Can you go from a 3% non-elective Safe Harbor contribution to a flexible (maybe) 3% safe harbor contribution mid year? Would you need to provide a seperate notice for this under SECURE, or can you just make the change when writing the Cycle 3 document?

Would there be anything legally preventing a recordkeeper from commingling the assets of multiple Solo 401(k)s into a single trust account to achieve efficiencies for the all the individual plans? I know certain parts of ERISA do not apply to a Solo 401(k) plan, but I'm wondering if any of the sections that do apply would prohibit this practice?

2 Plans in a controlled group.  Plan A is a 6/30 year end, and Plan B is a 12/31 year end.

How do I determine who is an HCE?

It is my understanding that at one time - forfeitures were not allowed to be used to fund safe harbor contributions.  I can't find when/if that changed and is it ok to use forfs now to reduce the safe harbor contribution to employees.

Curious as to what approach you take. A sole prop has Schedule C from two different businesses. One has income of $100,000, one has a loss of $50,000. Defined contribution plan.

Do you
A. calculate based on $100,000?

B. Calculate on $50,000?

C. Give your opinion (mine is that you do not net the two, so $100,000) to the CPA/Client and let them choose?

Posting for an ex-colleague.  Their company is paid bi-weekly and had 27 pay periods in 2020 instead of the normal 26.  One of their payroll people miscalculated their own 401(k) contribution, intending to contribute the maximum  $19500 over 26 pay checks, but instead overcontributed by $750 because of the extra paycheck.  But instead of having the excess paid to them out of the plan like you are supposed to, the payroll person took it upon themselves to adjust their own W-2 and adjust their own paycheck so that they could get the money back from the employer instead of taking it out of the plan.  No 1099 issued, no earnings on the excess.  It is a large company and no one is likely to notice but my colleague thinks this is a problem.  I am being careful not to express my opinion but I sure know what I think.  How big a problem is this, if it is?

The alternate payee's attorney is questioning the valuations and wants a full accounting.  It's is a pooled profit sharing plan.  The client is asking if there is anything in the code that prevents the disclosure of this information as it relates to other plan participants.  I believe there is but I can't find it.  Any suggestions on how to handle this situation?

Say you have a sole prop with one employee. Sole prop's Schedule C is low enough so that taking into account the contribution for the employee, and the earned income reduction, the sole prop's net "plan" income is, say, $25,500. Sole prop is catch-up eligible, and deferred $26,000.

Now, under IRC 414(v)(2)(A)(ii) the sole prop deferral can't exceed $25,500. So I assume the excess $500 is considered a 415 violation? I don't see what else it could be - not a 402(g) violation nor an ADP failure...

Plan sponsor switched recordkeepers mid year.  During first part of the year, participant took $100,000 covid distribution from recordkeeper before transfer to new recordkeeper.

Participant went directly to new recordkeeper and requested $30,000 Covid Distribution.  New R/K processed distribution without approval from plan sponsor or TPA.  Recordkeeper relied on participant’s self certification.

Am I correct that in order for the plan to remain in compliance, the $30,000 adjusted for earnings needs to be returned to the plan by the participant as an “overpayment”? (Participant not otherwise eligible for an in-service distribution.  Not term’d.  Not 59 ½.)

Participant does not have the money to put back into the plan.  Who is responsible for returning the money?

Would appreciate any thoughts on the following.

An ongoing governmental defined benefit plan provides a small death benefit (under $5,000) upon the participant's death in various scenarios. There is an order of payment (spouse; named beneficiary; children; estate). However, in some cases, the sponsor is (1) unable to contact a beneficiary, but believes they have the beneficiary's correct information, (2) is unable to identify the correct beneficiary at all, or (3) is unable to obtain a name, address, valid SSN, etc. for someone they believe may the correct beneficiary.

Assume no relevant state law, no representative has qualified on the estate, and that the sponsor has conducted a diligent and reasonable search under the circumstances.

Under scenario (1), I believe they could forfeit the death benefit subject to reinstatement, force an IRA rollover, or possibly escheat. 

What are valid options under scenarios (2) and (3)? My understanding is a forced IRA rollover would require establishing an IRA in the beneficiary's name, which may not be known (or may be suspected but an SSN not known). Same with escheating, which would require withholding and 1099-R reporting.

Does this leave forfeiture and reinstatement as the only alternative as it requires no taxation, withholding, or reporting? 

Plan allows for in-service withdrawals at age 59.5 for deferrals and SH, and PS at NRA.

Participant was told she could take an in-service withdrawal from the plan.  She was not told about the age requirements.

She took a $100k distribution from the brokerage account in September 2020, and a 1099-R was issued.

Problem is, she is only 35.

Can we retroactively amend to allow in-service w/d from Non-Elective contributions at age 34?

I see in EPCRS you can do that for hardships and loans.  Nothing about "regular" withdrawals.

If not, what's the correction?  Return the money and reverse the 1099-R?

Client forgot to file form 5558 yesterday and was told by accountant o file one today, send overnight and also to get"into gear" and file Form 5500-SF today and check off the box for Form 5558.

I know Ogden is backed up, but what are the odds this one would slip by with no penalty?

I mean, I have never heard of a penalty for a form 5500 being one day late.

I am having a hard time finding rules on the two year of service eligibility requirement.   I thought you could not have dual entry dates because someone could actually be excluded from the plan for more than two years.    

Example:  Joe is hired 7/15/2018.  He meets eligibility 7/15/2020.  Does he enter the plan on 1/1/2021 or can there only be one entry date for the beginning of the plan year.   

Am I confusing rules with 1 year of service and more than 18 months?

Client is filing 2018 and 2019 5500s soon and has what I believe to be a reasonable cause for the late filing.

Client received a penalty notice for the 2018  from the IRS but not from the DOL.

I have prepared a reasonable cause statement response to the IRS but am unclear what needs to be done with regards to the DOL.

Do we file DFVCP and pay the penalty or can we get any penalty waiver pursuant to a reasonable cause statement? If the latter, where do we send it?

Our plan is looking into the possibility of adding an in-service withdrawal feature tied to the occurrence of a short-term/temporary disability.  We have not been able to find much guidance in our research to confirm that (1) this is permissible and (2) what parameters can we place on it.  I know the Treas. Reg. 1.401(b)(1)(ii) allows for in-service withdrawals of funds after a "fixed number of years, the attainment of a stated age, or upon the prior occurrence of some event such as layoff, illness, disability, retirement, death or severance of employment."  Would a short-term or temporary disability (that would not qualify for the exception to the 10% early withdrawal penalty if the worker is under 59 1/2) be an event that would allow for an in-service withdrawal?  (We would only allow withdrawal of employer contributions that are vested and put a cap on the amount that could be withdrawn, plus require proof/documentation for the short-term disability).  If anyone has added this type of feature or can provide references to any IRS or DOL guidance (whether articles, PLRs, Rev, Ruls., etc) that would be great. My research hasn't been very fruitful (although I did come across at least one plan that incorporates this feature) but not much more. 

I have an employer who states they have joint employer status with their employees, but almost all the employees are directly employed by other entities. No controlled group exists between the entities, but they are claiming a controlled group isn't necessary for these employees to participate in their plan.

Has anyone encountered such a scenario? How do you set up the plan document this way when it seems like the IRS and DOL conflict?

Does the postponement in tax filing deadline (from 4/15 to 5/17) also cause a postponement of when 402(g) corrective distributions must be processed?

I have a 401(k) plan where the employer has many union employees covered by a collective bargaining agreement. The union employees are currently excluded from the 401(k) plan. The owner is covered by the CBA under a separate union agreement, along with only a few other employees. For a little background, about 75% of the company's workforce is made up of union employees.

If the plan were to amend to allow employees from only the separate union agreement that includes the owner, would all union employees need to be included in the compliance testing, regardless if they are excluded from the plan? The concern is that including all union employees would more than likely result in failed coverage testing.

I'm looking for a little confirmation on what I hope are easy questions - with a lot of set-up.  A control group has 9 different 401(k) plans.  A few of the plans fail the ratio % test so we are going to aggregate the plans into 3 separate groups:

Group 1: Plans 1, 2, 3, and 4 are not safe harbor and all have identical provisions.

Group 2: Plans 5, 6, and 7 are not safe harbor and all have identical provisions (but different match than group 1).

Group 3: Plans 8 and 9 are safe harbor match with identical provisions except Plan 9 also has a fixed 2% non-elective contribution.

Groups 1 and 2 each pass the ratio % test for 401(k), 401(m), and 401(a) as well as ADP and ACP so we are in the clear. Group 3 passes the ratio % test for 401(k) and 401(m), but not 401(a). The only option for Group 3 is the average benefits test and it passes - if our system is running it properly. While I know the basics, I don't have a ton of experience dealing with the ABT and I'm always leery of results that I can't double-check with confidence. I know I should trust the software, but I trust the opinions of many of those who reply to this message board a little more.

In the average benefits test the HCE and NHCE in Group 3 are having the EAR's calculated while all HCE and NHCE from Groups 1 and 2 are shown with a 0.00 EAR. The average EAR for all HCE is .72%. The average EAR for all NHCE is .65% so definitely more than 70% of the HCE EAR. Non-discriminatory classification seems fine - excluded employees are only those employees from companies 1-7 and the ratio % test for 401(a) was 52%.

1. With this information does it sound like our system is running this properly and all three groups pass coverage - or is this not enough information to hazard a guess?

2. I think we've aggregated the most-logical way possible but am I missing any potential problems with aggregating these 9 plans into 3 separate groups?

3. Each of these plans uses different recordkeepers, have different investment lineups, and very different fee structures. Is this a potential BRF problem?

Company A and Company B both sponsor 401k plans. Company A purchases Company B in a stock acquisition. Prior to the acquisition, the attorney's draft a board resolution establishing a termination date for Company B's plan. The plan termination date was the day before the closing of the purchase of Company B. The resolution was executed timely. 

The TPA for Company B's plan is stating that since the plan was not restated for the tricycle amendment prior to the establishment of the termination date, they are now considered a non-amender and must file under VCP to bring the document current. They state that had they known about the acquisition ahead of time, they could have avoided VCP by restating the document before the termination date. Note - the purchase happened within the past two weeks, all assets are still in the trust. 

I know the document needs to be updated, but I have never heard that it must be updated before the termination date is established. 

Is the TPA correct that Company B must file via VCP to restate the document as if they are a non-amender? 

Thank you

(I should have posted this under the termination message board, not sure how/if I can move it or if a moderator can move it for me, thanks)