We have a plan that we took over recently.  its a small plan with little distribution activity.

It does not appear that they have applied for a Trust id.  They can not locate if they did.

Is there any way to find out if they have one? 

If i try to apply for a new one the plan was effective in 1994, more than 25 years ago.  The system only allows 1 year in the future or 25 years in the past.  Would you just enter 1997 to apply for it?

Thanks!

Can an employer offer an "Open Enrollment" option to allow ALL employees, even if they have NOT met eligibility requirements, to enter the plan?

Imagine this situation: An employer sponsors and administers a § 401(a) plan that allows § 401(k) elective deferrals, provides matching contributions, and provides nonelective contributions. None of this is a safe-harbor arrangement. All plan, limitation, accounting, and tax years are the calendar year.

When 2022 begins, the plan did not exclude union-represented employees; they were participants under the same conditions as all employees. In the spring, the employer and the union negotiate a collective-bargaining agreement. The CBA, effective June 1, provides for the union-represented employees to be covered only by the union’s multiemployer individual-account (defined-contribution) plan, including for § 401(k) elective deferrals, matching contributions, and nonelective contributions (which all are set to no less than what was provided under the single-employer plan).

Promptly after signing the collective-bargaining agreement, the employer amended its single-employer plan to exclude, from June 1, the union-represented employees. The amendment also specifies that the 2022 nonelective contribution allocated to a union-represented participant is counted only on her January-through-May compensation.

How does a plan’s administrator (and, more practically, its recordkeeper or third-party administrator) run coverage and nondiscrimination tests for this year?

Are there two sets of tests—one for the year’s first five months, and another for the year’s last seven months?

Or are there other ways the measures or tests (or both) adjust for the fact that classifications of participants changed during the year?

As noted in the title, I am dealing with a multiemployer 401k plan.  We are going through a situation where the employer contract holder is changing and we are being asked whether this should be treated as a severance event for impacted participants making them eligible for a distribution.

Our plan document notes that if a participant is deemed to be separated from covered employment, defined as quitting, discharge, or layoff, the participant is entitled to a distribution.  The plan document notes that there is no separation benefit if at the time of application for payment the participant is employed by his employer.

Any assistance appreciated.  My initial thought is that the answer is no, but it would be great to have some statute/regulation/case law to use to support the provided answer.

Plan is terminating. There are a few participants that terminated and have a 5 year break in service but were never paid out. Do these people also become 100% vested due to the plan terminating? Or are we able to pay them out based on their vested amount at the time they left the company.

Thank you!

Plan has been around for four or 5 years and have been SH match all the long.

What happens if they give their SH notice on Dec 20 this year?  Or January 12, 2023?

what are the consequences?

I have a solo 401(k) that has already been fully funded for the 2022 plan year ($61,000) and they recently decided they want to open a cash balance plan for greater tax benefits. If they open a cash balance plan, their solo 401(k) will be over funded $22,500 in employer contributions. They would like to remove the overfunding from the 401(k) plan to open and maximize their cash balance plan for 2022. What type of correction would this be (excess annual additions, mistake of fact)? What is the best way to go about correcting this?

Owners of an ALE purchase a non-ALE 10/1/2022, making the non-ALE a member of an Aggregated ALE group as of what date?

Applying the normal 2022 look back monthly-average-FTEs to the prior non-ALE falls below 50 (even after including the ALE employee numbers for Oct-Dec).

Does the non-ALE become a member of the Aggregated ALE group on 1/1/2023 or not until 1/1/2024?

Thanks

I was just wondering, since I never seem to find formulas like that in any documents I review. 

Seems like it would be a great idea for a sole proprietor, where income could fluctuate widely, and that way they don't really have to accrue a more-than-significant benefit until after the net earnings clear some amount the person would need for living expenses.  Like, a contribution credit of "5% of compensation plus 75% of compensation above $100,000" where that could eliminate the need to worry about a big obligation in a "bad year".  (Okay, maybe throw in a 401a26 failsafe, too.)

Plus it's been a decade-plus since I even saw a super-integrated DC plan, and always liked the term.

Hi

An interesting situation that I never encountered.

Calendar plan with 3 provisions

401k deferrals

3% non-elective SH

PS with integrated allocation. 1000 hours+last day rule. Owner is younger than the employees so worked out great.

5 participants, 2 HCE and 3 non-HCE. 2 additional HCE's are excluded categorically

All 3 non-HCEs terminated during 2022 before the last day, 2 with under 1000 hours and 1 with over 1000 hours.

Plan passes both ratio and ABPT.

Since all non-HCEs are getting no PS allocation but only 3% SH, I do not think the plan can rely on PS allocation to be safe harbor anymore and needs to be tested for 401a4, do you agree?

Anything else I am thinking of?

As a bonus question, all 3 employees left - 2 got new jobs and 1 for difficult maternity and applied for some kind of disability. Would that constitute partial termination? They hired additional employees during 2022 of which only one remains employed.

Any comments are appreciated.

We have a new plan where the trustee wants to take an in-service distribution of $300k. He is 43 years old. He wants to pay all the taxes on the distribution. I have never administered where it was allowed for anything other than 59.5 or early retirement.  Can a plan allow in-service prior to 59.5 or early retirement?  

We have a client who opened a new plan in August 2022.  The plan effective date is 1/1/2022.  Deferrals did not begin until Oct 1, 2022.  It is a basic safe harbor match plan allocated on a plan year basis.  The match will be calculated after the end of the year. 

My question is must the match be based on compensation only from Oct 1 through Dec 31 or the entire year?  Example: Employee has $10,000 in wages each of 4 quarters.  Oct - Dec defers $2,000.  Would this person get a $400 Match (4% just on 4th qtr wages), or a $1600 match (4% on full year wages)?

Nothing in the plan limits the compensation or match period.

Appreciate your comments.

DC Plan - employee terminated last month.  To prevent her from suing the company (no details on that) they will be giving her $8,000 severance pay that will show on her W2.  I don't think they give her the guaranteed 3% safe harbor on that amount because it was not given for services rendered and she would not have gotten it had she stayed with the company.  True or not?   The document discusses post-severance pay (bonus, commission, etc.) but not this.   TYIA. 

Prior to acquisition, target company is correcting the Release timing language in Executives' Change in Control ("CIC") Agreements that pay a lump sum within a set time period after involuntary termination within 6 months after a CIC, (subject to delivery of a Release, with no time limit for delivery of the Release, and no language that the payment for such termination won't be made if the Release is not delivered within a set time) by having the Executives sign, before Closing, an Amendment stating that the Release has to be delivered, and irrevocable, within a set number of days after involuntary termination within six months after CIC, and if it is, lump sum will be paid on last day of the time period, and if it is not, lump sum is forfeited. 

For an Amendment like that, which seems to fit Section VI of IRS Notice 2010-06, for 409A corrections, is everyone (or anyone) still sending the Notice to the taxpayer/service provider/Executive the following January, and still attaching the Notice to the service recipient's tax return, as Section XII of Notice 2010-06 requires for Section VI corrections? So difficult to explain to client (employer) and taxpayer (Executive) that putting this Release language in an Amendment means we need to send these lengthy, nearly incomprehensible Notices next year. Just wondering if anyone else is actually doing this? 

We administer a 401K Plan that has owner and spouse as participants as well as rank-and-file. Husband died 5 years ago, and his account is still open.

Fund-holder will not permit rollover of deceased participant's account into spouse's.

I do not see why not; when I asked the fund-holder (in this case Voya), all they could tell me is "no..we can't do that."

I see no reason why not.

Am I missing something or is just that Voya will be losing out on a fee?

Interesting question arose from out in the wide world, and I don't know much about ESOP's. Suppose you have an S-corporation, where the document clearly states that all distributions must be in cash. Seems straightforward enough. So if the corporation RETIRES shares (as opposed to repurchasing them) when someone terminates employment, there's still no share distribution to the participant, right? So that no NUA calculation would apply, even if there is a lump sum distribution? Isn't the net effect (to the participant) the same, whether shares are retired or repurchased - i.e. the participant never receives ownership of the shares, so there is no "put" option, and the participant just receives cash, as required under the terms of the document?

Participant had 2021 402(g) excess of 1,000.  At time of distribution there was $20 in earnings.

The IRS says it's taxable in both years.  (I knew that).  But it also says BOTH amounts are reportable on a 1099-R.  I thought just the 2022 amount is reported on a 1099-R (basis and the earnings), but the 2021 overage would be taken care of on the 1040 using the W2.

Here's what the IRS site says:

Under Revenue Procedure 2021-30, Appendix A, section .04, the permitted correction method is to distribute the excess deferral to the employee and to report the amount as taxable both in the year of deferral and in the year distributed. These amounts are reported on Forms 1099-R. In the case of amounts designated as Roth contributions, the excess deferral will already have been reported in income in the year of deferral. However, the amount will be reported as taxable in the year distributed.

Many § 401(a)-(k), § 403(b), and governmental § 457(b) plans distinguish between participant loans with a repayment period no more than five years and those used to acquire the participant’s principal residence.

If a participant’s request for a loan asks for a repayment period more than five years:

Does a plan’s administrator (or a service provider acting for it) accept the participant’s written statement, made under penalties of perjury, that the loan will be used to acquire the participant’s principal residence?

Or, does a plan’s administrator require some evidence independent of the participant’s statement?

If so, what substantiation does an administrator or its service provider require? A mortgage commitment? A purchase agreement? Something else?

If a plan’s procedure requires independent evidence, does this mean a claim must be submitted in paper form? Or does a service provider’s software allow uploading pdf files for the independent evidence?

In your experience, what percentage of plans process a principal-residence loan by relying on the participant’s written statement, seeking no independent evidence?

In March I filed my 2021 solo/individual 401k's 5500-EZ through the EFAST DOL website. 3 weeks later in April I received the CP283 notice with the $150,000 penalty. It turns out I read the form wrong and entered the year 2017 and not 2021. In 2017 I was below the $250k threshold and was not obligated to file the form 5500-EZ. My first year filing was 2020.

After received the CP283 I immediately phoned the IRS and an agent suggested I amend the 2017 5500-EZ with the correct numbers and the penalties would be removed. I did amend immediately but in August received a notice of interest on the original $150k. Just in case there was some error that I was not made aware of, I mailed form 4506 today requesting a copy of my 2017 form 5500-EZ but there was no way to say I want the amended copy.

I've been working with the IRS's Taxpayer Advocate Service (TAS) for a few months now to resolve the mistake. My latest phone call with TAS was that the IRS was still making a determination but we would likely need to go through appeals. I've read online that I need to wait to appeal until after receiving a "statutory notice of deficiency". But everything I read online associates this with 1040's... I plan to work with a firm to represent me in appeals if the IRS determines against me. 

• Should I still mail form 843 like it shows on the IRS page? (https://www.irs.gov/individuals/understanding-your-cp283-notice)The TAS never mentioned this form to me.
• Was the fact that I accidentally, but voluntarily, filed 2017 late still subject me to the late filing penalty, even if I was not obligated to file?
• Does anyone have any other suggestions?

I'm hitting walls at every turn. I don't understand how entering the wrong year can result in owing $150,000. It's easily proven that it was a mistake... the numbers I entered match my statements for 2021 not 2017. Actual people at the IRS have read my letter of the facts and received 401k statements. It's still possible they rule in my favor but my TAS agent didn't sound hopeful. Thank you for any advice.

EDIT January 2023: It is with extreme gratification that I can report back and say the IRS abated the penalty and interest. What a weight off my chest.

ERISA Sec. 3(37) defines a multiemployer plan as "a plan—(i)to which more than one employer is required to contribute, (ii)which is maintained pursuant to one or more collective bargaining agreements between one or more employee organizations and more than one employer, and (iii)which satisfies such other requirements as the Secretary may prescribe by regulation."  

There does not seem to be a definition of what it means to be "maintained pursuant to 1 or more CBAs" in the specific context of Sec. 3(37).  

ERISA Sec. 3(40) excludes from the definition of a MEWA "any...plan or other arrangement which is established or maintained—(i) under or pursuant to one or more agreements which the Secretary finds to be collective bargaining agreements...."  

The regulations under Section 3(40) do define what it means to be "established or maintained under or pursuant to one or more agreements which the Secretary finds to be a [CBA]."  In part, this test requires that 85% of the plan's participants be covered by the CBA or CBA-adjacent.  29 CFR 2510.3-40(b).

The Section 3(40) regs state multiple times that the definition therein of what it means to be established or maintained under or pursuant to one or more CBAs applies ONLY in the context of Section 3(40).  E.g., "Nothing in or pursuant to this section shall constitute a finding for any purpose other than the exception for plans established or maintained under or pursuant to one or more collective bargaining agreements under section 3(40) of ERISA."  29 CFR 2510.3-40(a).  

My question is:  Does the definition of what it means to be "established or maintained under or pursuant to one or more collective bargaining agreements" under the Section 3(40) regs apply to Section 3(37) for multiemployer plans?  If not, is there a different definition for Section 3(37)?  

Thank you for any insight.