Section 4225(a) requires that there be a bona fide sale of all or substantially of the "employer's" assets in a arms'-length sale to an unrelated party.  Where you have another member of the selling and signatory employer's control group (here a company that owns the building that was leased to the signatory employer), must there be a sale of assets of both the signatory operating company and the related real estate company for Section 4225(a) to apply?  I think the issue is whether under ERISA the concept that all companies in the control group are deemed to be the same employer applies to Section 4225(a) so that all companies in the control group must be sold.  I have not found any precedent for this but this does not sound correct to me.  If any one has any thoughts, they would be most appreciated.  Thanks.    

Hi, 

One of the terminating plan there are few participants with balance in the MPP source, this was from the pervious plan.  The plan has elected for optional, so if a participants does not take action can the plan sponsor direct to have the funds rolled over to an IRA account for the ones who have balance in the MPP source? or should it be an Annuity? 

Thanks 

Assume a tax-exempt entity, "Parent," has a for-profit subsidiary, "Sub."  One of the executives of Sub is also an officer of Parent.  As an officer, he would (at least typically) be considered an employee of Parent.  Assuming the plan language permits it, any issue with him participating in 457(b) and 457(f) plans of Parent?

Presumably, any 457(b) deferrals should be limited to his compensation received from Parent for his officer duties.  

Any limits to what he can get on the 457(f) side?  It seems like this might have 4958 or 4960 implications.

i put this out here once before but struggle with the right answer. 

I have a participant over age 72 that passed away in 2020.   Non owner –  The RMD was waived in 2020

His spouse (beneficiary) passed away in 2021.  She was over age 72 as well.   Money is still in the participants name in the plan.

The plan is terminating, assets will be rolled over to an inher IRA

The 3 children are the beneficaries.

RMD is required for 2021, based on 12/31/2020 value.

I am trying to figure whose age I would based the RMD on.  Owner?  Spouse or oldest child?  Any thoughts?

Thanks, I appreciate your help.

We have a plan that we just took over as TPA.  In reviewing the information it was discovered, that yhere is a loan that was issued 8/2012 that is still showing as active.    Does not appear that any loan payments were ever made nor was it ever defaulted.

If I am reading Rev Proc 2021-30 correctly, 6.07(3)(d)  -  it look like i can use the SCP if the participant would pay the loan off in full, plus interest.

Am  I reading correctly or does this have to be filed through VCP?

Thank you!

A single member plan a year ago (2019) rolled into the plan a large sum and the sponsoring business intended to hire employees.  COVID hit and no employees were hired.  A form 5500-SF with the "one participant plan" box was checked and filed for 2019.  Due to COVID the owner/single participant took a distribution and the assets of the plan are now only $51,000. No employees.... just the owner.

Do we need to file for 2020?  

I know the question of filing without the audit has been discussed many times. However, my question seems to not be addressed in prior discussions and this bothers me. I am looking for any clarification. The following sentence is above the signature line of the 5500:

Under penalties of perjury and other penalties set forth in the instructions, I declare that I have examined this return/report, including accompanying schedules, statements and attachments, as well as the electronic version of this return/report, and to the best of my knowledge and belief, it is true, correct, and complete. (emphasis mine)

I know the DOL has issued FAQ25 on EFAST2 Q&A https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/efast2-form-5500-processing.pdf

I understand there are extraordinary circumstances that cause the audit to be late. However, in my experience, 99% of the time audits are late due to procrastination. 

My question up for discussion is: does the penalty of perjury sentence mean nothing to the DOL? Or does it apply to all the data besides the audit? Does the perjury sentence mean nothing to CPA's and those under Circular 230 who recommend filing without the audit? 

Filing without the audit seems to just be a way to buy another 45 days of "extension" and the DOL seems to be okay with it. 

Thank you

Just want to see if you agree with my interpretation. Plan with many operational violations. The plan does NOT provide for the 20 hour exclusion, but they have been operating as if it did.

Now, since employees were incorrectly excluded form deferring, there will have to be make-up contributions, etc.

My question is this - under 1.403(b)-5(b)(4)(i), if any employee in the "less than 20 hour" exclusion category is permitted to participate, then no one in that category may be excluded. So, in this case, since some of the "under 20 hour" folks are going to have to participate since they weren't previously excluded, then this precludes amending the document for future years to institute this exclusion? Or have I got that wrong?

Hi all

I am asking the following 2 scenarios on behalf of someone who is not my client but asked me about it. They deal with a payroll company for their plan.

Scenario 1:

3% non-elective safe harbor for 2020, they do not have the money to make it by Friday. They already missed the 9/15/2021 deduction deadline.

I thought that they had till 12/31/2021 to finalize the 2020 SH, I thought wrong?

Assuming that it can be done by 12/31/2021 (after 10/15/2021), it will be deductible for 2021.

However, it will not affect the 2021 415c limits, correct?

Scenario 2:

Plan sponsor did not make any contribution for 2020 by 9/15/2021 corporate deadline

Plan has 3% non-elective safe harbor for 2020 plus they want to make profit sharing for 2020.

For the profit sharing to be for 2020, they need to deposit by 10/15/2021, correct?

How about the safe harbor, let's say similar approach as in scenario 1 i.e. can make it by 12/31/2021?

In both scenarios, they will have anough payroll in 2021 for the 2020 and 2021 contributions to be deductible. 415c issue, another story.

Thank you

Received the following question from an auditor friend of mine, who is trying to wrap up a 12/31/20 plan audit before Friday:
 

Got a plan that dropped its interest rate down to 1% due to the pandemic....not sure why they did this, but we are not sure that this would be considered "reasonable rate of interest" per IRS standards and that if it is determined that it is not, then isn't there a risk that the "Loans" would be considered distributions?  We have a call into the client to see why they did this and if anyone weighted in in terms of ERISA allowability. 

Any thoughts on this one?

This is a general question - have just been presented with an ERISA 403(b) plan that has been operationally botched for an as yet untold number of years - could be 4, could be 13. VCP all the way unless ERISA attorney advises them to ignore the problems and start clean next year. Very doubtful...

Among the MANY transgressions, people ineligible for employer nonelective contributions have received them, for as far back as this goes. Plan is 100% immediately vested. Just wondered if anyone has ever SUCCESSFULLY negotiated with the IRS to have such contributions removed from their accounts and reallocated? I can't imagine that the IRS would allow this, but maybe someone has tried it with success?

A client asks: Employer used PPP money to pay Christmas bonuses in 2020. If the plan has no exclusion of bonuses from covered compensation, can these PPP funded bonuses be excluded from covered compensation?

Unless there are some regs that I haven't located, I can't see how these bonuses could be excluded.

Legal in state where the entity does business.  Are there any recordkeepers who will work with these businesses?  I know it's a whole thing I just am curious to know if its doable.

Suppose you have a small 401(k) plan that provides for a safe harbor NEC. There are 4 business owners (25% each) and 10 employees (all non-key nhces). The plan only provides the safe harbor NEC to non-keys.

For the past 4 years, 1 owner and 3 of the 10 nhce employees have been excluded. They have a December 31 year end.

The company wants to amend the plan effective November 1 to remove the exclusion for all (i.e. they want everyone to be eligible).

Question: if this is done now, will the 3 nhces that have been excluded be entitled to the safe harbor NECs even though they will have only had 2 months to make salary deferral contributions for this year? Would we be able to include them as benefiting for the salary deferral part of the 410b coverage test?

Thanks.

Hi

I am not a DC person in general and was asked to do a favor to someone for a plan that is in trouble.

Plan is a DC plan with deferral, 3% non-elective safe harbor and profit sharing provisions.

Plan effective date is 1/1/2015.

Only 5500 filing was done for 2015 but under DVFC program.

I am assuming the document is a PPA document so should be ok as just needs to be updated for Cycle3 - no confirmed yet. I am not sure if any statutory amendments were required, to be checked.

Nothing has been done since then, no filings, no SH notices, no nothing.

As no letters have been received for missing 5500 forms yet, i am assuming that it is ok to file all missing years under DVFC, correct?

I will have test/check each year for contributions made (or missing) and wanted to see what needs to be done if corrections are required - all may need to be done under VCP unless eligible for SCP:

• What if SH contributions were missed and/or not correctly calculated?
• What if any new employees were eligible and never provided deferral elections forms, SH allocations SPD etc?
• What if PS contributions were made and plan did not satisfy 410b and/or 401a4 - formula is group based i.e. not safe harbor

Any other questions I am not asking? I am aware that there are a lot check when and if i get any information for each year.

Usually I would like to run away from these but...

Thank you

Hi

To confirm, if sponsor wants to set up a new 401k plan for 2021, they are late for safe harbor for 2021, correct?

Same question for an existing PS plan and wants to add 401k feature for 2021.

There is no way to set up any plans that have safe harbor for 2021, correct? Just checking out there.

Any 401k deferral will be subject to ADP for 2021 unless they use the 5% rule, correct?

Thank you

Thankfully, none of my clients ever seem to be in a disaster area where they need disaster relief, but this time, one of my audited plans is in NYC and wants to take advantage of the 1/3/22 deadline.  From what I'm reading, there's nothing special to do - just file before the new deadline, and the IRS is supposed to know by the address that the plan sponsor is eligible for the relief.  For those who unfortunately have to deal with this on a more regular basis, does that sound right?  Doesn't the box on Line D usually have to be completed?  I don't want to add a $2,000 late filing penalty to this company's other issues...

What happens to QDRO if employee is terminated before retirement? or terminated due to vaccine mandate?

My wife and I got married earlier this year. She is not a US citizen and is living in Sri Lanka.

I want to add her to my 401K plan as a beneficiary. When I try to do that, it requires a SSN or TIN. Is there any other way to do this? Can I write a will instead that leaves everything to her?

A question came up on a HRA. I was able to obtain a copy of the Plan document, and the language is, shall we , a bit sparse, and not terribly enlightening. But here goes. 

Plan was established in 2008. In the adoption agreement, under "Maximum Benefits Per Coverage Period" it says: 

"Other: A discretionary amount to be announced by the Employer at the beginning of each Coverage Period." It then goes on to list the maximums for 2008.

So here's the question - the coverage limits have been increased several times since then. Do you think this language would be sufficient, if the amounts are properly communicated to employees each year, or should a Plan amendment have been done each time the limits increased?