We are helping a takeover client with a DFVCP filing.  The EFAST site only goes back to 2009 filings which makes sense.  When going to the DFVCP payment web site, it lists Forms 5500 going back to 2004 as "late filings found in EFAST at this time."

Question is how are pre 2009 Forms showing up on the DFVCP site as being on the EFAST site, but they are not actually displayed on the EFAST site. Maybe the client filed electronically, but it is not displayed on the EFAST site?  In any case how do we amend those pre-2009 Forms and submit under DFVCP?  

Hope someone has experience with this.  Thank you!

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Safe harbor plan fails compensation ratio test for the match since bonuses are excluded. The plan document does not provide any type of correction method such as use total compensation. Does an 11(g) amendment correct this situation where compensation would be added back? I remember hearing in the past that if a safe harbor plan fails compensation tests it blows the safe harbor, unless the base document has a correction like the AQSC document does. This plan uses a pre-approved document but no correction language has been located. How do we proceed? Thanks!

Hi, I've worked on 401k plans for a while now, but encountered mega roth backdoor quite recently. I do understand that it has great tax saving for an individual but after digging deeper I read that ACP must be passed for the after tax voluntary contributions even if the plan is safe harbor and passed ADP and ACP for matching. Am I understanding this correctly? Also is there any way to bypass the testing for mega roth backdoor after tax contributions?

Thanks!

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So, every day I find something that I thought I knew and now question my entire life.  

Most of our safe harbor plans we write with no hours or last day requirement for the new comparability profit sharing to allow for flexibility (they have to get the gateway anyway for SHNEC). I am now questioning a safe harbor match plan with new comparability PS.  We sometimes don't give the PS to HCEs (spouses, non-owners) and terminated employees.  As long as it passes, we figure it's ok.  I went down a rabbit hole today with chatgpt and he/she/it told me that if the SPD is explicit in saying they will receive a PS, then they have to receive it. 

This is what the SPD says: Discretionary Employer Contribution formula. We will decide each year how much, if any, we will contribute to the Plan. Since this Employer Contribution is discretionary, we may decide not to make an Employer Contribution for a given year. We may decide to give a different contribution to each eligible participant under the Plan. The Employer Contribution may be determined as a percentage of compensation or as a dollar amount. We will inform you of the amount of your Employer Contribution once we determine how much we will be contributing for the year.

Employer Contributions. Under the Plan, as amended, you do not have to satisfy any additional allocation conditions under the Plan. Thus, you will be entitled to share in any Employer Contributions we make to the Plan if you satisfy the eligibility conditions applicable to Employer Contributions regardless of how many hours you work during the year or whether you terminate employment during the year.

 If this is a SHM plan - do we have to give a PS to terminated participants OR HCEs as long as we pass the required testing (401(a)(4), 410(b), TH)?  I

Thanks!

New solo 401(k) Plan was signed/adopted 5 years ago.

No contributions have ever been made.

Only filing ever done was to create a Trust EIN.

'Plan Sponsor' would like to "disappear" the plan and start a SEP this year.

I'm just processing what steps to take.

Often, when there are late deferrals to a plan, TPAs are using the DOL VFCP calculator to determine lost earnings.  I understand that's only allowable if the Sponsor is filing under VFCP.  And if not submitting, they must use EPCRS to determine the earnings.

The first and best option is to calculate actual earnings for everyone involved.  Than can get hectic if there are more than a few participants involved, or multiple payrolls.  Hectic and pricey--we charge by the hour, and the cost can easily overtake any benefit to the participants.

We may have a way to calculate the Rate of Return (RoR) individually for each payroll, rather than exact earnings.

My question is this:  Is that enough?  Using the RoR per participant (and if unavailable, the RoR for the during the same timeframe?)

The DOL calculator determines not only lost interest, but the interest on the interest.  Would I need to do TWO calculations?  First determine lost interest from payroll date to deposit and then another from deposit until 'today'?

How do you guys do it?  Several colleagues at other firms just take the path of least resistance and still use the DoL calculator.

I haven't heard anyone getting in trouble for doing it that way.  Have you?

This client owns a business and is going to open another business (both in the financial arena).  I can use the same plan document for both plans... using the joinder agreement option... it's a control group.

IF the client wants to max out the ER, does it matter which business ponies up the money?  OR... if the client earns $100K from company A then company A needs to pony up $25K (and so on with Company B)

Thanks

A new company's inception is 9/1/2025.  There is one employee, the S-Corp owner.  First tax year runs 9/1/2025 to 12/31/2025.  Owner wants to adopt a calendar year profit sharing only plan for 2025, adding 401(k) for 1/1/2026.  W2 comp for the period 9/1/2025 to 12/31/2025 will exceed $350,000.  In the EOB it seems to indicate that it is possible for the effective date of the plan to begin prior to the inception date of the company.   The EOB indicates that the IRS informally expressed this view at benefit conferences.  It also notes that the employer can highlight the issue in the plan's determination letter request which seems to indicate that this wording has been in the EOB for a long time.

Is this an acceptable approach?  

If not, and the plan year must be a short plan year (9/1/2025 to 12/31/2025) to run as a calendar year plan, are we then prorating the compensation limit to $116,667 (4/12ths) and in turn using that pro-rated limit to determine the max deductible amount of $29,167 (25% of prorated limit).

Thank you very much.

I thought this seemed pretty simple but now I am getting confused ..

401k plan currently has 6-year vesting schedule.

They would like to amend the schedule to a 5-year schedule, which will be more advantageous at every year.  They are doing this because they feel like their current schedule is not competitive in their industry.

However, they do not want to give the new vesting schedule to anyone who is terminated but still has money in the plan.

Can the amendment state that only participants who work an hour of service on or after the effective date of the amendment will be subject to the better vesting schedule?  And they want the new schedule to apply to all of the money in the accounts of anyone who is still employed on the date of the amendment (ie., they don't want to only apply the vesting schedule to new contributions made after that date).  

I guess where I am getting confused is, Is there a requirement that anyone with at least 3 years service (including terminated participants) must be allowed to elect the better schedule?

Thanks!!

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Would a top-heavy Safe-Harbor plan have to make a top-heavy minimum contribution if they only made profit-sharing contributions to non-key participants? My thoughts are no because the highest profit-sharing contribution received by a Key employee would be 0%.

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I know enough to be dangerous with regard to the subject matter.... so

I understand that surplus assets in a self-funded plan my be used in various ways to cover/lower future costs for participants and cannot be used across different "welfare plans" that cover different employees.  I understand that EE contributions will be ERISA "plan assets" and ER contributions may or may not be plan assets depending whether held in trust or general assets of the ER.  I understand that ERISA plan assets are subject to the exclusive benefit rule and must be used to benefit participants.  What I need clarity on is how it is determined that a single plan exists under ERISA for this purpose.  Say you have MEC plan (or MEC + Plan) plus insured dental and vision plans that cover the same group of employees if they so elect.  What makes it a single plan whereby any surplus plan assets can be used across all programs?  Is is simply the terms of the plan document and the trust agreement that ties them together - just like a Wrap Plan that creates a single plan for 5500 purposes.  Or am I am missing something?

I don't do DB/CB work and don't normally have to deal with J & S rules.  However, I have a terminating DC plan with J & S in it.  If a participant is unresponsive or the spouse refuses to sign, it appears that we have no other choice other than go to the marketplace and buy an annuity for them.  Is there any other option?  Penchecks says they will handle funds over $7,000 for terminating plans but if the participant doesn't respond, they don't buy the annuity....they move them to an IRA and thereby ultimately are bypassing the spousal consent rules.  Since the plan isn't covered by the PBGC, we can't move the funds there.  Any other options?  

Hi All,

Happy Holidays to All. 

A DB plan ret age is 62. Employee retirement date was march 2025 but did not receive his lump sum until Dec 2025. He was entitled to his lump sum since March 2025. What rate would you use to give interest on the lump sum from march 25 to Dec 25?  Plan equivalence? Thank you

Question:

For the purpose of calculating the top heavy balances, are adp/acp corrective distributions added back in? 

Plan failed 2024 ADP/ACP testing:  HCE/Key employees adp/acp corrective distributions of $5,000.  These were corrected on 3/1/2025.  When looking to add back in "In-Service" distributions, would these be considered that for top heavy balance for the 2025 determination?  Or excluded from the Top Heavy balance. 

My argument is that these distributions were forced distributions because of the failing ADP/ACP test.  The participant did not have the option not to take it, so why should it be added back in?

Thoughts?