I have failed to file form 5500ez for 10+ years. I always assumed my accountant took care of it. Can I qualify for the max fine of $1500 through the penalty relief program? Also would i have to file a seperate return for every year my account was $250k?

Greetings everyone. If a newly formed business started March 16, 2021 and adopted the plan effective March 16, 2021, are they subject to the short plan year proration rules? Or are they exempt from the rule because their business was formed later in the year?

The plan is a Volume Submitter MEP, and the client adoption agreement states: "The initial plan year begins on the Effective Date of this plan and ends on the following December 31. If the initial plan year does not begin on January 1, the initial plan year shall be a short plan year."

I thought there may be an exception for newly formed businesses.

Thank you!

3 person plan, H/W owners and one NHCE.  Owners retiring and business and plan closing.  Client doesn't want to liquidate investments to transfer to IRA so are planning on doing in-kind rollover.  NHCE is taking a rollover of cash to IRA.

H/W owners only doing in-kind withdrawal.  Want to know does it have to be done as a percentage of each asset for each person.  So, do H/W both have to get their percentage of each investment or can they calculate the amount needed and move specific assets to one person.  I'm inclined to say it needs to be a proportion of each investment but then I thought what does it matter as long as the correct amount is distributed to each as it's not the plan's concern what they invest in their IRA.  

Simple question - if a plan is amended to allow in-service distribution (after NRA only, no early in-service commencement) and offers a lump sum, are there any restrictions (beyond high-25 and AFTAP related issues - neither apply here) that would prevent a full time participants reaching NRA (age 65 here) from taking a lump sum?

The amendment to the plan doesn't suggest there are any (as in, the amendment could've easily referenced the LS option as being excluded if it wasn't allowable) and the plan is long frozen, but it does seem a bit odd. I can't think of anything other than seeming odd, though - there's no need to suspend benefits since in service distribution is allowed and the only real exposure to the participant (if they take the lump sum and don't roll it over) is understanding the tax implications of taking a lump sum (already covered in literature). 

We have a plan that has a Safe Harbor NEC contribution.    Prior to 1/1/2020, the pretax eligibility was 60 days, SHNEC 1 YOS. With those provisions, they lost their top heavy exemption.  (of course they are top heavy)

1/1/2020, they change the eligibility for both pretax and SHNEC to 1 YOS.  So we thought all would be good.  However, they rehired a participant at the time of previous employment met the pretax eligibility.  Upon rehire, they are now eligible for pretax, but still have not completed a YOS for the SH contribution.  

How does this impact their top heavy exemption?  Does it still apply or since they have a participant not SH eligible does it  not apply?  Would they need to give her a TH contribution?  If so since the plan excludes comp prior to eligibility, would they have to calculate the 3% on gross comp for those that became newly eligible in 2021? 

I have an HCE with a 402(g) excess of $500 for 2021 (he deferred $20,000)

And I have a NHCE with a 402(g) excess of $135 (he deferred $19,635)

Neither catch-up eligible.

I thought you kept the excess in the ADP test for the HCE and removed it for the NHCE.

For some reason Relius is removing it for both.  I just want to make sure I'm understanding the rules  before I start bugging them.

Employer currently offers a 401(k) Plan, no match.

Vendor has recommended QACA for the 1/1/2023 Plan Year.

Question -

When setting up the QACA, I know you can not elect that the Automatic Deferral percentage does not apply to existing participants.

If a participant is currently deferring 0% and there is a affirmative election showing they declined, does this mean the 3% QACA does not apply to this participant?

The employer has about 40 employees currently not deferring, I am trying to figure out if the addition of the QACA means this group is swept up in the Auto Enrollment unless they make an affirmative election not to participate. 

Thanks

The plan has each participant in their own allocation group.

Is it okay to allocate $0.00 to NHCEs and $0.00 to HCEs and test them on an accrual basis, and test the NHCEs and HCEs receiving the same flat dollar amount on a contribution basis providing that the ratio testing passes?

The plan allowed 1 HCE and 2 NHCEs to enter the plan prior to satisfying the eligibility requirements.  My understanding is that the amendment needs to pass 401(a)(4).

My question is ... who do we include in the 401(a)(4) test - eligible employees, or ineligible employees?  Thanks.

Small $ when using Calculator...de minimis..

Good Afternoon,

I have never had this situation before and I need the Forum's expertise:

The situation is  as follows:

There are two Company Plans, a Cash Balance Plan and a  Cross Tested Profit Sharing Plan. Together the plans are Top Heavy. The cash balance allocations must be tested with the Profit Sharing allocations. When non-discriminately testing the Cash Balance Plan with the Profit Sharing Plan, only one Participant, lets call him John, would need to have his PS percentage increased from the 5% MTH allocation (the 5% MTH allocation provided to all NHCEs passes the Gateway test) to 8.35% of compensation.  This provides the minimum increase needed to pass 401a4 testing.

As stated above, the Profit Sharing Plan is X-tested and to receive a Non-Elective PS allocation, the Plan Document has a 1000 hour and last day requirement and even though John was there on the last day of the plan year, he only worked 600 hours during 2021.  Knowing those facts can John receive a NE contribution greater than the 5% of compensation MTH contribution in the PS plan or do I need to increase another Participant’s PS allocation that did work 1000 hours and was there on the last day of 2021 to pass 401a4 testing?

Thank you,

Dawn

I am a TPA with a small employer (5 participants), and they would like to remove the Roth as an option.  There is currently 1 participant making Roth deferrals.  I understand that we can remove the Roth provision, but is there a way to 'grandfather' in the 1 participant who utilizes it so she can keep making Roth deferrals?  I think I know my answer, but want to check with you guys.

BTW (the story behind the question) - there has been a lot of hassle in cashing out a participant who had a total of $1300 in the plan, some of which was Roth.  It has been a pain in the rear-end explaining all the nuances to the accountants (ha!) and investment advisor, as you all know, and even harder on the plan sponsor, so she has asked if we can just discontinue the Roth.  The one lady who is still employed there and makes Roth def's may not be pleased if we remove it so we're trying to allow only her to do it.

Thank you!

Hi

Looking at a combo plan with an existing DC plan.

DC plan effective 2018 had a special entry that let in a part-time employee in 2018. This employee always worked under 500 hours.

Elapsed time method is used for all provisions (I am by no means experienced in using elapsed time)

DC plan has deferrals, non-elective SH and PS. For PS, last day rule is required. In addition, participant must complete period of service under elapsed time - I do not see any provisiosn as to what period is - will be checking with the other TPA.

Adding a CB plan for 2021 (assume all ok for top heavy) which will have 21/1 assumption with 1000 hours for eligibility and accrual. This part-time employee will never be eligible in CB.

Cross-testing both plans. Does the part-timer get gateway? He is in the testing because employed on 12/31 and also has 401k deferral and SH (possibly PS too).

Can he be tested under otherwise exclude (the only one and non-HCE).

Thank you

For a trustee-directed plan, we have historically calculated the RMDs once we've accrued the contribution. The participants ending balance at 12/31/2021 would be equal to the actual investment balance plus their contribution receivable.  The participant wants his RMD in January before we know the accrued contribution amount. Can we modify our methodology and calculate the RMD based on just the value of the investments going forward?  We don't have the accrued contribution amount available in January.

Thank you!

Hi,

A client failed the ACP Test. When calculating the refunds, the system is also calculating match forfeiture refunds as well. All of the people receiving refunds are 100% vested.

Can someone explain to me what is happening? 

I put together a spreadsheet that will calculate single life and 100% J&S APRs. This was inspired by comments from @401king and others in another recent thread.

You must enter the interest rate and age on the Input tab. You can optionally enter an account balance, if you do it will calculate the annuity amounts in addition to the APRs.

Important: you must enter the values from the correct mortality table on the "Mortality" tab. The mortality tables are published by the IRS, for example the 2021 table is here: https://www.irs.gov/pub/irs-drop/n-19-67.pdf Use the values in the column labeled, For distributions subject to 417(e).

If someone wants to enhance this workbook to automatically pull the 417(e) tables, or the 10-year CMT rates, that would be fantastic.

Use this workbook at your own risk. I believe it will generate correct results based on the inputs but I can not be responsible if it fails in some cases. I can not promise that it will not immediately delete all your files and melt your CPU the second you open it, either. Treat it like any other file you would download from an anonymous internet stranger.

APR calculator.xlsx

Solo 401k rolls all money in the 401k into a SEP IRA n 2019.  1099R issued, but 401k administrators does not file a Final Form 5500.  Does anyone know how to correct this now? 

Solo 401k rolls all money in the 401k into a SEP IRA n 2019.  1099R issued, but 401k administrators does not file a Final Form 5500.  Does anyone know how to correct this now? 

Company switched payroll providers. New payroll company has not withheld 401k from the 5 participants for 2 months.

What's the best (and cheapest) way to correct? Can this be self-corrected? Must employer make up lost earnings? Can the DOL calculator be used?

We have a strange situation.  We prepared a 2018 delinquent Form 5500 for a large plan in December 2021 and the auditors assured us the opinion would be finalized and sent by 12/31/21 but they only sent in February 2022.

The issue is the version of F5500.  We had prepared it on the 2020 version which was the latest version available at the time.  Now the 2021 version is available, do we need to reenter data onto the 2021 version and submit or is it fine to file on the 2020 version?  If anyone can share their experience or insight that would be much appreciated.