We have a client that allows for the true-up of the safe harbor match.  There are a few participants that have maxed out their deferral contributions early and the match stopped.  The payroll provider is calculating what the match should be based on the deferrals and YTD compensation and funding it through the year.  Does anyone see an issue with this since the document allows for True-Up?  Or should the funding be done at year end?

Really quick, is a 408(b)(2) and 404(a)(5) disclosure required for Cash Balance and Defined Benefit plans?

An employer spins off from its 401(k) plan a portion of that plan’s assets and liabilities into an unrelated 401(k) plan. Neither the transferor plan nor the transferee plan has any defined-benefit or other pension obligation.

On receiving the transferor’s Form 5310A, what does the IRS do with it.

How likely is it that the IRS will ask the transferor a follow-up question?

We took over a DB plan a few years ago and obtaining the last Valuation Report as well as SB was like pulling teeth (and we are not oral surgeons).

The participant in question has terminated and client looking for me to calculate the amount due, through a current date. Upon his review, he's telling me the prior actuary counted a part-time employee as full time (1,000 hrs) for two years.

Of course employers always complain the participant is getting too much money, but according to these new facts (and he supplied the hours worked for each year) the participant's place on the vesting schedule is lower than reported by prior actuarial firm.  Instead of being 60% vested per the actuarial report, she is actually 20% vested.

My dilema - should I redo the calculations with the correct information (my actuary's opinion) or "what's done is done" as per my ERISA attorney.

Regardless of what the client "wants", if the plan is audited by IRS, they will consider this an operation failure and sanction the client.

Hi, 

Plan is terminating due to asset sale and the term date is 07/08/2022, since the plan is terminating Mid-year should a safe harbor notice be sent and will an amendment be required? 

Thanks

A labor union wants an employer to transfer assets and liabilities of the employer’s individual-account retirement plan, for the collectively-bargained employees, to the labor union’s multiemployer individual-account retirement plan.

Would this involve risks to the employer?

Small SH 401(k) plan (one MD, six NHCEs) had balance due for 2020 Safe Harbor match.  As of mid-2022, the 2020 SH match not deposited to plan (pooled account).  What options does the plan sponsor have to correct this?

Thanks.

Is a mandatory plan restatement (for example, a Cycle 3 restatement) considered a settlor function by the DOL? Or can the fee be paid from plan assets?

Does anyone know of a document vendor that has a Money Purchase plan with mandatory employee contributions (not a governmental plan). 

Question regarding the management group analysis under 414(m)(5).  I have four entities which none qualify as parent/sub or brother/sister controlled group members amongst each other.  One of the entities definitely provides management functions for the other three, but none of the three recipient organizations provide more than 50% of the gross receipts to the potential management organization.  

I know that organizations related to the recipient organization are included as part of the entire group, but I believe that analysis is scrutinized after the determination of whether a management group even exists.  In other words, if I am incorrect and  the three recipient entities above were combined prior to the management group analysis is performed, then the combined gross receipts of all of these companies would be above 50% and thus constitute a principal business.  I don't think that is the case, but I wanted to hear from others.

Maybe I'm just realizing this later than everyone else, but since the rates are changing monthly, are we in for a bunch of timing headaches?  Specifically...

1. My efficient assistant prepared the report and statements in April... and I'm just now getting to reviewing them.  It used to not be a big deal because no numbers changed.  But now I have to re-run the lifetime income disclosures because the interest rates aren't the same now as they were three months ago (or they might be, maybe... better not take the chance!).

2. Let's say I actually did send the statements with disclosures back in April.  Plan sponsors being plan sponsors, the package sat on their desk until I reminded them that they actually need to open it and do something, so they don't hand the statements and disclosures out until July.  Are the disclosures that we prepared back in April no good?  Would the participants ever know or care?

3. The interest rates update near the end of the month (according to the updates I get from my recordkeeping software provider).  Does that mean I'm on hold with sending out reports near the end of the month so I don't accidentally force a client to hand out a disclosure notice that is 'behind' by the time they hand it out?

These sound ridiculous... but that doesn't mean they're not how the rule was written.  Of course, then there's "written" vs. "interpreted"... anyway, am I working myself up over nothing?  Thanks.

Small business has discovered that it did not contribute enough in the past 4 years.  They are making the correction and will make a contribution to make whole the contributions for the previous years. Can they deduct everything this year (the year the contribution is made for correction) or do they have to go back and amend the previous 3 years returns to show the deduction for the year it should have been made?  Any direction would be appreciated.

Anyone know of a company with a 401k plan with roth conversion available for PRE tax contributions ? This is separate from a different somewhat common plan feature of roth conversion for AFTER tax contributions to assist a so called mega back door roth. Yes I know something like what I am asking can be done in IRA but then you cant put it back inside an ERISA protected 401K.

Welfare plan, the first year for one of the benefit plans included commissions & premiums for 2 years in their schedule A.  The following year, no Schedule A information was provided (since it was already reported the prior year).  There will be a Schedule A provided next year.  For the year commissions & premiums are zero, do you file a Schedule A or skip a year?

XYZ US and XYZ UK are commonly controlled business organizations.

XYZ US maintains a 401(k) plan. XYZ UK is not a participating employer under that plan.

Martha ends her employment with XYZ US on June 30, and becomes XYZ UK’s employee on July 1.

If employment by a business organization commonly controlled with the 401(k) plan’s sponsor otherwise would mean a change is not a severance-from-employment, is there anything that varies such a rule if the next employing organization is outside the USA?

Has anyone had any experience with New York State withholding on a minimal distribution.  Participant receiving about $1,200. wants to withhold about $300. 

How does the client report this. Assuming on Form 945.  How do they pay it? Client uses Paychex, they cannot give them any guidance.

Any help would most appreciated.

Thank you.

Richie

Have an owner who just reached Age 72 on 6/14/22. Plan Year is 4/1/21- 3/31/22. Under Secure 2.0 he has to take his RMD by either 12/31/22 or 3/31/23 (if he takes 2 RMD's in 2023). Two questions:

1- Do I use the value of his Account Balance in the Plan at 12/31/21? Or use the valuationAccount Balance at 3/31/21 or 3/31/22? If I have to use 12/31/21, an interim valuation would be required.

2- I have read that the senate and house are working on a bill extending the RMD to 73 in 2023.  Would that help him in any way?

Thank you for your help.

Richie

An IRS-preapproved plan’s adoption agreement has a fill-in for the effective date of the cycle 3 restatement.

(But that date does not apply to a provision for which the basic plan document, the adoption agreement, an “addendum”, or something else in the IRS-preapproved documents specifies a special effective date.)

Imagine the user’s plan has for decades used the calendar year for the plan year, limitation year, and other provisions.

If in July 2022 a user specifies a date on the fill-in for the general restatement date, what would you choose:

July 31, 2022?

July 1, 2022?

January 1, 2022?

Something else?

What is your reasoning for the restatement date you choose?

DB plan terminated in 2018. The two participants received max lump sum, and the excess went into a QRP. The two original DB employees are no longer on payroll, so no 95% issue. There are now new employees including a new owner. Remaining unallocated assets are over 1 million. Can we set up a new DB qualified replacement plan using the remaining unallocated assets.   

Our client has an interesting situation:  A participant whose divorce became final ON her annuity starting date.  The plan administrator was aware of the pending divorce, but could not suspend payments (as it normally would under QDRO procedures) because the participant had also reached her required beginning date under the RMD rules.  The administrator did not receive the final decree until a few months after the ASD/RBD, and brought the participant into pay status with a QJSA because they believed her to still be married on her ASD.  

Under state law, the participant was not married on her annuity starting date.  My thought is that the participant should be permitted to retroactively elect a life annuity.  However, I'm curious if anyone has ever seen a similar situation and how you handled it?