Here are the facts:

Owner/participant retires 12/31/2021, dies shortly after.  
Plan fails the ACP portion of testing.  Owner is due a "refund".  Money has been moved to a spouse's account as beneficiary.  The transaction was treated as a "funds on deposit" and transferred to the spouse.  No 1099R was generated.

Question:  since the money has been moved, we need to make the distribution, whose ss# should the distribution be taxed under?  Also, since the "transfer" took place in Feb 2022, would the plan be considered to have been timely corrected? 

I will have ot find more information, but I got a request today asking for clarification on if two companies were a control group- there are partners who have common ownership; one partner owns 80% of a related business. They are wondering if he sells his interest, bringing it under 80%, will that be enough? I have a feeling that the other partner(s) have enough ownership to make this idea a non-starter. 

The businesses have seperate DC plans, and have been advised by someone else that they may need to amend those plans (I am assuming this is to provide substantially equal coverage between the two companies).  but I thought there was a grace period for that.

We submitted our plan to the IRS under VCP about 6 months ago and just found an issue completely unrelated to the VCP submission.  I do not see any requirements that we can't still self correct the recently identified problem, but wanted to see if anybody had a different opinion.  In my mind, since there isn't a specific exclusion, as long as the issue would otherwise qualify for self correction, I can.  Any insight would be appreciate - because maybe I completely missed an all cap requirement that says differently....

Have you seen any study about possible anti-selection (e.g., higher average mortality than the overall population or plan population) with respect to a Social Security Level Option?

Looking for guidance on how an employer applies the rate of pay affordability safe harbor to an employee that is paid both a salary (for work performed in one position) and an hourly wage (for work performed in second position).  My first thought is to just use the W-2 safe harbor, but the client wants to explore the other possibility.  I found language in the final regs allowing the employer to apply different safe harbors to different categories of employees but nothing about applying a safe harbor to an employee with two categories of pay.  Any ideas?

Question about preparing the attachment Schedule H/I Line 4a Schedule of Delinquent Participant Contributions.  Do you include the calculated lost earnings in the amount or is it just the late contribution amount.       The 5500 instructions only discuss the contribution.      I have someone telling me to include the earnings.

My understanding is that employee premiums paid toward self-insured group health coverage are considered ERISA plan assets, but may be held in the employer's general assets due to the trust-requirement relief. However, the other ERISA rules (fiduciary obligations, prohibited transactions, reversions, etc.) continue to apply to the employee premiums. 

Say the total premium for a month is $1,000, of which the employee pays $200. The employer sets aside $1,000 in an account in its name and EIN and there is no other indicia of ownership or rights by the plan. 

How do you determine the portion of the account that is plan assets subject to, say, the PT rules? Can you treat the account as using employee contributions first? Would this accounting restart every payroll cycle when new employee premiums are withheld?

Would appreciate any insights.  

Background: ERISA provides anti-alienation protection to qualified retirement plans; early Supreme Court cases deferred exemptions back to Congress, 1984 Congress allows QDRO's, 1997 Congress allows reimbursement for fiduciary breaches or criminal activity involving the Plan.  Mandatory Victims Restitution Act ("notwithstanding" any other Federal law) has otherwise been used as end-around of anti-alienation for variety of other restitution-based claims against 401(k) accounts.

1.  Has a MVRA based appeal been heard by the Supreme Court and what was the result if so?

More recently, appeals have sprung up concerning the mandatory 20% withholding and the 10% early withdrawal penalty.  Apparently, the IRS has opinioned that the 10% penalty does not apply in instances of forced distributions, easy enough to understand since that's a facts and circumstances determination anyway.  However, the caveat with MVRA is that the government is only "standing in the shoes" of the participant, meaning the participant directs the withdrawal to themselves, but the government receives the monies so demanded by the restitution order.  In general, the Plan is required to withhold 20% for federal income tax withholding, which shorts the restitution order; and since the participant is still the "recipient" before remanding the funds to the government, they're also stuck holding the bill for the taxable income!  So, where the participant is following court-ordered direction, they are then triple-penalized, 1) the restitution payment itself, 2) the restitution order is now short 20%, and 3) the participant now has to recognize taxable income often reaching hundreds of thousands of dollars, at a time when they are incarcerated, or otherwise destitute following liquidation of any available assets before reaching into their 401(k)

2.  Is anyone aware of a final resolution to any of the 20% withholding appeal cases?  Anything I saw noted them being remanded back to the originating district court by the circuit court to address these deficiencies.

(Caveat- Yes, I fully recognize that these are actions to correct a wrong committed by a convicted individual.  I'm merely looking for commentary or known resolution to the issues of MVRA abuse to circumvent the sacred anti-alienation provision and basic justification for ERISA; and any procedural establishments for handling the 20% mandatory withholding)

When pension $ are requested to be paid back retroactively due to policy change, etc. how are the pay backs treated at tax time.  I didn't see any prior year adjustments on the 1099R.  Some employees had the option of reducing future pension $ until paid back.  Others had the option of paying back lump sum.  How would the tax $ be adjusted on the lump sum pay back.  Would the 1099R show a reduced gross income in box 1 or would another document be issued for this pay back?

So I keep getting all of these email blasts about CARES Act Amendments being extended.  But apparently that only applies to the RMD waivers and not all the loan/distriubtion rules. Why in the world would anyone do half of a CARES Act Amendment?

This must be an oversight? Has anyone confirmed that this was intentional?  This is really not an extension at all...

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.