harbor match during the year.

Based on contributions made each pay period, they all reached their 415 limit as of the last paydate.

However, the plan requires that a safe harbor match true-up be done.  Each of the four is due to receive a true-up, but that true-up will push them over the 415 limit.

Since it's a match and required by the document I'm leaning to allowing it to go through then just deal with the 415 excess and refund accordingly.  However, another person here believes that, since we know this true-up will push them over the 415 limit we should not allow it to go through, so that means they won't receive the match they are required to.

Thoughts?  I've struggled to find clarification if we should allow this true-up to go through, deal with 415 refunds, or just not provide the true-up and 415 passes.

We always thought post age 65 retirement 415 limit is based on the following:

The lesser of:

A) Maximum Average Compensation X all YOS (up to 10 Years) as of valuation date / 10 Years.

Or

B) Maximum dollar limit (age 62 - 65) X YOP as of valuation date (up to 10 Years) / 10 Years X dollar limit adjustment factor.

The dollar limit adjustment factor can make the limit high especially if the participant is older. However, the APR for someone who is that much older will be low and besides, the comp limit under A will keep the limit in check.

Have been told B needs to be capped / replaced with A but instead of all YOS as of the valuation date / 10, YOP as of valuation date / 10.

This regulation, published in 1991, purports to have us consider HCEs together with those who are HCEs by attribution considered as a single HCE for purposes of 410(b). The regulation refers to §414(q)(6). §414(q)(6) at that time was removed from the Code in 1995. The regulation was not updated.

We have a plan with and HCE and his two children, who are also employees, but do not benefit. For 410(b) purposes must we consider them as one HCE or can we consider 1/3 HCEs as benefiting?

Please cite any references.

Thank you.

I'm not someone who processes claims, but we help administer a few plans.  The TPA denied the following services, saying that they needed to be pre-authorized.  My question is, with the The Newborns' and Mothers' Health Protection Act of 1996, I know that says that pre-authorization is not needed for the 48 or 96 hour hospital stay in regards to having a baby but do these services also fall under the no need to pre-authorize: 

Thanks in advance!

If the disclosure method is only for ACTIVE EMPLOYEES (paper copy to all others) who all have a company e-mail address and accessing it is an integral part of their duties, etc., etc., is the initial notice of electronic delivery required to be in paper format, or can that initial notice also be sent electronically via e-mail? Some confusion on this - it appears that it could be via e-mail rather than paper?

I have a solo 401K plan for my LLC (of which I’m the sole member and no employees) and I have an associated roth option. In my first restatement completed earlier this year, I marked them as plan sequence numbers 001 and 002 and I called them ABC LLC Individual 401k and ABC LLC Roth 401k. Since they are in different account and I always had to complete two sets of paperwork I thought of them as separate plans. Was that incorrect? Should they be the same 001 plan sequence and only be called by one name.

I'm having to move my accounts since TD Ameritrade, where I have been, is discontinuing the business. As I do the paperwork with a new custodian, it got me thinking. Appreciate any comment. Thanks!

What are the benefits and drawbacks of using paycheck to paycheck for company match vs statutory compensation? We are taking a rollover plan that is paycheck to paycheck but are not sure if it would be best to keep it this way or change to statutory compensation. We believe statutory compensation would be easier for true up purposes but paycheck to paycheck could be easier for record-keeping. 

If the administrator inputted the incorrect % match for a participant how can they correct this error? The plan is matched on a paycheck by paycheck basis so is there a way to correct it in the following paycheck or would that not be allowed? If that does not work would we be able to have a forfeiture of that amount or is the money now the participants due to the error? 

Hi Folks!

I know that in some cases attribution through a retirement plan trust is blocked for purposes of determining HCE and Key status. 

Is the same true for determining 5% owner status for purposes of an RMD?

If that's not the right question please let me know. 

ROBS plan - the participant turned 72 in the second half of 2022. Their account of course holds the employer stock. they are very much an active employee. 

I'm thinking the constructive ownership of §318 applies and an RMD is required. But I'm wondering if I'm missing something. 

Can anyone confirm or deny?

Employer received a participant request to increase 401k deferrals from 3% to 5% in 2020. The request was received but never implemented, but the participant just noticed that the change never occurred. Is the participant entitled to any corrective contributions/earnings on the missed deferrals and safe harbor matching contributions?

Thank you.

Can a new nongovernmental 457(b) plan becoming effective 11/15/2022 allow employees to make initial deferral elections after 10/31/2022, but before the plan effective date, that will be effective to defer pay beginning 11/15/2022?  These are not new employees.

Under 1563 and 414, brother-sister common control for corporations can be based on value or voting power. So five people owning all the voting stock of two corporations would create a brother-sister group regardless of the value of their shares relative to the overall value of either corporation. 

Under 1.414(c)-2(c)(2)(iii), effective control for a brother-sister group of partnerships is based solely on ownership of capital or profits interests. There is no separate reference to value or voting power, just ownership. 

Does this mean one individual could own the sole voting interests in two partnerships (but not sufficient economic ownership) yet not form a brother-sister group? This seems inconsistent. Or is there some implication that the ownership of capital/profits interests would be determined in part by reference to voting power?

Or am I missing something altogether?

Appreciate any insights.

Just curious, if a partner(s) accidentally forgot to make a 401(k) contribution to the plan for 2021 via their Schedule C or K-1 income, can they still make it for 2021 even though it's no longer deductible on the business tax return for the 2021 year?

If a plan is Safe Harbor are you able to do discretionary profit sharing (like a new comparability model)? Where the owner wants a different end of year profit sharing contribution from the other employee. 

Co. A sponsors SHNEC plan with a profit sharing contribution as well.  Plan is TH.  Owner of Co. A also owns Co B and Co. B is NOT a participating sponsor of the plan.  Pass RPT without issue.  Are these employees required to receive a Top Heavy contribution?  I love it when they tell me about new businesses the week before their PYE and they want their contribution before the PYE on Monday.

The SECURE Act (Section 104) increased the tax-credit for a small business establishing a retirement plan to $5,000.

Does a small business qualify (for the credit) if they already sponsor a retirement Plan (in this case a SEP-IRA)? They would you like to start a 401k in 2023 but only if they are eligible to  receive the tax credit for a establishing a new retirement plan 

All help is appreciated

Thank you in advance

Timing is everything

A CPA has asked me a question.  His client has a Simple plan and I guess they want a 401(k) plan.  I know that you can not fund both plans at the same time (and dare I go further, you can't even have both plans in existence at the same time?).  They want to terminate the Simple and establish a 401(k).

• If they funded the simple during 2022 they can not adopt a 401(k) until 2023 (correct?)
• He is concerned about the Secure Act, a mandate on funding a 401(k) into next year.  Did I miss something? I'm going to ask him what he means.

This in my mind shouldn't be difficult.  Maybe he is reading into something too much?