Good morning everyone!  Just curious how everyone handles management fees on the investments and reporting it on the Form 5500.  I've seen a few different things, most notably:

1. Include them as part of the Investment Gain/Loss - Line 8(b)
2. Include them as "Other Expense" - Line 8(g)

I'm not sure if it matters either way, but just curious since I've seen different things in the past.

Thanks everyone!

Participants were given 1099-Rs by January 31; 945 filed with IRS by 1/31/22; client has not yet filed the pink 1099-R/1096.

Excuse my ignorance, but what is the penalty for late filing with IRS; can the fine be paid with the submission and on what form, if possible.

Can someone send me a link to the DOL proposal to limit audits to those participants who have balances in the plan?  Apparently there was a comment window that closed in November 2021 or something.  Someone mentioned it to me but I cannot find anything on google.

Are company contributions to either 401k/PS plans or cafeteria plans 401(k) plans subject to FICA taxes?  Do they add to the FICA wage base?  I believe that they are/that they do, but I’m reading things that suggest otherwise.

I know that they are not subject to withholding taxes.

New 401k plan.  Effective Date of plan is 1/1/21, adopted in Aug 2021 so deferrals began in August.  Is it permissible to calculate the ADR using the full year wages?  

Can we self-correct an operational failure in a terminated plan or is correction of such failure only available by going to the IRS via VCP per Section 4.07 of Rev. Proc. 2021-30.  Section 4.07 doesn't say SCP is prohibited (unlike, for example, Section 4.08 which says SCP is not available to correct failures in orphaned plans).

Individually designed plan failed to adopt the required hardship withdrawal amendment by 12/31/21. 

Assuming it has a favorable letter, this error seems to be available for self-correction under EPCRS. Anything I am missing? It seems too easy.

I thought some people discussed this a while ago.  But can a plan allow for people to waive their PS (and SH) contributions due to the resource limit for SSI disability benefits?

Plan utilizes Fail Safe provision for coverage (so no ABT, here).

Plan (just) fails coverage for the match by three people.

The plan document says who the plan needs to cover, but it does not say what benefit these people must get.  Unlike a non-elective contribution failure, a match benefit would seem to be based on deferrals.  Often, the people not benefitting don't ahve any deferrals.  

So, does the ER give them some sort of QMAC?  To what level?  The groups ACP?  (ACP including voluntary after tax?  yes, it's still a thing!)

I'm sure I've seen the answer somewhere before, but it's been many years since I've had a plan fail the match portion of the plan.

Plan has two trustees.

One of them has retired and is simply no longer involved or around.

There is no board for this small company.

Can plan be amended to only the one remaining trustee by this one remaining trustee and not involve the outgoing one?

A husband and wife in a common law state (so a controlled group) have separate businesses and separate calendar year profit sharing only plans.  The husband has no employees, the wife has one employee that is eligible for her plan effective January 1, 2022.  The wife's plan requires 1000 hours and last day to be eligible for a profit sharing allocation.  The husband's plan requires last day or 500 hours of service to be eligible for a profit sharing allocation.

The wife's employee terminates in 2022 with less than 500 hours.

Am I correct that we can exclude the employee from coverage since they did not earn more than 500 hours of service, and thus not have to provide a profit sharing allocation?

Thanks very much.

Hi,

An owner only DB Plan (100% owner -no partners etc.) opened account with Bank. Bank did not want to open pension account so he opened the account with the corporate name only and left out "Defined Benefit Pension Plan" on the account name. It is a checking account with no interest -so there are no issues of bank issuing a 1099 for interest income. Is this a big issue that the account is missing db plan on the label? Thank you.

Our plan allows both elective deferrals and after-tax contributions.  If an otherwise eligible employee was excluded from participation in the plan, I understand we need to provide a QNEC for the missed deferral opportunity and the missed after-tax contribution amount, plus applicable earnings, and the related missed match, plus applicable earnings.  If no one has ever made after-tax contributions under the plan, do we just use the ACP attributable to match for the employee's group?

I have a plan for which I have to do a Schedule D.  I cannot get it to take my entries past page 2.  I keep adding page 2 (page 3 is not available apparently), but it still only fills out the first 2 pages no matter how many I add.  Just spent 45 minutes imputing the info to see that most of it didn't take. How do you keep adding so it shows up? Thank you in advance! 

Hi!

A plan participant requested a rollover of his $40,000 account balance.  Due to a processing error on the TPA side, the distribution was coded as a cash distribution when entered, so federal and state taxes were withheld when the recordkeeper processed the distribution.  The net amount was paid directly to the IRA Custodian, and taxes were remitted to the IRS and state.

The distribution was processed in December 2021 and the participant notified us in March when he received his 1099-R's that something did not seem correct.

We contacted the recordkeeper with fingers crossed that the entire transaction could be reversed, but they said it could not, as it crossed tax years and the taxes had already been remitted to the IRS.  And, since it was not their error, they could not "front" the tax funds back to the participants account as it could not stay on their books.

The original 1099-R was issued showing the $40,000 as a cash distribution with taxes withheld, and since the participant is age 35, the form was coded with a 1, so the 10% early withdrawal penalty also applies.

The participant had not yet filed his taxes, so the recordkeeper reissued the 1099-R as two separate forms:  one shows the amount that was deposited in the IRA as a non-taxable distribution, coded as a rollover; the second shows the amount of the taxes withheld as a taxable distribution coded as a 1.

There has been a lot of discussion now regarding how to make the participant whole, and talk about how this will play out with his taxes regarding whether he gets a full refund of the taxable amount, and what will be due for the penalty.  To me, the participant should wind up with the full amount in his IRA that he asked to be deposited in his IRA.

Does anyone know a way this can be accomplished?  Should a 1099-R have been issued to show the full amount of the distribution, zero should have been taxable, show the actual taxes withheld and code as a G so no early penalty?  Will this result in the taxes being returned?  

The participants broker also feels that since the participant never actually received any funds, the 60 days does not apply for the participant to change his mind and deposit the tax amount into his IRA.  I do not even know if the participant has access to enough cash to be able to deposit the amount withheld for taxes.

I am hoping someone has had this situation and it came to a happy resolution.

Thank you!

Company A acquired Company B in stock acquisition in 2021.  Each entity sponsors its own 401(k) plan with calendar year plan year. Company A's plan is a QACA safe harbor with a 3% non-elective contribution. Company B is not safe harbor.

Company A wants to freeze Company B's plan as of 12/31/22 (end of 410(b)(6)(C) transition period), add Company B as participating employer under Company A plan as of 1/1/23, and merge Company B's plan into Company A's plan sometime in 2023. (No bandwidth to do a year-end plan merger.)

Company A wishes to carryover the deferral elections under Company B's plan to Company A plan as of 1/1/2023.

I am concerned that this doesn't satisfy the uniformity requirement under QACAs/EACAs (that eligible employees be automatically enrolled at a uniform percentage of compensation).

1. Am I being too conservative? Would such carryover be okay for a QACA?

2. Would your opinion differ if the plans were merging as of 1/1/2023, given that the merged plan would be a continuation of both Company A and Company B plans?

The owner would like us to take the Cycle 3 restatement fee from the plan. The plan document allows us to take this type of fee from the plan. However she (the owner) has indicated that she wants the whole fee to come out of her account only and not across the board from the participants accounts. Is this permissible, can we take the fee from her account only? The document doesn't address this unfortunately.

I have previously prepared a Form 5500 for a Master Trust, which held assets for two plans of a plan sponsor. As of the end of 2021, the Master Trust no longer exists, as one plan merged into the other and the master trust was no longer necessary.

In preparing the Schedule D, Page 3, would you list the two plans that were in the Master Trust during 2021, or would you leave it blank, since there's no Master Trust at the end of the year?

Thanks for any replies.

Hi, 

Plan was terminated by Sponsor on 12/28/2021. Plan was terminated by plan counsel advice. As a corporate action/ acquisition plan is starting a new plan. Plan counsel is advising that the terminated plan needs to be amended. Do the terminated plan needs to be amended? When a plan terminates we don't ask for an amendment since the letter of Direction Document and the Board of directors resolution captures the  requirement of the plan sponsor's intent to terminate the Plan and this ideally suffices the requirement to terminate the plan.  However since here the counsel has the plan sponsor to do an amendment what kind of amendment will be required? 

Thanks

For the fiduciary-breach lawsuits that been in the news for the past 15½ years, has anyone done a scorecard on how many, or what percentage, were:

completely dismissed?

won by the plaintiffs?

won by the defendants?

settled?