Business owner is shutting down his practice, moving states, and opening a brand new practice.

Although it's the same line of work, for practical purposes he is planning to create a new S-Corp in the new state and shut down the old one.

There are and will not be no other employees.

Any reason he cannot just keep the same 401(k) plan and rename it under the new Corp?

Professional Services Group with shared ownership of company by the professionals.

Each professional has their own Inc/LLC and their own plan.

All plans mirror each other and are cross-tested together.

Some of the professional are exiting the Company at say 9/30, though their individual companies will continue.

The PS contribution requires last day worked and they will be making PS contributions as separated companies.  It is assumed then that their PS contributions will not be included at year end testing.

Somehow I know I'm not thinking of everything clearly. Two questions:

• I believe they are treated in the testing as terminated at 9/30, so 401(k) contributions made prior to 9/30 are included in testing.
• One of the Partners leaving is over 65, so is eligible for a PS contribution as a Retiree, but the contribution will be made long after 9/30. Not sure if this is included in the testing?

Can a multiemployer health & welfare fund (which, by definition is not an "employer" or an "employee organization") take advantage of the DOL voluntary plan safe harbor contained in DOL Reg. §2510.3-1(j) to avoid application of ERISA (assuming it otherwise satisfies the safe harbor requirements)?

I have a few plans where the forfeiture account has increased, either from zero, or from some amount to a higher amount. Do these assets get counted as employee assets? I don't know what was done in past years for these, but I wanted to make sure they are in the correct place.

I have a prospect that is a part of a PEP.  He wants to exit out of it and operate his own 401(k).  I have never done this but from what I'm reading it's not a simple task.  Anyone have insight as to if it can be done and if so, how?  Thanks

The sponsor of a retirement plan that yet has no provision for an involuntary distribution desires to provide an involuntary distribution if a participant is severed from employment and her balance is no more than $1,000.

The sponsor prefers to limit the plan’s involuntary distribution to the amount specified in Internal Revenue Code § 401(a)(31)(B)(i)(I) because the sponsor/administrator is unwilling to provide for a default-rollover IRA, which would be required if an involuntary distribution is more than $1,000 and the participant/distributee furnishes no different instruction.

The plan’s provision would look to whether a participant’s whole account, including her rollover-contributions subaccount, is no more than $1,000.

The plan’s governing document uses no IRS-preapproved document. The sponsor would amend the document to state its desired provision (except to the extent a provision would tax-disqualify the plan).

Assume all amounts are 100% nonforfeitable.

The plan provides participant-directed investment, with a broad range of investment alternatives. Account balances are recomputed every New York Stock Exchange day.

For simplicity (and to not resume a June 2020 BenefitsLink discussion), assume the plan incurs no fee for processing a distribution, and a participant’s account incurs no charge that could result in a distribution amount less than the participant’s before-charge account balance.

What happens if, between the time the plan’s administrator sends a § 402(f) notice and the form for instructing a direct rollover and the time the administrator would process an involuntary distribution, the participant’s changes from less than $1,000 to more than $1,000? Must the administrator cancel the distribution?

What happens if, on the day the involuntary distribution would be processed, the participant’s account balance changes from $999 (based on the preceding day’s funds’ shares’ prices) to $1,001 (based on the funds’ shares’ prices on which shares would be redeemed)?

Must the administrator cancel the distribution? How does a recordkeeper do that? If looking to the preceding day’s balance is good enough and the distribution is not canceled, what does the recordkeeper with the breakage between $1,000 and the funds’ shares’ redemption value?

How do plans’ administrators and, perhaps more important, recordkeepers deal with this in the practical real world?

I have a plan that was a controlled group/ASG in the same plan.  

This year (2021) four other companies joined the plan that aren't part of the CG/ASG, and no other business ties, so we have an open MEP.

As I understand it, in an open MEP, each plan has it's own 5500, and in a closed MEP, they only file one.

So, in this case, can I treat that CG as one closed MEP and file a single 5500 for those plans, and stand alone 5500's for the four new ones?

Or do I have to file 14 seperate ones?

We have a client who provides health through a community plan.  Employers pay into it, there is insurance and a trust with assets.  Each participating employer has had to file their own 5500 under their EIN.  The health plan has provided information for Schedules A and I in the past.

I requested the information for 2021 and was told by our client - the health plan is filing the 5500 on behalf of the plan and participating employers no longer need to file a 5500.  I have to think our client will need to file a 5500 marked "Final" as the IRS/DOL will be looking for one since there was a 2020 filing and since we filed an extension 2021.  I am attempting to clarify this with the health plan people but still waiting for a response.  If they don't provide any direction, we will prepare a 5500 for our client to sign and file.  The 5500 program doesn't like a welfare benefit plan with no Sch A or I but I suppose  I can ignore that validation warning.   Better to get one filed and possibly amend later if needed.  We only file a handful of welfare benefit plans and have never had to file a final. 

Just checking myself - ERISA 403(b) plan allows "ad hoc" distributions - i.e. partial withdrawals for terminated participants. Is it allowable to eliminate this option for current accrued benefits? (Plan provides for lump sum distribution.) Note that this is not an "in service" distribution question.

New plan.

Effective date 1/1 for PS of current year (10/1 for 401(k) and safe harbor)

Owner wants to allow all employees employed as of 7/1 to be immediately eligible as of 1/1.

Does that make sense then that anyone hired between 1/1 and 7/1 would be immediately eligible, albeit on their own date of hire instead of 1/1?

A 125 Plan allows entry date first day of month after meeting eligibility requirements.  The 125 Plan is a calendar year plan.  If the entry date of the participant is Nov 1, can the participant submit for reimbursement a medical expense incurred in March of the same calendar year?

Is an IRA’s sale to a not-yet spouse a prohibited transaction?

Imagine this not-so-hypothetical situation:

Two people who have contemplated marriage decide to wait. Why? One’s IRA owns real property, which the couple intend as their new residence. The IRA holder believes that living in the property while the IRA owns it would result in an improper personal benefit and prohibited transaction. Instead, the IRA sells the property to the holder’s not-yet spouse. (Assume the IRA’s sale is for an amount an appraiser says is fair market value.) The couple delay their marriage, and the IRA holder’s move, until the year after the year in which the IRA sold the property.

BenefitsLink neighbors, have you seen any court decision or agency proceeding that analyzes a situation anything like this as a too-clever evasion or somehow a prohibited transaction?

What tax-law doctrines might the IRS (or a taxpayer) use to reason that the IRA’s sale to a not-yet spouse ought to be treated as if it were a sale to the IRA holder’s spouse?

If a 401(k) plan has no participants and no assets, is a Form 5500 required?

The plan provides for employee deferrals only (no employer matching or other employer contributions) and no employees have enrolled in the plan to date. The plan has never held any assets. Is a Form 5500 required?

TIA!

Best of luck - hopefully it won't be too severe. We're pulling for you!

As I understand it, if an Employer choses to utilize the Top Paid Group (TPG) for it's benefit plans, it must be used on all benefit plans, retirement and non-retirement plans.

So, this would include 401(k) and an HSA, right?  if an employer wants to use TPG for HSA, they have to use it for the 401(k) right?

But what happens if you have conflicting choices?  The HSA says TPG and the 401(k) plan says standard?

Anyone have a decent primer on this they could share? What needs to be in the election by the Plan Sponsor to opt into this method instead of the standard method? Is there a summary of the 24 month average rates? Is that a single rate or are they segmented, that is 3 separate 24 month rates. When you chose a specific look back month for the 24 month average does that same month have to be used for each of the next 4 years you are required to use the alternative method? The standard method is pretty straight forward and verifying rates seems easy on the PBGC site. The alternative method I feel should be somewhat straight forward too but for some reason it's eluding me

This feels like something I should know but I don't do a lot of PBGC plans and most of them are under 25 where it's simply cheaper and easier to pay the small plan cap.

I have a plan that's got for them a significant VRP this year due to the very low PBGC rates and trying to see if the alternative method can reduce that substantially even though I know it means using the alternate method for at least 5 years.

Terminating plan - The termination date is 09/21/2022 and the employee has contributed $27000 ( the 2022 max +Catch up) in deferral contribution.  

* Is the maximum deferral allowed for individuals if the 401K plan only operates for a shortened year, i.e., January 1 through September 21, 2022?

Thank You. 

I have a plan that traditionally gives a 16% ps contribution.  They would like to allow employees to be able to take a portion in cash.  For example: 10% would still be PS, but the other 6% could be cash or deferred.  So, I believe I have a CODA situation.  

That being said, for the 2022 plan year, they would like to start this arrangement.  They would make the PS in March 2023.  Would the CODA portion be a 2022 or 2023 contribution? I am thinking 2023 deferral?  For the amount that is taken as cash, I assume it would be 2023 income.

Question 1: One person CB plan. CB pay credit formula is a percent of compensation using only compensation greater than $150,000. If compensation is less than $150,000 is there a 401(a)(26) failure?

Question 2: Company has three employees, all family / HCE's. All employees have entered the plan, but only one of the participant is receiving an annual cash balance benefit, the others are in a $0 contribution credit group. Is there any way this plan can pass 401(a)(26)?

Have a potential new client that just came to me with a failed ADP Test.  However, the previous TPA did not make any type of correction to the test.  Now we are left trying to figure out how to proceed:

1) Is this correctable via the VCP program?
2) In order to correct the testing, can we refund one participant enough in order to pass the testing?
3) What liabilities, if any, are there to the company?
4) What penalties could the Plan face?