Can you please explain the difference between a safe harbor plan which makes a nonelective 3% distribution to employees vs a QNEC or QMEC in order to pass ACP and ADP testing? To me it seems that they are basically the same means to an end which is making the plan compliant, so what would be the benefits and disadvantages of using each?

Employer entered into a new collective bargaining agreement a couple of years ago that provided additional non-elective contributions and full vesting under the 401(k) plan (more generous than what the plan provides). The Plan was not amended to incorporate these negotiated terms of the CBA.

What is the fix?

Technically, there is no plan failure. Rev. Proc. 2021-30 states that "VCP provides general procedures for correction of all Qualification Failures: Operational, Plan Document, Demographic, and Employer Eligibility."  The plan has been operated in accordance with its terms, so there is no "Operational" failure, and it doesn't violate Section 401(a) by its terms, so there is no "Plan Document" failure.  There is no failure to satisfy the requirements of § 401(a)(4), 401(a)(26), or 410(b) ("Demographic" failure) and the employer is eligible to establish a 401(k) plan, so there is no "Employer Eligibility" failure. 

Thus, I read EPCRS to say that there is no relief available for this scenario. Is that accurate??

A company has remote employees in a state where that state has a state mandated retirement plan but the employer itself is domiciled in a state that does not have a state mandated retirement plan requirement.  If the employer does not provide a retirement plan of its own in the private marketplace and if it does not want to start one, does that mean the employer has to work with the state plan for those applicable remote employees?

First time filing for a PEP.  Small plan filer.

Am I right that they can't use a 5500-SF and have to use 5500 w/ Schedule I?  And all we need to do is provide the same attachment as a MEP, with listing the companies and the contribution percentages?

And mark 5500 as Multiple Employer Plan?

Taking over a C-Corp with two employees:

1) Owner of about 95% of company
2) Employee with about 5% ownership in the company

There is no relationship between the two.

The previous TPA had been filing the Form 5500 as an EZ.  Would this qualify for that, however?  Unless that type of ownership would classify them as a "partner", I don't see it but I just wanted to confirm.

Was planning to switch it to an SF, but wanted to confirm.  Thanks everyone!

If a plan has 15 employees 11 of which are considered HCE, what are some amendments that can be made to the plan in order to pass compliance. Should we edit the vesting schedule of HCE employees to include a cliff, make 100% or keep as "NA - Vesting schedule is Top-Heavy Compliant"? Do we also need to add in a safe harbor non-elective contribution in order to be able to make a safe harbor contribution of 3% at year end if necessary? This option states the following: "This amendment only applies to the ADP testing safe harbor under Code section 401(k)(12). If the Plan provides contributions in which the ACP testing safe harbor is necessary, then an advanced notice is required and this amendment may not be used." Can you explain in which cases this amendment should and should not be used? Can you also explain how we can make a 3% contribution at year end and if we need this amendment in order to do so? 

Almost all of our clients hand sign the 5500 and a signing authorization.  Over the early years of EFAST, clients just stopped wanting use/recover their PINs.  One client just now did an electronic signature on the 5500 copy that we will attach to the filing before I e-sign.    I'm sure ths has been discussed many times but appreciate comments on this.  There is still time to get a hand signature but not much time.

Is it normal to automatically revoke beneficiary designations of a spouse upon legal divorce of a participant and the spouse? If this is not automatic would the participant have to manually update this within their elections or would there be some sort of legal designation of assets? 

The question has come up whether a plan currently using a safe harbor match can mid-year amend the plan to provide for a 4% safe harbor non-elective contribution. The request is prompted by the sponsor considering adding a DB plan for the current year realizing that the non-elective form of SH would be a better fit for a combo plan.

Notices 2016-16 and 2020-86 don't seem to address this specific situation. I think it should be allowed. Any other thoughts?

I have to amend a Schedule D attached to a large plan 5500 that was just filed for 2021.  The employer neglected to give me a new participating plan.  

Do I just attached the updated Schedule D to the 5500 for filing or do all the Schedules and original documents get refiled as well?  The 5500 Instructions are not clear.

I am new to using this forum (and to the entire industry) so I apologize if this has been addressed one or one million times. Can anyone point me to a resource that provides an exhaustive (or close) list of all ERISA fee litigation cases in, say, the past 3 years? 

Hello,  Client A, a sole proprietor, has his own 401k plan.  His wife just established her own sole proprietorship.  Client A wants to add his wife's company as a Participating Employer to his plan.  Would this be considered a Control Group with an adopting employer or a MEP with an adopting employer?

Have a December 31, 2021 cross-tested 10 participant 401(k) plan where they fund a 3% employer safe harbor contribution. The plan sponsor is an S-corporation that went on extension for 2021. In addition, they funded a profit sharing contribution of 2% of salary and there are no conditions on the contribution allocation. The employer funded the safe harbor and profit sharing contribution to all participants except one of the nonhighly compensated participants who terminated employment during 2021.

It is now past September 15 when the mistake was discovered.

I believe they have until December 31, 2022 to fund the 3% employer safe harbor.

Could they correct this with an 11g amendment or must they correct through voluntary compliance? Could they correct with self correction?

We know both the SH and PS allocation for this one participant will be deductible for the 2022 year rather than the 2021 year.

Thanks.

If a PBGC plan is terminating with a majority owner waiver with spousal consent (assume the waiver and consent meet PBGC conditions) how is Schedule EA-S completed with respect to assets and liabilities?

Assume without the a waiver the liabilities are $500K and assets are $400K.

COVID killed this business model and it has not recovered and prospects for recovery are grim. Very small Cash Balance Plan.

Regarding the PTE that permits a plan benefit to be paid from the employer's corporate account due to the plan's illiquidity as long as there's an agreement in place for an interest-free, unsecured loan, does anyone know if there are any limitations for the term of the loan or repayment frequency?  For example, can the loan be for 18 months with the entire amount repaid with one payment at maturity or sooner?  Thanks in advance.

Hello a husband and wife own two businesses, each are 50% of each company.  1 company sponsors a solok - no employees under that company other than them.  The other company wants to set up a retirement plan for (2) employees, one is a W-2, the other a 1099.  Can they open a Simple IRA or what options do they have?  Do husband and wife opt out of this plan or can they also contribute?  Can 1099 employee be included or they need to set up a SEP IRA?

Their goal is low administration on the plan for the employees, so not a regular 401k.

Thanks!

A plan merges into another plan effective on 10/1/2020.  The plan performs a short year test from 1/1/2020-9/30/2020.  It fails adp testing.  When are correction due to avoid the 10% excise tax?  12/15/2020?

Similar situation, except plan actually terminates effective 9/30/2020.  When is the deadline to correct ADP without penalty?  

We had a 6/30/2021 filing sent in without the audit report around April 15, 2022 and within 45 days the IRS had sent a penalty assessment letter (around $20,000) which appeared to us be a significant change in approach.  Can others indicate whether or not they had similar experiences?  We used to just file without the audit and amend when it was available.   But now I'm wondering if a change in approach would be to not file at all and use the DFVC.

Has anyone else had to deal with this?

If a client failed to divulge that they own multiple companies (they are unrelated, but he is the 100% owner of all of the corporations) and it's not discovered that it should've been a controlled group.  What are the ramifications?  Is there any back correction that is needed?

Plan excludes per diem employees. A per diem employee who used to be a regular employee and was eligible to contribute wants to roll money over into the plan. Is she allowed to roll money into the plan since she is technically no longer an eligible employee?

Thank you!