I have a plan that is well into Top-heavy territory now, and because of the family/HCEs that will not be changing. They have a match now, but if they change to a SHM, this should fix the top-heavy issue, I believe. 

My questions are:

because they're now 29 days to pye, they cannot amend and fix the issue for 21-22, correct? I don't think they're interested in a non-elective SH plan 

They have a non-elective profit sharing source now, if they use SHM to avoid adp/acp and top-heavy, will they need to not contribute to that source again to remain exempt?

Thanks for your help.

Amendment just came in. The adopting resolution language says it was "duly adopted" on August 25th. However, it was SIGNED on August 31. Is it still valid, or do those dates need to match? Does it depend on state law? 

P.S. I'm talking about the corporate resolution. The amendment itself, while being signed on August 31, isn't effective until November 1, so no worries there.

A BenefitsLink discussion yesterday remarked on a service provider’s request for a nonelectronic signature, despite an IRS procedure that permits an electronic signature.

There is no one comprehensive rule that answers questions about the acts or circumstances that require a manual, rather than an electronic, signature.

For some of us, it’s not easy to recall which acts (of those that call for a plan sponsor’s or plan administrator’s signature) permit an electronic, or require a “manual”, signature. So, let’s crowdsource our list.

The focus is on what the three U.S. government agencies—the Treasury department’s Internal Revenue Service (IRS), the Labor department’s Employee Benefits Security Administration (EBSA), and the Pension Benefit Guaranty Corporation (PBGC)—say is permitted or required. If you quickly remember it, next to each description put the abbreviation for the agency that stated a rule or guidance.

I’ll start by putting one entry in each category.

Manual signature required

A plan’s administrator authorizing its service provider to submit the administrator’s Form 5500 report — EBSA — source ???

. . . .

. . . .

. . . .

Electronic signature permitted

A user’s signature to adopt an IRS-preapproved plan document — IRS — Rev. Proc. 2017–41 § 5.10, 2017-29 I.R.B. 92, 99 (July 17, 2017), https://www.irs.gov/pub/irs-irbs/irb17-29.pdf

. . . .

. . . .

. . . .

We invite your BenefitsLink neighbors’ praise if you help us complete this list.

Has anyone seen language from FIS Relius?  (Yes, I posted on that board as well.)  Or any other source?  I believe FTWilliam has a SECURE Amendment for its NQ plans but have not seen it; am also wondering if there is other amendment language available out there.  The amendment is due to be adopted by year end.  

Has anyone received from FIS Relius a SECURE amendment for required minimum distributions for use with their 457(b) plan document?  The amendment is due to be adopted by 12/31/2022.  Thanks.

Hello all,

Have a sole proprietor with a profit sharing plan, would like to terminate and roll funds to an IRA. In looking through paperwork it appears there may have been 2 Plan ID's used.....checked both and do not see record of any 5500 filings. Plan was established in 2005 and, until recently, had more than $250K in assets each year. Only activity are yearly RMD's. Looking for advice on how to proceed.....

Thank you!

Brian

We have a potential new client where:

Grandma owns 47%
Mom owns 47%
Third party owns the remaining 16%

If they were to hire one of the grandkids, technically they wouldn't be considered an HCE based on attribution correct?

My understanding was that ownership transfer from grandkid to grandparent, but not the other way.  And since mom only owns 47% there isn't an issue.

I just wanted to confirm I was correct.  Thanks!

For anyone who watched it (good webcast if you didn't) - at one point my attention got diverted for a couple of minutes by an e-mail popping up. When I dragged my attention back to the webcast, I THOUGHT I heard them say that for a tax-exempt 457(b), a SECURE amendment was due by 12/31/2022. Did they say that?

I recall seeing some debate on this in the distant past, but I don't recall any consensus. Say an employer does a corporate resolution to make a discretionary match, or PS, then doesn't make it. Are they now legally required to make it? If not, shouldn't be a plan qualification issue, just revising valuation(s). (And let's assume there's no employment contract that dictates an employer contribution.)

Many employers never end up doing a resolution. If they never did the resolution, then I presume the "failure" to make the contribution isn't a problem anyway?

There may be a potential bankruptcy looming...

How should withholding be reported on a Roth conversion if under 59 1/2? We have 2 opinions.

1. If a conversion occurs for someone under 59.5 and there is withholding then report on 2 1099-Rs. One showing the distribution as code 2 and another saying the withholding was distributed to the client as code 1.

2. The conversion both the cash and withholding would fall under the exception to excise tax withholding so both legs should be reported under a distribution code 2. 

Which is right?

Is anyone else getting push back from any record keeper regarding e-signed plan documents? Nationwide is telling us that they have to wet signatures and are not accepting our e-signed versions. I know that other RKs send their documents out using e-signing so this has to just be Nationwide. Thanks for any feedback

Seeing as how 401(a)(31) is a statutory provision, does a Plan need a separate document provision electing to be able to use an automatic rollover, or is it available to any Plan the claims qualification under 401(a)?  The DC LRM from 10/2017 includes a required provisional statement about automatic rollovers, that references the mandatory distribution section, but no adoption agreement provisions are noted as needing to be included.  Also, the mandatory distribution section the LRM notes that should be included, is not addressed anywhere in the LRM.

Hi,

Yesterday, two separate DB Plan ez CALENDAR filers for 2020, that were extended due to IDA to Jan 3rd and then further extended to  Feb 15th received late filer penalty notices of $16, 500 and $17,000 respectively. They both filed in mid December 2021, well before the Jan 3rd extended due date. In addition, on top of each form it was written in Bold..."New York- Hurricane IDA - FEMA IDR 4615." Has anyone else heard about this? Thank you. 

We offer top hat medical plan.  Can we set up ICHRA?

Sole Prop established a Solo 401k a few years ago.  All was well as he had no employees

In February of last year (2021) a FT employee was hired  Unfortunately, the Plan had both immediate eligibility & vesting  for PS contributions.

May 2021 - owner amended the Plan to a SH 401k and added a vesting scheduled for PS contributions - an effective date of 1/1/2021

The sole FT employee has since severed employment 

Question?

How is vesting calculated? 

Is the former employee 100% vested (since there was no vesting scheduled when he became eligible) or does he follow the schedule (since the amendment was effective 1/1/21) prior to his DOH?  

All help is appreciated. 

Thank you

Would appreciate a quick sanity check here:

Mother owns 70% of Corp A. Mother has an adult daughter, who is married to son-in-law. Son-in-law owns the other 30% of Corp A. Son-in-law also owns 100% of Corp B. (Assume no other attribution aside from family, no excluded interests, no ASG, no management group, not a community property state.) 

Under 1563, I believe that mother will not be deemed to own any stock in Corp B. Daughter would be deemed to own all 100% of son-in-law's stock in Corp B, but because daughter is an adult, and mother does not own >50% of Corp B, mother is not deemed to own daughter's (attributed) stock in Corp B. Also, the prohibition on double-attribution among family members would cut off deemed ownership of those shares with daughter (i.e., once they are attributed from son-in-law to daughter by spousal attribution, they cannot be attributed again to mother, even if mother did own >50% of Corp B). 

Likewise, as an adult, daughter would not be deemed to own mother's shares in Corp A because daughter does not own >50% of Corp A's shares. 

Because mother owns >50% of Corp A, she would be deemed to own any shares in Corp A owned by daughter directly (zero); however, the double-attribution rule would prevent attribution from son-in-law to wife to mother, so mother would not be deemed to own son-in-law's 30% in Corp A.

I think I'm left with:

Corp A: 70% mother; 30% son-in-law; same 30% daughter through spousal attribution

Corp B: 100% son-in-law; same 100% daughter through spousal attribution; 0% mother

This leaves only 30% common ownership, which clearly avoids a controlled group unless I am missing something.    

Client has 2 locations with separate plans to avoid being a large plan filer. One participant has moved from one location to another. Should her account balance be moved to the new location as well?  If so, would this be treated as a regular rollover distribution where the employee has to complete distribution paperwork and a 1099R is generated? Or can it just automatically be moved? The amount in question is over 100K. 

Thank you!

Hi,  

When a employer decides to discontinue in the pooled employer plan (PEP) and allows distribution, will the participants needs to be 100% vested? can someone share the IRS/DOL rule on vesting for PEP ( plan termination) 

Thanks

Plan participant first wife dies.   He  names daughter as beneficiary of his 401k plan, and also as beneficiary of the 401k plan in his family trust.  He remarries and dies several years thereafter without naming his new wife as beneficiary of his 401k plan.    The daughter is claiming the benefit.   The new wife disagrees.    Who is right.     

I am looking at setting up two plans for a controlled group. The entity structure is as folllows:

Company A is owned 100% by husband and Company A owns 100% of Company A1 and 70% of Company A2 (the other 30% are unrelated owners) Company A1 and A2 are restaurants and Company A is a management company. 
 

Company B is owned 100% by wife (married to husband above and husband and wife participate in all businesses) and Company B owns 100% of Company B1 and 100% of Company B2, Company B1 and B2 are restaurants and Company B is a management company. 
 

If we did one plan to cover all entities it would have enough participants to require an audit. What we are looking to do is have two plans (both plans would be designed the exact same) and Plan 1 would cover Company A and Company A1 and A2. Plan 2 would cover Company B and Company B1 and B2. By having two plans each plan would have less than 100 participants and neither one would need an audit. 
 

I have the following questions:

1. the affiliated service group rules don’t apply here since these entities are mainly restaurants, right?

2. Wouldn’t Plan 1 technically be a multiple employer plan because of the 70% ownership of company A2? (Doesn’t rise to 80%)

3. If Plan 1 is a multiple employer plan (which I think it is) can Plan 1 be permissively aggregated with Plan 2 for testing purposes (coverage and nondiscrimination)? Technically wouldn’t you just be aggregating Company A and A1 in Plan 1 with Company B, B1 and B2 in Plan 2 and company A2 would be tested separately? 

4. Are there any risks to structuring two plans instead of having just one to avoid an audit?