I am terminating a profit sharing due to the sale of the company.    This is not a 401k plan and they do not wish to apply to IRS for DL.  I was taught to give a 15 day notice to plan participants but can't find the citation.  Can someone please provide me with some guidance in this matter?

Participant elected to have Roth deferrals taken.

Company deducted funds pre-tax.  (However, the proceeds were "correctly" placed in the Roth source at the record keeper.)

Crossed tax years.

What might the fix be here?

Plan is SH Basic Match with 1 year wait and semi-annual entry.  Wants to amend to immediate eligibility but exclude seasonal employees who have not met the eligibility requirements.  Is that permitted to be done mid-year? 

I'm taking over a client where there are two life insurance policies owned as Plan assets.  Here is the issue, the premiums were paid outside of Plan assets.  Normally we would use those payments as part of the contributions for the year, but the issue is that the premiums are actually in excess of the allowed contribution (plus the client also made an additional contribution in '22 for the '21 plan year).

Would there be an issue in having the fund reimburse the owners who made the premium payments from outside the Plan?  That way the premiums were paid by the Plan and the additional contribution could be made?

I just wanted to make sure that this wouldn't create additional issues.

Thanks in advance!

I really struggle with Affiliated Service Groups. A client asked me about the following scenario: Hospital wants to engage physician practice ("PP"). Hospital offers to hire all of PP's employees. Doctor will be the sole person that will remain behind in his entity. Hospital will then engage Doc as Independent Contractor, where he will provide all of the same services, using his former staff (now employed by the Hospital). Hospital will handle all of the back office functions for doctor (billing, insurance, etc.). The question was whether Doc, in his own entity by himself, can maintain his own retirement plan that provides very rich benefits; and not get lumped into testing that plan with the Hospital retirement plan. It seems to me that this is exactly why the ASG rules were created and that this seems like an A Org situation. But again, I am terrible at ASGs. 

Any thoughts?

Has anyone had any information as to the degree the IRS budget increase under the Inflation Reduction Act will flow down to TE/GE division and possibly impact plan audit activity?  I read Chuck Rettig's letter about not focusing on small taxpayers but do we know anything about allocation of these funds and the degree to which it will impact plan enforcement?  Any comments and surmises welcome.

A client established a profit sharing plan during 2021 (drafted and signed before 12/31/21) with every intention of making a first year contribution.  The client also has a 401(k) plan that's been in existence for years, but they wanted the profit sharing plan to be a stand-alone program.  It's intended to operate as a trustee-directed investment fund as opposed to the participant-directed 401(k) plan.  Due to certain cash flow issues, they now decide to skip the contribution for 2021.  There are well over 200 eligible participants. 

We (the TPA) plan on preparing Form 5500 reporting the accurate participant count and zero assets.  The auditor says they've never had this problem before, and don't know how to proceed.  Other than auditing the employee eligibility, they're stumped on what to do regarding the lack of assets and how to report.  By the way, the client is aware that an audit is needed for this second plan (with whatever cost is involved).  We suggested that if they don't plan on making a profit sharing contribution for the next few years that they terminate the plan and then re-establish to avoid these additional annual auditing fees.  They declined.

Has anyone faced this situation who can offer some guidance?

Thanks.

Hi, 

One of the plan that is terminating the term date is 08/31/2022 and participants have already max out for the entire year (20,000) since the term date is 08/31/2022 and the part's have contributed for the entire year will this be excess contribution from the participants end? 

Thanks

I have an auditor friend who  has brought up the following issue:

Plan subject to audit terminated and all assets were distributed during the month of June, 2022. The auditor inferred to the plan sponsor that they could defer the attachment of the 12/31/21 audit, and include it with the 6/30/22 short year filing (audit will be prepared for the short year), utilizing the answering of Schedule H, Line 3d(2), indicating that the plan "has elected to defer attaching the IQPA's opinion for the first of 2 consecutive plan years, one of which is a short plan year of 7 months or fewer".

The sponsor tried to submit the 2021 Form 5500 without the audit, and the software vendor would not accept the return, citing the lack of the auditor's report being attached to the return.

In all my years I have always applied the language of Line 3d(2) of Schedule H to an initial plan year of less than 7 months. In the scenario above, we would insure that the 12/31/21 5500 filing had the audit report attached, and then again for the final short plan year.

Has anyone seen the scenario above, where the auditor tried to attach both audits to the final short year filing?

Thanks for any replies.

I'm participating in a NQDC that specifies that the distribution starts the January following an Elected Age + Separation of Service.

I'm allowed a one time change and I changed my plan by five years (original elected age + 5 years).  The change was made 13 months prior to the earliest payment date (the January following the original specified age) - Change became final in Nov the year prior to the original elected age.

Nine months after the change my employer statement was showing the new age + separation from service (status pending - I assume because it can't take effect for 12 months).  Several months later the plan got transferred to a major investment firm and their statement was showing new age + "separation+5 years".  I filed a claim stating that it should be new age + separation of service but they declined the claim and pointed to 409A.

Note that my plan states that if I attempt to change the payment election the same year as the elected age (that would be less than 12 months from earliest payment date) they will change the separation of service to separation+5 years.  In this case I made my change the prior year (Nov).

I have read countless web site that discuss "Changes in Time and Form of Distribution" but I can't find anything that talks about adding five years to my separation date.  This seems like a slam dunk but then we're dealing with the IRS tax code.  Does anyone have any insight on when separation would/should be changed to "separation + 5 years" so I can determine if I should appeal the claim?

Can a non-citizen/non-green card holder living and working in the US (for example, on a visa) contribute to an HSA if he or she has qualifying HDHP coverage in connection with his or her US employment and no disqualifying coverage?

The Code and related IRS guidance state that eligible "individuals" can contribute without any caveat that they be citizens so it appears that non-citizens can do so but I have come across some sort-of-authoritative sources that say the opposite.

Any thoughts are appreciated.

Sorry for some very basic questions, but it seems to me that under the 409A regs the concept of "performance-based compensation"  is only invoked if there were a possibility of that compensation being deferred. In other words:

1. If there is no opportunity to defer, an employer could pay a bonus for performance over the preceding 12 months based on criteria established right before the bonus is paid without running into 409A, correct?

2. If there is no opportunity to defer, an employer can establish performance criteria for a bonus that would be paid with respect to a 12 month period that has already started without running into 409A, correct?  (E.g., in August 2022, the employer establishes performance criteria for the period July 1, 2022 through June 30, 2023, and any resulting bonus would be paid shortly after June 30, 2023.)

Thanks!

We have an ESOP and we would like to have certain employees outside the US participate in the Plan (the ESOP currently only covers US employees).  Normally, this wouldn't even be a consideration because ESOPs normally allocate based on US income.  We don't have that issue, because we allocate based on job classification.  

But we still have the remaining issue that allocations cannot exceed 415 compensation.  Do we have any options here?

Is there a way that non-US compensation can be classified as 415 compensation?

If not, is there a way we can pay foreign employees so that the compensation somehow qualifies as US compensation?

To the extent it is helpful, some of the foreign employees are in Ukraine, but we have others in other countries who we would also like to add as participants.

As we know the deadline for signing Cycle 3 Adoption Agreements has passed.  What if a plan sponsor has not signed the now separate Trust Agreement timely - by July 31?  The Trustees are the same before and after Cycle 3.

Recently filed 2021 Form 5500-SF for a plan and about a week after filing the Employer contacted us to let us know they realized after the fact that the filing had their old address. Address changed a couple years ago but didn't get noticed on the filing until now. Do we need to file an amended return?    

I am looking for thoughts on merging 2 457(b) top hat plans when the plans have a different plan year end - for example one plan has a plan year end of 12/31 and the other plan has a plan year end of 9/30. In the qualified plan world, you cannot merge 2 plans if they have different plan years. I feel this is not really an issue in the non-qualified 457 plan context where there is no Form 5500 filing or testing requirements. Does anyone have any comments? Thank you!

If a participant wants to take a distribution (either in-service or termination), is it an IRS requirement to get spousal consent or is it at the Plan's discretion?

When calculating the Contribution & Benefits Utilization standard and Key Employee 25% Concentration Test you are supposed to calculate the aggregate qualified benefits.

Are qualified benefits equal to payroll deductions for cafeteria plan items plus employer HSA contributions <or> do they include all employer contributions - including amounts paid by employers to pay for health, vision, and dental premiums?

Deleted - inadvertent duplicate

Another TPA has asserted that this is possible. I think this is dead wrong, and I can find no support for such a position. However, I'm always willing to question myself. Does anyone believe this is possible?