A participant passed away in 2020.  The family and employer just notified us in 2022.  One of the beneficiaries is a Trust.  The claim form states that "The Trustee of the Trust must certify whether the underlying trust beneficiaries are designated or non-designated beneficiaries as defined by Section 401(1)(9)(E) of the Code.  The trustee must provide the certification by October 31st of the year immediately following the participant's death."  Since 2 years have passed, what is the impact of the trustee not having met that October 31st certification date?

 A Non-Electing Church sponsors a Money Purchase plan which needs to be restated for Cycle 3.  We understand that there is a newly allowed type of pre-approved plan for this situation under IRS procedures but our current document provider is not offering one.  I found some notes published by ASC on such a document but have not located anything else.  Does anyone know of a document provider with a pre-approved plan document (exempt from the requirements of Title I) for a Money Purchase plan sponsored by a Non-Electing Church?  Thank you!

Patricia Neal Jensen

patricia.jensen@futureplan.com

The IRS Form 720 was updated in March 2022; however, the dates and rates for the PCORI fee  on line 133 were not updated (from $2.66 to $2.79).  Does anyone have a work-around for this or how are you handling this?  The service that we use is not allowing an override of the amount due.  This is for Plans with a 12/31/2021 year end.

Just had an initial call with the financial advisor, so some of this is subject to change as I get more details, but it sounds like:

> NFP has a 403b with a large insurance co and is tired of bad service, high fees, etc.
> NFP is looking into a new recordkeeper and wants to move the plan, but the insurance co says that the accounts are individual annuities (though they are the only provider and there is a company contribution, so this should be an ERISA plan with all that entails) so the plan sponsor does not have the right to pick up all the accounts and move them - each participant would have to agree to do so.

Is there anything legally preventing the opening of a new 403b plan and saying that effective 7/1/22, all deferrals go to New Plan at New Recordkeeper, and all participants have to complete a new deferral election form?  Any participant who wants to make a transfer from Old Plan to New Plan may do so, but not vice-versa.  Old Plan would still exist separately for document, 5500 and whatever other purposes; if someone wanted a plan loan, for example, they would only be eligible for the balance in the plan they are applying in.  The real problem is that the extra expense of two plans will likely offset the savings the New Recordkeeper is offering.  But at this point, I'm just trying to figure out options.

I know this isn't a perfect solution, but we've been burned several times with trying to manage a plan where there are still accounts in the old recordkeeping platform and trying to get information from them each year is a complete hassle.  You think "oh, the balances will just decline each year, it won't be that bad"... five to seven years later, and they're still going strong!

A client provided a revised census for 2020 testing. When 2020 testing was rerun it was determined that the plan failed less than the original test. Corrective distributions had already been paid out and reported for 2021 taxes by the time the revised test was run. Participants are no longer able to return the excess corrective distributions to the plan. What is the correction? We are thinking that the client needs to submit the difference back to the plan but not the participant accounts. Is this correct?

Client has a bond but needs to increase coverage.  He is asking....

"to meet the coverage requirement does it matter if I have 2 bonds that in total meet or exceed the coverage requirement?"

I don't see a problem... but thought I would ask

If the company adds in a new pay code, what procedure or regulation does the plan sponsor need to base off to determine if it's pensionable earning?

Thank you

EPCRS gives a correction for "[f]ailure to distribute elective deferrals in excess of the §402(g) limit (in contravention of §401(a)(30))."

401(a)30 just points to 402(g).

Can there be excess 402(g) deferrals NOT in contravention of 401(a)30?

And also, the plan MUST remove the 402(g) excess (in contravention of 401()(30)), or the plan risks disqualification.

I seem to remember if the excess deferrals were there after April 15, you didn't do anything until the participant took their money (year?) later.

And I read that if the excess deferrals are NOT in contravention of 401(a)(30), then the deferrals HAVE to stay there until there is a distributable even.  Again, under what circumstances would that be? 

On the client's census, they tell us that Jim owned 2.5% of the company last year (S Corp), and belonged to the Union.  He made $121k in 2020.  This year (2021) however, they tell us he owns 6% and is still in the union.  Now he's an HCE for 2021.  He's the only union person that defers (there's only one other).  So the ADP test is failing.

I thought I remember reading somewhere that a person cannot be an owner and a member of the union at the same time.  How can someone be part of management and be a union employee?  If that's true, how is it handled?

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.