What is the purpose of Normal Retirement Age in the plan document? There is a section that specifies in service distributions can begin at 59.5 but then there is another section specifying that normal retirement age is 65. What benefits must start at 65? This does not mean that they have to start taking RMD's at age 65 correct?  

100% of the ira was converted to roth, and taxes were paid. Now, a partial distribution is happening, but the 5-year clock has not been satisfied, making it a non-qual distribution. I think jsut the earnings are taxable, but, can he specify return of capital and not touch earnings, making it a tax-and penalty-free distribution?

We have received 3 letters from plan sponsors in the past week that Form 5500 EZ plans filed their forms late with huge penalties.  All three forms were filed on time.  Has anyone else had plan sponsors receive these letters?  We've asked ASPPA and we haven't received a response yet and our plan sponsors are obviously concerned.  We tried to call the IRS and got a message that due to high volume to call back tomorrow.   Any advice on how to find out if these were sent out in error to EZ plans? Thank you!

Fee Example: a TPA quotes $15k to $20K for TPA work for a plan year for a new client, not knowing what the records will look like.  The plan sponsor signs an engagement letter agreeing to the fee range.  Time tracked to complete the year ends up being $12,000.  Is it ethical for the TPA to bill $15,000?  Can a client demand to see time entries?   I think we all know recording exact time doesn't happen.  Many small things go un-logged into time/billing.  This would be a case where the TPA fee is paid by the plan sponsor not from plan assets. 

I just heard from the partners of a plan sponsor that they could barely fund the 3% for 2022 and want to eliminate the 3% safe harbor for 2022.  It is not a "maybe" safe harbor.  Most of our SH plans have the 3% hard-coded in because it is easier to deal with as opposed to an amendment each year.  they are probably stuck for 2022 which is fine.  they then will ask me if they have to fund for themselves - 2 partners in a partnership.  My answer has always been for this situation yes so as to follow the plan document but if they want to take that chance and simply have insufficient funds, they must at least fund for the non-HCEs.  

Any way to get out of the safe harbor for 2022 at this late date?

Tom

An IRR is a rollover within a retirement plan to a designated Roth account in the same plan. 

Question is do we code the 1099 code "G" and then use the taxable box to create the tax liability to the participant converting OR do we use code "2" (I have read this is IRA to Roth coding only).

Thank you for any input.

An employee stopped working for a company for a certain period of time, kept on payroll, but did not officially terminate from the company. Would you consider his termination date the day he/she stopped working for them or the date they are no longer on payroll? I'm thinking the latter, but would like to know your thoughts on this.

Plan sponsor has an employee who wants to be excluded from the plan due to religious reasons.  Eligible employees receive the 3% SH and a small PS.  It is not workable to exclude him by job definition or class, location, etc.  Very strange and I will tell the sponsor he must participate.  Maybe use the beneficiary designation to assuage his objection to the plan whatever that might be.

https://www.sidley.com/en/insights/newsupdates/2022/11/us-dol-proposes-self-correction-of-delinquent-contributions-and-loan-payments

Can someone pleas call the DOL and explain to them what "self-correction" means?

1. The sponsor would submit an electronic notice form on the EBSA website, after which the self-corrector would automatically receive an emailed acknowledgment. The sponsor must complete a retention record checklist, including signing a penalty of perjury statement, preparing or collecting certain documents, and providing the checklist and required documentation to the plan administrator.

In reliance on advice of prior counsel, a client engaged in what has turned out to be multiple prohibited transactions, with a 4975(a) tax due of around $200,000.  Client has corrected the prohibited transactions, so no second-tier tax is involved.

          First Question: Does the IRS have any discretion to not assess the full 4975(a) tax? 

I know the IRS has discretion not to assess a second-tier tax, and discretion not to assess penalties for failing to file 5330s under IRC 6651(a). I know the client can apply for an individual exemption with the DOL, and that the DOL has the discretion to reduce penalties under ERISA Section 502(l)(3) for reasonable cause.

          Second question: Is there any IRS discretion or other statutory or regulatory basis to reduce the 4975(a) tax?  What are the client's options if the $200,000 tax would be an extreme hardship on the taxpayer by using up essentially all of their savings and other assets?

Thanks for any help. Feel free to email separately if you prefer: jkirtner@hershnerhunter.com

A fiscal year filer's report was due 10/31.  Our office submits on the client's behalf and the client signed and returned the form timely, the actual submission took place after 10/31.  No penalty notices have been received.  Is it possible to submit it again using DFVCP?

The following is a link to the SEC Clawback Regulations as published in tomorrow's (11/28/22) Federal Register (which take up a mere 67 pages in the typical Federal Register three-column print).

https://www.govinfo.gov/content/pkg/FR-2022-11-28/pdf/2022-23757.pdf

just wondering - do Plan Sponsor's generally sign the Safe Harbor Notice, or do they just get sent out as applicable?

Plan Sponsor/Administrator files 2018 5500-SF one year late (not under DFVC).

Ignores IRS penalty letters and IRS has now assessed a $70K penalty.

No DOL penalty assessment yet.

Can we file an amended 2018 5500 under DFVC and get IRS penalty abated or is it too late?

Many thanks.

one of our clients asked what it would look like if they stopped doing 3%NE SH-if there would be refunds/ how much. Is the simplest solution setting up a new plan and uploading the census and running the tests? I know what I'd do in Datair, but that's not an option right now. 

I have a company that has 2 divisons, but they are operated as seperate companies. it is 100% a controlled group, Each of the companies has a 401(k) set up, but one company is an all-union shop, so no participants can be in the plan. recently, a new, non-union member joined the company, so he would be the only participant. is the best course of action to set up a division at the custodian to keep them seperate? does the new employee need to be kept separate from the original 401(k) plan?

We have a plan that missed providing deferral opportunities for quite a few employees over the years.  They are going to go back and make good on calculating and depositing what is required for these individuals.  However, several individuals have left the company years ago and they may not be able to locate them on their own.  Any recommendations on a public or private services that can be used to search for lost participants?  

Thank you

Hope you all have a wonderful Holiday break. Watch out for crazy drivers! There were already a lot of people in a heckuva hurry this morning...

Never encountered this - one person plan and the owner died.  Spouse survives him, though she was never in the plan.  Does she sign the plan termination paperwork?

Getting word that a plan I've been chasing is going to come with us.  Sounds like they haven't yet gotten their safe harbor or EACA or QDIA notices from their current TPA or RK yet for 1/1/23.  It's a SHNEC, so we can pass on that if we have to, fine.  I'm getting information rapidly, but what if we just can't get enough to produce the EACA or QDIA notices by 12/1/22?  I don't see any kind of remedy, like "hand it out as soon as possible" anywhere.  What kind of pickle are they in?  Thanks.