I'm curious when most new (small) plans tend to acquire their first fidelity bond and how that affects reporting on Form 5500-SF.

New plan didn't manage to purchase their bond during first year plan in effect (2020), and only purchased upon review in early 2021.

My approach is to report no fidelity bond on 5500-SF but just wondering if it's legitimate to report the bond since it's in effect at time of filing 5500-SF, even though not in effect during that plan year.

I've seen variations of this question on here, but nothing exactly on point. What does a plan do with the benefit of a deceased former participant when there is no beneficiary, no estate, and the plan is terminating? 

401(k) Plan participant died in 2013 and plan was notified in in 2015. There was no beneficiary on file. According to the plan document, if there is no designated beneficiary, the beneficiary shall be the surviving spouse and if there is no spouse the beneficiary shall be the executor or administrator of the participant's estate. It appears there was no estate established and employer cannot find any heirs. 

The plan will soon be terminating due to a merger. What should be done with this participant's benefit? 

I am 62 and retired.  I have a Roth 401(k) which has satisfied the five year period for taking tax-free earnings.  I plan to roll this Roth 401(k) account into a Roth IRA.  Does the five year period start anew?

Company A purchases Company B in stock sale.  The transaction occurs in 2021. 

Company A sponsors a calendar year end safe harbor 401(k).  The safe harbor is an enhanced, 100% of the first 4% match.  The plan requires age 21 and One Year of service for eligibility.

Company B sponsors a calendar year end safe harbor that also uses an enhanced 100% of the first 4% match.  Company B's plan requires age 21 and 3 months of service.

At some point Company B's plan will be merged into Company A's plan. 

I understand that it would be best to merge the plans at the start of a new plan year.  It is not possible at this point to merge for 1/1/2022. 

If Company A does not want to wait until 1/1/2023 to merge the plans and they do so mid 2022, what pitfalls need to be overcome?

Company A has been considering making their eligibility requirements more liberal anyway, so moving to a 3 month wait would not be an issue.  And both plans use the same match formula.

If Company A amends eligibility to 3 months effective 1/1/2022, that effectively ends the coverage transition for 2022, correct?  But if the intention is to merge the plans in 2022 the coverage transition would end in 2022 anyway.  That being said, would it be better to wait until the plans merge in 2022 for Company A to amend eligibility, or would amending at the start of 1/1/2022 be the preferred way to go?

Are there any "mid-year" amendment concerns since we are talking about safe harbor plans?

I've already advised the client that any decisions should be reviewed by their legal advisors, especially any decision that might affect the length of the coverage transition period, so this is more for my own education.

Thanks very much.

What is the due date for the deposit of a profit sharing contribution in a non-profit?  They are exempt from filing a form 990 or 1120.   

If a participant waives the right to participate in the Plan, do they also waive the right to receive the top heavy minimum as well?  

Thank you

Can the cost of the Fidelity bond be assessed to the plan (from forfeiture) and/or participants?

TPA produces annual 5500s.  Client constantly indicates on annual data request that no contributions were submitted late per DOL rules.  TPA enters zero on the proper line of 5500/5500-SF.

Later it is determined that the client has been depositing weekly payrolls only once per month for years.

TPA brings this up with client, they say they don't have any money to pay lost earnings or to pay TPA for calculation.  They do not want the item listed on the 5500 either.

What is the TPA's exposure for producing the 5500 with no late contributions when in fact there were?  The TPA is not signing the 5500.

This is truly a hypothetical question, but comes to mind since there have been a couple of "mistake of fact" distributions recently.

Suppose you have a legitimate mistake of fact contribution. In order to return it to the employer, it is supposed to be returned within 1 year.

Now suppose it is past the 1 year, before it is even discovered. I believe it then needs to be allocated as an employer contribution. Other opinions? Other solutions you have used or heard of in "real life" situations? Just curious.

Hypothetical for the moment, but could become real. Participant dies, no named beneficiary. Under the plan default, it goes to the daughter. Daughter is non-responsive, although her location is known.

This doesn't really fall under the "can't be located" missing beneficiary. Let's assume after a period of non-response, the plan just cuts her a check. If she doesn't cash it, what then? Does anyone happen to know if Millenium Trust or similar organization will accept a rollover to a beneficiary IRA in these circumstances? (I realize I can contact them - just wondered if anyone already knows). Other options?

P.S. - let's assume it is over $5,000, in case it makes any difference in your thoughts.

The IRS recently issued a TE/GE Issue Snapshot entitled "Calculation of Plan Compensation for Sole Proprietorships."  This Issue Snapshot involved the calculation of earned income with respect to nonelective contributions to a defined contribution plan in the situation where the self-employed individual has made no elective deferrals and the nonelective contribution is fully deductible under Section 404. 

My question is, assuming that the proprietor's net income from self-employment is equal to $100,000 for 2021 and s/he has established a solo 401(k) for 2021, how do you calculate the elective deferrals? I know that for the common law employee, elective deferrals are subject to FICA withholding. By extension to the self-employed individual, I would assume that the elective deferral would also be subject to the self-employment tax on earned income. If that is the case, do you simply multiply the earned income amount by the 0.9235 (which is the amount you would multiply self-employment income to arrive at the amount which is subject to self-employment tax and then multiply that by 15.3%, leaving the balance as potentially available elective deferrals?

I would appreciate anyone's thoughts on this issue.

We have a parent who is owned by an ESOP.  The parent owns Company A, and Company A owns Company B.  We were told that we had to have this structure because of the ESOP.

We would like to change the structure so that the parent owns Company A and Company B (making A and B sister companies).  I don't see any problem with doing this, but I am concerned with messing up something in the ESOP based on the previous advice.  Is there anything preventing us from making the change?

Plan Administrator wishes to exclude HCEs from participating under the Plan in order to pass minimum coverage tests under 1.410(b)-2(b)(6).  In order to avoid minimum coverage failure for 2021 Plan Year, Plan Administrator proposes adopting amendment to exclude HCEs retroactively to 01-01-2021.  The Plan does have one HCE currently participating the Plan.  If the Plan Administrator adopts the amendment, can the deferrals for 2021 year be refunded to the HCE (and included in gross income of the HCE), since the HCE is no longer eligible, so that no HCE benefits under the Plan for the 2021 plan year and the Plan passes minimum coverage?

Any problems or issues with this I am missing?

I have 3 questions about Workday all as it relates to monitoring the DC Plan 415(c) Annual Addition limit ($58,000 in 2021.) 

1. Please confirm Workday can actually monitor the 415(c) Annual Addition limit.
2. Can Workday calculate DC Plan contributions sequentially: for example, determine non-elective contributions first before payroll deductions/matching contributions.
3. Can Workday also calculate DC Plan contributions concurrently: for example, Basic Pre-Tax, Basic Roth, and Matching Contributions can be calculated concurrently up to the Annual Addition limit.  Sequential deductions may lead to Basic Pre-Tax Deductions up to the annual addition limit with no room for matching contributions.

Has anyone seen an ERISA 404(c) plan that allows participants to have their own investment advisor's fees paid out of their plan account?  I have seen this, but only in the case of self-directed brokerage windows within a plan.  I have a client asking if they can allow participants to obtain advice on allocating their accounts between the plan's designated investment alternatives and charge the associated advisory fee against their account.  This strikes me as technically permissible, but a huge pain to administer.

I've located a couple of similar message board threads which reached a similar conclusions, but they predate the service provider and participant level fee disclosure regs, which seem like they would raise some additional roadblocks.

Any thoughts appreciated.

A 401(k) Plan is a single employer plan and filed Form 5500's as such. Mid-year 2019 the plan selects a multiple employer plan provider and converts to become a participant in a multiple employer plan. The Lead employer that sponsors the multiple employer plan files a full year 2019 Form 5500, and this 401(k) plan is listed as a participating plan. While the IRS received a single plan Form 5500 from this 401(k) Plan in 2018 they are asking why no 5500 was filed for 2019. Thus, we are sending them the multiple employer plan Form 5500 that was filed for 2019. Is this enough? Or does the plan need to file a short year 5500 for 2019 for the months it existed as a single employer plan and use the DOL DFVCP to correct this apparent filing error?   

Here is my situation:

- Plan sponsor is a partnership with a cross-tested profit sharing plan

- We received the K-1s for 2020, which only had Guaranteed Payments subject to Self-Employment Taxes in Box 14A.

- For one of the partners, he was limited (to pass testing) to a profit sharing of $20,000 (Box 14A was only a little over $100K).

- We just found out (after the September 15th deadline), that the K-1s were in error, and he should have had over $300,000 in Box 14A. They are filing an amended 1065

He would like to put in the full $57,000 for 2020 (an additional $37,000 contribution). 

He can still put in the additional $37,000 for 2020 since it is still within the time frame for a 2020 annual addition, but he cannot deduct this on his 2020 1040, but could on his 2021 1040. However, the next question is if he wants to do the maximum in 2021 ($58,000), can he deduct the full $95,000 ($37,000 for 2020 plus $58,000 for 2021) on his 2021 Form 1040, or would that be limited to $58,000 only?

I tend to believe the answer is yes, he would get the full deduction in 2021 - but I am struggling to find support for that position. He isn't violating the 415 limits or the maximum tax deductible contribution for the plan.

Thoughts/support for that position?

Are cash values in a profit sharing plan used in the calculation of required minimum distribution. I have paid my PS58 costs each year.

While I know there is opinion that separating a 401(k) plan into two plans solely to avoid large plan/audit status may not be an acceptable reason to create a second plan, we did this for a client several years back.

In 2012 we spun off to a new plan those hired on or after 1/1/2011.  Those hired before 1/1/2011 remained in the existing plan.

We have tested the two plans together in all years (they are ADP/ACP tested plans with all of the same provisions).

We are now to the point where the second plan is reaching large plan status.  The client asked if we could split that plan into a third plan, but I told them I didn’t think that was a good idea.   Instead, we are exploring the idea of “rebalancing” the two existing plans, changing the plan eligibility from the 1/1/2011 hire date to a 1/1/2019 hire date.  In essence, we would be moving all those hired between 2011 and 2018 from the second plan to the first plan, which would reduce the count in the second plan thereby allowing it to grow again.

Has anyone ever done anything like this?  The recordkeeper for the plans (Empower) is saying they would simply do a plan to plan transfer (since it's one company) and so no black out notice would be needed, but I feel like it is a bit more involved than that.

Any thoughts/advice would be greatly appreciated.  Thanks in advance.

Hi, 

One of the terminating plan has been advised by their counsel to have company name changed as of the effective term date.  Will this require an amendment? since they want the 5500 and all filing to be done with the new company name hence wanted to check if a plan amendment is required. 

Thanks