Client has not yet restated DC plan for Cycle 3. Client is willing to sign interim amendment for a plan terminating in 2022. What are the issues if he terminates the plan prior to 7/31/2022, the Cycle 3 restatement deadline, without actually restating the plan for Cycle 3?

Company with multiple doctors, set up so each doctor has their own corporation with its own plan, and then there is one plan for employees. All plans are combined for testing (they also mirror each other).

One of the doctors is exiting the firm toward the end of the year and going independent. As such she will exceed 1000 hours while within the Controlled Group, but not after she departs.  I think hours are only relevant for Controlled Group testing since she will definitely work 1000+ hours for her own Corp.

Since employer contribution requires last day worked, I believe the contribution itself will not be included in the combined testing which will reflect a $0 for her.

Just curious if there are any differing thoughts?

We recently acquired a small TPA firm - less than 100 clients.  Former owner used Datair and we are a Relius group.  Relius cannot accommodate a conversion until 4th quarter.  Does anyone have experience converting from Datair on their own? They are going to send us instructions but former owner did not use Datair export so we are lacking in support issues.  Or, does anyone know of an independent contractor that can be contracted to work on these types of tasks.   Looking for suggestions based on past experience.  Thank you.

We currently administer a profit sharing plan sponsored by a dental professional association. No individual accounts. Two trustees, one retired and a replacement was named November 2021 and as of that date, ownership changed to new PA.

Under SECURE, we set up three separate plans, in name of the PA as it existed on 1/1/21 - one for each trustee, the third for the employees, effective 1/1/21 as the PA is on extension.  All contributions have been made to the existing plan in order to coincide with the existing PA.

The existing accounts will be transferred into their respective new plans with individual accounts in 2022.

One of the trustees is itchy that the new plans were set up under the old PA, we told him it had to be this way as the new PA did not exist on 1/1/21.

Since the money will not be transferred until 2022 and we are applying for a fidelity bond, and the bond will not cover prior acts, who is the sponsor and in whose name should the accounts be under?

As of now, the new plan is set up under the name of the old PA but probably will not be funded until individual accounts are set up with a carrier, prior to the due date of the PA tax return.

A plan client wants to make a retroactive amendment going back to the beginning of the 2021 plan year that is not corrective of a plan document failure, operational error or discrimination violation. This is a voluntary retroactive amendment to add additional accrued benefits to NHCE plan participants. Thus there are no anti-cutback or discrimination concerns. Shouldn't this retroactive amendment be permissible with no need to rely on SCP or 1.401(a)(4)-11(g) since this is not a correction of a plan or operational violation?

It is my understanding that a person who "opts out" (irrevocable election) is not an excludable employee for purposes of the coverage test, and is treated as not benefiting.

There is only one NHCE in the plan and this person signed an irrevocable election.  (Would have been eligible otherwise.)  Coverage fails.  Plan document allows us to bring in enough NHCEs to pass coverage.  Can we still give the opt out person an allocation to pass coverage?

Client maintains two companies, one is a professional service corporation (the "PC"); the other provides management, back office and other services to the PC (the "MC"). MC only provides services to the PC, no other clients. There is no cross ownership between the two companies, just a management services agreement. 

MC and PC want combine their employees for purposes of medical plan coverage. Is it a MEWA? Does the answer depend on whether they qualify as a management group under Code 414(m)? I found an old opinion letter that says that whether they are a management group or ASG is not determinative as to whether they can be treated as a single employer for purposes of determining if a MEWA exists, but that doesn't give me much comfort. 

Does anyone know of an Excel spreadsheet for ASG determination?

A Tax exempt employer allows all employees to accumulate unused vacation pay. Employees may cash out up to 25% of unused days in any calendar year. When the employer has extra staffing needs, it allows them to cash out the entire bank. When employees retire, they are cashed out.

Obvious 457(f) issue is the cash-out. At what point is this vested deferred compensation? The annual vacation schedules are negotiated with a union - 2 -4 weeks based on seniority. This is not just a special deal for executives, although they participate also. 

I think this is a fairly common design, and I've seen little in the way of IRS guidance. Thoughts? 

What is the best method to use to correct an EIN on a Form 5500-SF which was already filed? I don’t believe amending the 5500 to show the correct EIN in box 2b of Form 5500 would work since the correct EIN in box 2b would not be able to cross-reference the original Form 5500 which was filed using a different and incorrect EIN.

The instructions for completing Form 1095-C state that an employer can only use the W-2 Affordability Safe Harbor if it applies for the entire year. I assume this means calendar year (tax year) as that is the reporting period. 

Are the rules any different for a non-calendar year health plan? For example, if the plan year is July 1 - June 30 and premiums are "affordable" Jan - June but increase on July 1 and are not affordable Jul - Dec, can the employer use the W-2 Safe Harbor code for only Jan - Jun? My interpretation is no, it seems straight forward, but I am getting push back from an accounting firm and would like to make sure I have not missed something. 

Thanks in advance.

This has been discussed but most of the threads were older so I'd like to see what others think now.

Plan Sponsor name and EIN (as well as the Plan name) were changed effective 01/01/2021.  When preparing the extension for the 2021 plan year, the FT Wm software is using the old name and EIN, even after I updated them on the website.  Can I assume this is the correct way to file the extension and then when the client files the 5500-SF form and reports the Plan Sponsor name/EIN/Plan name change on that it will line up with the extension that was filed under the old name/EIN? 

It makes sense to me because the EBSA has no record of the new information until the 5500-SF is actually filed. 

Just paranoid I guess and want to be sure.....

Participant has been working part time for years, under 1000 hours.

In last plan year they worked zero hours, but they are not formally terminated.

My recordkeeping system has excluded them from the Top Heavy Test. But his balance is so large, that it makes a difference whether the plan is top heavy or not.

Include or exclude him?

We want to start sending our reports electronically and we are looking for a nice software package that will help us create slick reports using the output from ASC and adding in some verbiage.  Anyone using anything commercially available out there?

Quick Question.  Employer made the 12/31/21 loan repayments in early '22.  Would these be included as a receivable to the Plan?

We do take receivable contributions into account, so just wanted to make sure that loans were handled the same way and not on a cash basis.

Thanks!

I have read:

(1) that a younger beneficiary of a deceased plan participant is entitled to take a lump sum distribution and not be subject to the 10% premature distribution tax because the deceased participant was older than 59-1/2.  

(2) But then I also read that   "the lump sum you receive will be subject to local, state and federal income tax. However, you will not have to pay the 10% early withdrawal tax even if you and/or the deceased person are under 59 ½"  That seems fair to me, but then I don't decide what is fair.

Is #2 correct?
 

And on the side, the spouse of the beneficiary has no bearing at all on any tax matters.

Hi, 

I've encountered a very unique situation.  One of the terminating plan has a stable value fund and the client does not want to wait for the 12 months PUT period they want the MVA adjustment done and also they would pay the market value directly to the IRA provider where the participants will rollover.  I've never come across something like this, how can the participants can get paid or what would be a better approach? 

We have a debate in the office.  A 401(k) plan with an Integrated (4-tier) PS allocation @ 100% TWB.  (Excerpts from AA and BPD below.)   Fact:  The MAX SS integration is 100% TWB.  Q:  Can the plan choose to make less than 100% TWB (like 46% TWB) as long as the allocation is applied in the same non-discriminatory manner?  

Someone said it can be done & someone else said it cannot be done.  My brain hurts, so I am no longer sure.  Anyone else have some solid experience on this?

Per AA,

"...b) [X] Permitted disparity. In accordance with the permitted disparity allocation provisions of Section 3.04(B)(2), under which the
following permitted disparity formula and definition of "Excess Compensation" apply:
Formula (select one of (1), (2), or (3)):
(1) [ ] Two-tiered.
(2) [X] Four-tiered.
(3) [ ] Two-tiered, except that the four-tiered formula will apply in any Plan Year for which the Plan is top-heavy.
Excess Compensation. For purposes of Section 3.04(B)(2), "Excess Compensation" means Compensation in excess of the
integration level provided below (select one of (4) or (5)):
(4) [X] Percentage amount. 100% (not exceeding 100%) of the Taxable Wage Base in effect on the first day of the Plan
Year, rounded to the next highest $ (not exceeding the Taxable Wage Base)..."

Per the base plan doc...

"...(2) Permitted disparity allocation formula. The Employer in its Adoption Agreement may elect a two-tiered
or a four-tiered permitted disparity formula, providing allocations described in (a) or (b) below, respectively. The
Employer also may elect a two-tiered permitted disparity formula which changes to four-tiered in any Plan Year in
which the Plan is top-heavy.
(a) Two-tiered formula.
(i) Tier one. Under the first tier, the Plan Administrator will allocate the Employer
Contributions for a Plan Year in the same ratio that each Participant's Compensation plus
Excess Compensation (as the Employer defines that term in its Adoption Agreement) for the
Plan Year bears to the total Compensation plus Excess Compensation of all Participants for the
Plan Year. The allocation under this first tier, as a percentage of each Participant's
Compensation plus Excess Compensation, must not exceed the applicable percentage (5.7%,
5.4%, or 4.3%) listed under Section 3.04(B)(2)(c).
(ii) Tier two. Under the second tier, the Plan Administrator will allocate any remaining
Employer Contributions for a Plan Year in the same ratio that each Participant's Compensation
for the Plan Year bears to the total Compensation of all Participants for the Plan Year.
(b) Four-tiered formula.
(i) Tier one. Under the first tier, the Plan Administrator will allocate the Employer
Contributions for a Plan Year in the same ratio that each Participant's Compensation for the
Plan Year bears to the total Compensation of all Participants for the Plan Year, but not
exceeding 3% of each Participant's Compensation. Solely for purposes of this first tier
allocation, a "Participant" means, in addition to any Participant who satisfies the allocation
conditions of Section 3.06 for the Plan Year, any other Participant entitled to a Top-Heavy
Minimum Allocation. For purposes of both first tier and second tier allocations under this
Section 3.04(B)(2)(b), Compensation and Excess Compensation refer to Compensation as
determined under Section 10.06(A).
(ii) Tier two. Under the second tier, the Plan Administrator will allocate the Employer
Contributions for a Plan Year in the same ratio that each Participant's Excess Compensation
(as the Employer defines that term in its Adoption Agreement) for the Plan Year bears to the
total Excess Compensation of all Participants for the Plan Year, but not exceeding 3% of each
Participant's Excess Compensation.
(iii) Tier three. Under the third tier, the Plan Administrator will allocate the Employer
Contributions for a Plan Year in the same ratio that each Participant's Compensation plus
Excess Compensation for the Plan Year bears to the total Compensation plus Excess
Compensation of all Participants for the Plan Year. The allocation under this third tier, as a
percentage of each Participant's Compensation plus Excess Compensation, must not exceed
the applicable percentage (2.7%, 2.4%, or 1.3%) listed under Section 3.04(B)(2)(c).
(iv) Tier four. Under the fourth tier, the Plan Administrator will allocate any remaining
Employer Contributions for a Plan Year in the same ratio that each Participant's Compensation
for the Plan Year bears to the total Compensation of all Participants for the Plan Year.

(c) Maximum disparity table. For purposes of the permitted disparity allocation formulas under

For this purpose, the Taxable Wage Base is the contribution and benefit base under Section 230 of the
Social Security Act in effect at the beginning of the Plan Year. The integration level is the uniform amount
specified in the Employer's Adoption Agreement..."

Never had a plan do this before, but plan allows for in-kind distributions.  Any particular issues out there for self directed brokerage accounts that would like to basically rename their plan as an IRA and treat the value on that date as the direct rollover?

(Edit a few days later:  aw fiddlebeans, another terminology error on my part - I meant to type 'trust', not 'plan' in the phrase 'rename their trust'.)

We received a DRO from July 2020 back in 2020.  The order was clear, but contained some very odd terms, so we reached out to the parties to verify our interpretation.  We just heard back from them this week that our interpretation of the order is correct.  The DRO could be considered a QDRO, but can we process it now that its two years old?  I know there is the 18 month rule, but that appears to be more of a deadline for the administrator to process the Order, not a limit on how old the order can be.  

Can we process the Order?

Is there a limit as to how old an order can be and still be determined a QDRO and processed accordingly?