Client restated for Cycle 3 in 2022 and after much discussion decided on the Flexible Discretionary Match primarily because they wanted 2 different match allocation groups.  They are matching 100% of 2.5% for NHCEs and 100% of 1% for HCEs on a pay period basis.   My understanding is the first notice is required for the 2023 plan year and within 60 days of making the final match contribution so likely in March 2024.

First question - is the allocation groups they chose - HCE and NHCE, not job related necessarily.   We can change that to define positions that are HCE if we have to such as CEO, COO, CFO, HR Director, etc.  Do you think HCE and NHCE is ok?   There are no working owners and so it is just prior year comp based.

Secondly - under flexible match, must the match allocation groups be mentioned in the plan adoption agreement?  Or can that be left unmentioned since this is a discretionary match and the notice isn't due until after the end of the year?

This is the only flexible discretionary match client we have - fortunately.

Thank you 

Tom

I understand Simple IRA plans.  Setup is an IRS form 5304 or 5305 depending on where the money is invested.  Contributions are put in an IRA in the participant's name.  I don't handle them.

So what is a Simple 401(k)?  Basically a 401(k) with only a 3% match or a 2% NEC? 

• For setup I see on the ftWilliam system there is a toggle to designate the 401(k) as a Simple
• A 5500 is required.  A 5500-SF?  Same filing deadline?
• You have to pull together all the financial info to prepare the 5500, Is an annual report prepared, participant statements?

Is it really just a "vanilla" as it can get 401(k) with Simple IRA eligibility requirements, no testing, no PS contribution?  

How do we determine who is an HCE if the company did not exist in the "look back" year? 

If a company may need to make a non elective to pass non discrimination testing at the end of the year does it matter in the plan docs if the non elective contributions are determined at the end of plan year or each pay period? I suppose per pay period would give them the option to do it earlier then end of plan year but wanted to make sure there are not other drawbacks to doing per pay period instead of end of plan year? 

Dr. Acula had a practice with several full time employees.  Dr. Acula leases a small space in the offices of Dr. Van Helsing. 

At some point Dr. Van Helsing takes over as the employer of Dr. Acula's employees.  As part of this agreement, the two parties agree that Dr. Van Helsing will make his staff available to Dr. Acula for up to 30 hours per month at a set rate.  The staff that will help Dr. Acula could be one of his old employees or a staff member who has always worked for Dr. Van Helsing, or any combination thereof.

Question

Does the prior service to Dr. Acula satisfy the leased employee condition that he or she has performed such services for the recipient (or the recipient and related persons) on a substantially full-time basis for at least one year?

Thanks!

Anyone work with Civil Service Retirement System (Postal worker)?  I am looking at a QDRO for a friend and wondering how something might be interpreted.

This is an older QDRO (2003) and is very short.  It splits the benefit according to the Majauskas formula, then is says, "The alternate payee shall be treated as a surviving spouse for the purposes of a joint and survivor annuity and pre-retirement survivor annuity purposes".  Thats about it - it is only 4 paragraphs long.

The participant has retired and the AP is getting benefits, but the question is, what happens if the participant dies.  There was nothing in the QDRO about required form of payment, but I am wondering if the Normal Form in the Civil Service Plan is a J&S and therefore, saying that that the AP is treated as the spouse for the J&S annuity means they will continue to receive a survivor's portion if the participant predeceases the AP.

Any thoughts?  I assume the only way to know for sure would be to ask the PA, but I wondered if anyone had any thoughts before we did that.

Are distributions from a 457 Plan processed through payroll?  That's what someone is telling me, I just wanted to be sure

an advisor called me today and asked about how catch-up contributions are treated when an ADP failure occurs. Teh participant in question always has deferrals returned due to failed testing.  However, since Catch-up is not included in the ADP test, how is it treated when there is an excess deferral due to a failed test? My guess is that they would not be able to use the catch-up, so all  of the catch-up would come out along with whatever excess was determined.  Am I correct in this?

The accompanying instructions to the Form 6088 seem to indicate collectively bargained defined benefit plans must file a Form 6088 along with a Form 5310 submission. While clearly collectively bargained defined contribution plans seem less expected to file a Form 6088, collectively bargained defined benefit plans seem to lack only the expectation to input information into g. Revenue Procedure 2021-4 seems to present confusion, as at a particular section, this guidance seems to waive the expectation to file a Form 6088 for all collectively bargained plans. 
 

Please provide further salient, affecting guidance.

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.