The simplified facts are ... A catch-up eligible individual participated in a CY 401(k) plan through September 30, 2020 and deferred $19,500.  A portion of the plan gets spun off and the individual defers $6,500 in the new plan in  Q4.  

Can I use $6,500 as catch up in the first plan and not use any catch-up in the second plan?  i.e. treat the individual as deferring $13,000 plus $6,500 catch-up in the first plan, and $6,500 and zero catch-up in the second plan.  It seems that should be fine, but I want to check if I am missing something.  Thank you!

Do we know if e-signatures are acceptable for beneficiary forms?

I have read so much I am now becoming confused..... here is the situation -

A CPA reached out to me regarding a single member client she has.  This client was persuaded to open a 401(k) by the financial advisor who quite frankly I don't think knew anything about pension plans.  Anyway, here is what happened:

She opened a 401(k) for 2020
Rolled SEP money in (lots)
Contributed to the plan in 2020
- Deferred the max (23K)
- Maxed the employer (37.5K) upon advise of the financial advisor
ONLY HAD $35,212 in schedule C compensation

All contributions made in 2020.  

Taking the excess contribution out starts with deferral money then employer? or does it matter?

Depending on what comes out.... 
1099-R the deferral... withhold taxes
1099-R the employer, don't withhold taxes, code 8P
perform the withdrawals before the 2020 taxes are filed

Thanks

I'm just curious what large plan sponsors do when it comes time to provide an updated SPD, or the SPD for a new FSA provider.  Since electronic distribution remains opt-in for welfare benefits, do most plans print them out?

I work on a plan that is an owner/spouse CB plan. The couple got divorced, and the QDRO says the AP gets X% of the owner's account balance as of a certain date.

The parties involved apparently all agreed to a dollar amount based on X% of plan assets.

However, when I look at the actual benefits as of that date, the AP should have received tens of thousands of dollars extra, if I take X% of the Participant's CB benefit as of that given date.

When I initially received the QDRO and reconciled the plan assets and determined more money was due, the attorney who drafted the QDRO came back and said there is nothing more due, because both parties received what they had agreed on.

I'm curious if anyone has opinions on this. I'm thinking it's a case of a poorly worded QDRO and/or a misunderstood attorney, but I suppose I let it go if everyone's happy? Are there legal ramifications to be wary of here? Or maybe the QDRO is perfectly fine, and the way they have handled everything is okay? Thanks in advance.

Two person Solo 401(K) for a Husband-Spouse Partnership LLC.
Filed 5500-EZ first time for 2019 as the plan assets crossed $250K first time.
Closed the LLC 12/31/2020 since could not sustain due to Covid-19. As of 12/31/2020 there were assets.
In June-July 2021 Rolled over to IRA for one partner and Transferred to workplace 401(K) for the other partner with a W2 job.
There are trailing dividends coming through.

When do I file the final Form 5500-EZ?
File 5500-EZ for year 2020 as Final OR File 5500-EZ for year 2021 as Final, with 2 participants [5a(1)&a(2)]at the beginning of the year 2021  and zero [5b(1)&b(2)]at the end of year 2021? If Final has to be for 2021, what is the deadline?

Thank you!

A client opened a new 401(k) plan 1/1/2021.  The plan has immediate eligibility for those employed as of 1/1/2021 but excludes part-time/seasonal/temporary (those scheduled to work <1000 hours).

I am going to ask them to confirm who they determined met eligibility and provided enrollment material.  As TPA we can't make that determination not knowing expected hours.   

Probably an easy question - what about someone who is not scheduled to work 1000 hours in 2021 but has worked 1000 hours in a prior year?  I think they should have been enrolled as all service would have to be considered.  Normally any new plan without the part-time exclusion would include prior year 1000 hour employees as eligible so I believe I have my answer.

Thanks

Tom

An ERISA rule—29 C.F.R. § 2550.404a-5—calls an administrator of an individual-account retirement plan that provides participant-directed investment (even if no fiduciary seeks ERISA § 404(c) relief) to furnish regularly a disclosure document that meets several requirements specified in the rule.

Although the rule’s command applies to a plan’s administrator, for most plans a recordkeeper or other service provider does the work—not only in delivering the notice but also in assembling the notice’s investment-related information and other disclosures. 

What happens if a plan’s administrator wants the delivery service but not the assembly service?

Imagine that a plan’s sponsor/administrator is unwilling to adopt its recordkeeper’s standard 404a-5 notice.  And using the part the recordkeeper allows its customer to customize won’t fix the problem.  The customer is willing, at its effort and expense, to write its own 404a-5 notice, retrieve and insert the investment information, and deliver to the recordkeeper by a sharp cut-off date two days after each quarter-close, the print-display file of the 404a-5 notice to be delivered.  The page count and other technical points conform to what the recordkeeper does normally.  The plan’s administrator accepts responsibility for its communication, and the sponsor/administrator exonerates and indemnifies the recordkeeper for relying on the administrator’s instruction.

In your experience, does a recordkeeper:

deliver the customer-prepared notice?

refuse to deliver an outside-prepared 404a-5 notice because doing so would be too much disruption to the recordkeeper’s work methods?

Does the response vary with the size of the customer?

If so, how big must a plan be to get this delivery service?

Our plan currently has a safe-harbor enhanced match allocated each pay period with no true up at the end of the year.  We now wish to do a true-up at the end of the year.  The plan document provider says to amend the plan now to provide for the match allocation to be at year-end, with pre-funding per payroll period, rather than having the plan provide for a per-pay period allocation, with a true-up at the end of the year.   Is there a difference between the two approaches?  Thanks.

Does anyone have a copy of RevProc 2021-30 with page numbers in the Table of Contents?

https://www.irs.gov/pub/irs-drop/rp-21-30.pdf

Our TPA firm obtains authorization from the plan sponsor/plan administrator and files the 5500 for the company.  Can the 5500 signature from the plan sponsor/administrator be digital or does it have to be a "wet" signature in order to be valid?

thank you

Participant in plan elected to stop deferring, but the company kept up the deductions.  The company has made her whole through payroll.

We are correcting this as a mistake of fact.

What happens to the earnings?  The participant shouldn't keep it as a windfall.  (This participant is an HCE and Key EE)  I don't think the company should receive it either.  Do I put it into the forfeiture/suspense account?  Deferrals are the only contributions in the plan.  I wouldn't want to reallocate the $200 as a PS as it will result in tiny amounts for people who don't even have accounts.

Your thoughts are appreciated.

Hi

Just curious about the following:

Calendar plan, final distribution done in November 2020 i.e. final 5500 form is due 6/30/2021. So a short plan year.

I was just told about this today which means 5558 was not filed timely.

The sponsor is a calendar C-corp which went on extension for the 2020 filing. So the due date of the 2020 corporate tax return is extended to 10/15/2021.

Can the sponsor rely on this automatic extension and file the final 5500 forms by 9/15/2021 - extended due date for a November filing? Or it has to be thru DFVCP?

The following condition from the instructions may not make it possible:

(1) the plan year and the employer’s tax year are the same.

Your comments are appreciated.

Thank you

Let's see how clearly I can detail the situation:

Two owners are the only participants in a DB plan.  They're each about 70.  The DB plan NRA is 65+5 yop.  Formula is 10% per year, and they each earn about 120,000 per year on their W-2s.

The two owners and two staff people are in a DC plan (meant to provide the staff their test-passing requirements, mostly).  That plan has an NRA of straight age 65.  The two participants are 75 and 57.  So this isn't easy to pass to begin with.

2020 was year six for the plan, effective 1-1-2015.  So the owners are only now past their NRA.

A.  The owners' accrual has increased from 50% (five years times 10%) now to 60% of high-3.  This  new benefit is larger than the actuarial increase of the 50% benefit as of NRA last year.

B.  The regulations say you can ignore actuarial increases in the 401(a)(4) testing only if the employees have a uniform normal retirement age.

Am I stuck not having a uniform NRA between the plans?  Could it retroactively be amended lower from 65+5 to 65?  Does the fact that the DB plan's participants are past the need to even mention the 5 yop in the NRA definition carry any impact?  The staff people are excluded from the DB plan by job category, although I suspect that doesn't help the argument that the NRA basically is just 65 in the DB plan at this point.

Obviously it's a lot easier to pass the testing if their DB accrual rate isn't the full 10% but perhaps just (60 minus the adjusted value of the 50 from the year before).

Thanks....

-bri

Due to set of unusual circumstances, small plan Plan Sponsor that always deposits 401(k) contributions on time, deposited the sum total of $150 for 3 participants one day late (ie 8 business days after withheld).

Report on 5500?

We have client with 401(k) plan and separate PS plan.  They want to satisfy ADP testing for the 401(k) by making SH contributions to the PS plan.  Both plans use the same prototype document.

The document DOES allow for the 401(k) testing to be satisfied with SH contributions to ANOTHER plan.  However, nowhere in the document does it have anyplace to state the SH contributions made to the PS are intended to satisfy testing to another plan.

Does this satisfy all requirements, or does the PS have to specifically state that it's SH contributions are intended to satisfy another plan?

I was just curious what other TPA's might do regards to maintaining data for former clients. When do you delete it? Do you provide terms of deletion in your service agreement? What about long standing clients whose agreements never referenced a deletion policy?

Can a plan's forfeiture account be used to fund QNECs due from late deposit of deferrals and the attendant earnings?

Employer wants to encourage longevity, is looking at offering benefits to certain retired employees that meet certain requirements.  

Example: A Cafeteria Plan is amended to allow only active group health insurance plan participants who are at least 60 years of age but younger than 65 (i.e. Medicare eligibility) AND have a minimum of 10 years of GSB service to participate in the Plan after retirement would that be allowed?  I'm looking at 1.125-7(b)(2), which requires any "employee" (and I believe, would also include former employees) with 3 years of employment to participate in the Plan.  Can any further service requirements for former employees be added?