I have a client whose previous TPA reported a late deposit on their 2023 Form 5500.

The deposit was for a payroll dated 1/4/2023.  The client provided the detail to the TPA on 1/11/2023 - the funds were not actually deposited until 1/17/2023.

The TPA - when preparing the Form 5500 reported this as a late deposit.

Should they have?

I know it is past the Small plan Safe Harbor 7 business day rule.  But the rule I thought needed be followed about "late deposits you would place on a 5500" is the "soon as administratively feasible, but no later than the 15th business day of the next month".   Now...I know if there was an audit the IRS is going to only consider the "soon as administratively feasible" part of this.  But...should this have been reported as a late deposit on Form 5500 (question 10a).  The missed earnings was $1.31.

Just want to make sure i am understanding the reporting requirements correctly.  I would have said no.

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If a plan uses the W-2 definition of compensation, then it is pretty clear that tips and overtime are included in Box 1 of W-2 and thus the exclusion of overtime and tips will not affect comp.  But what about if the definition of comp is based income for purposes of withhdoling?  If the IRS clarifies that qualifying tips and overtime are not subject to withholding, won't that create a problem?  I am hearing that the IRS may do just that for 2026. I haven't seen anything written about this so I am very curious...

This is a legacy plan with a set of long time partners.

One partner has an LLC investment that pays out dividends, but the K-1 has shown a negative balance for two years now, with the most recent year even more negative. Not sure how to treat this for calculation of total assets in the plan?

Does anyone have a guide on how to download the correct file to be able to import year end data into the Allocated Link? Am Funds Recordkeeper Direct changed their reporting system and cannot provide us anything else. The .dat file no longer works. They advised us to contact Relius. Thought I'd check here first.

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I thought I remember reading that the Mega Backdoor Roth contributions had to be made early in the year (I think it was 30 days after the close of the year).  I just wanted to double-check to see if that is accurate?  We have a client asking about it, so before I confirmed that they could start it for 2025 (and not 2024) I just wanted to be sure.

Thanks in advance!

Is the Earned Income reported on Form 1065 K-1, income for the individual for purposes of the 401(k) plan if the K-1 is issued to a P.C.?

My answer is no, but I am second guessing myself and want another opinion. 

Scenario

Plan Sponsor: LLP , Participating Employers are two P.C.s 

LLP has regular W-2 employees that participate in the plan. Those are not in question. 

The shareholders of the LLP are two Professional Corporations and are clearly listed by the P.C. names on the individual 1065 k-1. Think "Jane Garcia, a Professional Corporation". The LLP as well as the P.C.s appear to be listed as active with the Secretary of State. Line i2 says "What type of entity is this partner?" and it says S Corporation. 

Jane Garcia - receives a Form W-2 from her P.C. She does not receive a W-2 from the LLP. 

Jane is arguing that the earned income on the Form K-1, from the LLP to the P.C. counts as personal earned income to her and also as plan compensation. 

Since the actual shareholder is a corporation, and is listed as one both in name and entity type, my understanding is that the earned income reported on the K-1 is NOT personal tot he individual. 

But I am getting so much push back from "Jane" and her advisors that I am second guessing myself. I am not a CPA, so I suppose its possible that there are special rules that apply to P.C.s that I am unfamiliar with so figured it would not hurt to ask the hive mind. 

Employee made elective contributions in 2018 and 2019.

He should have been paid in 2021, but was not -- it is too old to correct under the correction procedures (Notice 2008-113).

So we definitely have an uncorrectable error.  The employer is not interested in ignoring it and hoping it never gets discovered -- they want to fix it now.  I know we have to report it as a 409A violation and there will be a 20% excise tax.  But do we have to go back and report these as if the contributions were actually paid in 2018 and 2019?  Can we even go back that far?  To make matters worse, the participant also has older contributions (going all the way back to 2001) -- how do we handle those?

Can we just pay out everything now (2025), report it as a 409A payment, and pay the 20%?  Do we have to go back and report the contributions as paid in the year the contributions were made?

Say in 2025 a participant under age 50 defers $23,500, receives a non-SH match of $11,750 (match formula of 50% of all employee deferrals), and receives a PS contribution of $40,000 for a total of $75,250 and a 415 excess allocation of $5,250. 

Under EPCRS Section 6.06, the reduction would come first from unmatched deferrals (none as 50% of all deferrals are matched) and then from matched deferrals and the corresponding match.

In that scenario, is the correction:

1. Refund $3,500 of matched deferrals to the participant, and (2) transfer $1,750 of matching contributions to the plan's unallocated account; or
2. Refund $5,250 of matched deferrals to the participant, and (2) transfer $[edit: 2,625] of matching contributions to the plan's unallocated account?

In other words, does the "corresponding match" also count toward the 415 reduction (as in the first scenario)?

Thanks in advance. 

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Hi, all.

We are in the process of looking at an alternative to Relius for our TPA practice.  I've read through the handful of threads here regarding options but do have some questions which I am hoping someone can help me out with.

We've been Relius users forever...we bought in when it was Pentabs and I cut my TPA teeth in Quantech.  I'm an old dog, not necessarily wanting to learn new tricks, but it is becoming more and more obvious that Relius just may not be "it" for us anymore.  It's simply not what it used to be, and that really makes me sad.  The support is so, so, so bad now...it's just a shame.  I fondly remember the days of a call to Jacksonville and awesome support with Alan Gross, John Reasoner or Marlene Stein...but that's gone.  Ahhh...the good old days!  

Anyhow...as a jumping off point, we are a small TPA firm with about 80 plans but are definitely in a growth mode.  We service only DC plans.  We still have a portion of our plans as trustee-directed balance forward plans, but those are becoming less prevalent.  Most new plans are using an investment platform/recordkeeper like AF, Hancock (Manulife...what come around goes around) and Ascensus Vanguard.  We do not do any daily val recordkeeping, so there is no need for the functionality of the VRU, trading, etc.  I also just don't see us moving to that in the future, either.

We are a CPA firm, so I use our engagement binder for workpapers and doing the trust accounting work for determination of investment income from the trustee directed investment accounts.

Currently, we use Relius Administration, Relius Web Client and Relius Documents.  We don't have any proposal or portal software at this point.

I've been looking at FT William and have sat through a couple of demos there; for Document and Compliance.  There is a lot of really intriguing pieces there but am a bit confused.  I've seen in other posts here saying that FT William doesn't do "recordkeeping" It is basically just compliance testing.  I understand that they don't do daily valuation, but would it handle our trustee-directed, balance forward plans in a way that makes sense?  Basically, can we track participant balances, vesting, and allocate contributions and investment earnings to their "account" in a fashion similar to Relius and report to participants and clients as needed?  I've also heard great stuff about their support.  Granted, that's their sales guys touting how awesome it is, but it can't be worse than Relius is now.

ASC looks so clunky and frankly, like it was last updated in the 90s.  Our IT department really is pushing for a web-based solution.  Managing updates/servers for ASC look like a total drag, and it just appears to be "old technology".  Am I missing something about it?

Datair is also an option, but I am not at all familiar with it.  Thoughts?

Any insight of people who have converted to one of these other options would really be appreciated. I'd love a dialogue on this stuff and I feel like there are lots of us out here facing the same challenges with Relius.  I have a small budget to help grease the skids for anyone who can spend some time talking to me about real world use and experiences of ASC, Datair or FT Williams as we embark on our process.  Not talking big bucks here, but a token of my appreciation for your time.  🙂

I am working with a client with a defined benefit plan for collectively bargained employees. The overwhelming majority of the participants are male. The plan uses the RP-2014 blue collar male table for actuarial equivalence for participants and the RP-2014 blue collar female table for beneficiaries. In 1983, the US Supreme Court decided Arizona Governing Committee v. Norris, which held that the use of sec-based tables violated Title VII of the Civil Rights Act. Has anything developed which has changed this result in the interim? Or can this be justified by using a table for a single gender for all participants, regardless of actual gender? Thanks!

Unfortunately, we're getting closer to the 1/1/26 buzzsaw of required Roth catchups for the Highly Paid Individuals (or High Earners, whatever).

I get that it's allowed to not make these participants complete a new deferral election form if they have elected pre-tax deferrals - the plan sponsor has the authority to cut them off at the base limit and then take any additional deductions as Roth.  And for especially large plans, that might be the most practical method.

But what about smaller plans?  Does it "feel" better to allow the participant to sign off on something, or is just a note telling someone "hey, this is what's going to happen" sufficient?  I'd really rather not make this a 'case by case' thing because it's already enough of a pain to deal with.

Thanks.

Hi there,

I have an auditor asking for part-time hours starting in 2021, however this plan started 1/1/2023.  Am I right in thinking that hours prior to 1/1/2023 shouldn't be applied?

Thank you,

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I just wanted to make sure I wasn't missing a step to file a DFVC filing for a new client:

1) File the Form 5500-SF on EFast, with it checked off that it's a DFVC filing
2) Make the payment using the calculator

That's all there is to it, correct?  There isn't a step I'm missing?  Just wanted to make sure.

Thanks in advance everyone!

We use FT Williams for plan  documents (new to us) and we have a client who uses 60 days of service and not two months.  We cannot find a good way to fit that in the document.  IF we use the "Other" field, FT automatically includes the failsafe eligibiility language.  It also does not give us the opportunity to elect Elapsed Time for eligibility.  It seems as though the only way of electing elapsed time is to use something already hardcoded for months.

And this employer has had the 60 days eligibility for 1,000+ employees for years so, no, they will not change  to 2 months 🤣

Any suggestions appreciated!