Let's say I have a mep plan with 4 companies. Companies 1&2 are a controlled group. Companies 3&4 are a separate controlled group. 

Can 1&2 have one matching rate while  3&4 have a different rate? I know that I have to pass ACP test for companies 1&2 and then separately 3&4. 

Can a plan adopt an 11(g) amendment to fix a discriminatory definition of compensation? The plan excluded bonuses, and it does not contain a fail safe provision to automatically include bonuses when necessary to pass testing. TIA

A 401k plan document is written with a $1,000 force out provision for non-responsive terminated participants. The plan recordkeeper (bundled provider) processed force out distributions as if the document allowed for the $5,000 limit rule. 200 participants were forced to IRA's when they should not have been. This error happened within the last two months and was an isolated incident to these 200 participants. 

Rev Proc 2021-30 now provides more options for retroactive amendments pending certain conditions, one of which is (i) The plan amendment would result in an increase of a benefit, right, or feature.

Benefit, right or feature is not defined (as far as I know). My thought is that this error does not provide an additional benefit, right or feature. However, do others believe this can be corrected under SCP using a retroactive amendment to change the limit to $5,000? 

Thank you

Looking for a referral for companies that perform cybersecurity audits.  We are a small TPA (5 employees). 

Thanks very much.

Participant takes CRD during 2020 and repays the CRD during 2020.  Do we reflect the CRD on the 5500 and then show it going back in?  Or because they offset do you not show it?

Many news outlets are reporting the decision by Delta Airlines to impose a $200/month surcharge on employees who refuse the COVID vaccine.  Here is a link to the Wall Street Journal's article: Delta Air Lines to Impose $200 Monthly Charge on Unvaccinated Employees, Add Testing Requirements - WSJ

My initial reaction is that COVID vaccination status is a "health factor" under Treas. Reg. 54.9802-1(a)(1)(iv) (Receipt of health care) or (v) (Medical history).  One could also argue that refusing the COVID vaccination a health factor because it is analogous to the dangerous activities listed under "evidence of insurability" in Treas. Reg. 54.9802-1(a)(2)(ii).

It seems like the $200/month is a higher premium under 54.9802-1(c) for a similarly situated individual - it is a stretch to argue that COVID vaccinated employees/non-COVID vaccinated employees are not "similarly situated" because vaccination status is a bona fide employment-based classification under 54.9802-1(d)(1).

That leaves the exception for nondiscriminatory wellness programs in 54.9802-1(f), and specifically the exception for "activity only" wellness programs in 54.9802-1(f)(1)(iv), since the $200 is related to a health factor.  The activity-only wellness program would need to complete with the frequency, size of reward, reasonable design, and uniform availability/reasonable alternative standards requirements of 54.9802-1(f)(3)(iv).  It seems like the employee's personal physician can offer an alternative if he/she is willing to say that obtaining the COVID vaccine is not medically appropriate for that individual - although it is unclear what the alternative would be in this circumstance. 54.9802-1(f)(3)(iv)(C)(4)

I just received 2 e-mails from EFAST that the filing status of 2 plans were updated  as "filing received" but the files were sent in April & June respectively which both had good ACK files and the new e-mail has the same ACK file as the old.

I did not re-file either plan myself.

There were 2 warnings - one is basically "filed after due date with no cause or amendment" and the other is "matches another filing in database"

I'm trying to figure out if it's a general problem with the new electronic filing system for EZ plans or specific to 2 of my plans.

Anyone else get one of these?

Hi all- I was wondering if anyone knew the actual formula that is used to calculate the Lifetime Income Illustrations that are required in 2022. I know that DOL has the calculator but was wondering if some had the actual formula for both the Single and Joint, thanks

Background: Client purchased a plan with automatic enrollment and safe harbor match, with an effective date of 7/1/2021. The plan went live on our system, census was uploaded and participants were notified of their eligibility to participate, received all the required notices, and should have been automatically enrolled if they did not opt out. 

Client has now reached out (along with their financial advisor) saying that they never wanted automatic enrollment, didn't understand it, and now wants to "cancel" the plan. They have not done any withholding of ANY elective deferrals at this time, so the plan has not been funded. 

I am of the opinion that since notices have gone out, accounts have been set up, etc. they have a 401(k) plan, and they cannot just "cancel" it, i.e. pretend it never happened. I know how to correct the failure to automatically enroll participants so that is not the issue. 

Our main point of contention and one I am having difficulty finding any guidance on is; at what point can we say, "sorry, you officially have a 401(k) plan so you have to fund any required contributions and go through the normal termination process to close it"?

I believe the plan is active, and that they need to go through the correction process for the automatic deferral failure and then they can terminate the plan. The client contends that since they have not funded, the plan is not active and we should be able to just "cancel" it.

We've already told them that they can remove the automatic enrollment provision, so that is not the issue. 

If I anyone can point me to some guidance on this topic, it would be much appreciated. 

I was asked today if a new 401k plan can cover employees with W7#s instead of SSN.  I have no idea and am not sure what information I need to get to make a determination.  Anybody have any experience or guidance on this?  Thanks!

Business closed in 2020. Plan to be terminated in 2021. No employees in 2021. Since there are no nonexcludables I would think the plan should pass 401(a)(26). However, since the 2 employees minimum  goes to one if only one employee, does that imply that one  goes to zero if there are no employees. An ancillary question is  can an overfunded   plan be maintained in a retiree only mode if the sponsor remains in existence with no employees.

• Question 12 on Form 5310 reads as follows:

__ Yes   __ No   Has this plan been involved in a merger, consolidation, spinoff, termination re-establishment, or a transfer of plan, assets or liabilities that was not considered under a previous DL?

If “Yes,” submit the required attachment.

 What does "considered" mean in context of plan that uses pre-approved provider? Does the pre-approved provider's DL submission "count" as "considering" these mergers? Or would only an individual filing "count" as "considering" these mergers?

Here's why I'm asking:

Terminating plan is adopter of pre-approved plan. Prior to provider's pre-approved plan filing for Cycle 2 Determination Letter, the now terminating plan had 3 plans merge into it, with the now terminating plan as the surviving plan.  All are DC plans (and used plans from pre-approved providers), so no 5310-A filed, and no 5310 was filed at the time of the mergers by the surviving plan -- only DL filings so far have been usual filings on cycle by pre-approved plan provider. The terminating plan timely adopted its Adoption Agreement Restatement after the plan mergers, when its pre-approved plan provider sent the Adoption Agreement Restatement, for the Cycle 2 Determination Letter.  Pre-approved provider timely filed for Cycle 3, and presumably has received DL, although no Adoption Agreement Restatements sent out to employers yet. For the surviving plan, that is now terminating, when I file its 5310, can I check "no" on Line 12 of the 5310 as the previous mergers took place before the pre-approved provider's latest DL and before the plan adopted its latest Adoption Agreement Restatement?

Client adopted new DB plan under SECURE retroactive to 2020, but already contributed 30k to his owner only SEP for 2020. He really is only allowed to contribute to a DC  6% x $285k, which is $17,100.

The SEP is with Schwab, and so is the new DB. I doubt they will transfer the contribution directly from SEP to DB unless classified as a rollover (which it isn't!).

Is the only solution to ask Schwab to return the contribution as a contribution in error? Do we ask for a return of the erroneous non-deductible excess (30,000-17,100 = 12,900) or the full $30k?

Your help is appreciated!

If a plan wants to amend its rule for crediting interest to folks taking a lump sum (before: pro rata credit up through payment date, after: no such partial year credit), is that deemed a cutback even if done only prospectively on future distributions?

I could argue that my annuity value drops if I won't get that extra interest credit from 1/1 of the year I turn 65 up through the actual NRA and take my dough.

But if anyone knows of an exception or if there's been any IRS guidance, that'd be cool to learn.

Thanks.

--bri

Hi, 

When a 403(b) plan is terminating is there an exception they need not do 5500? example if the plan was set up in 2005 and has only 1 participant will a 5500 be required once the plan goes to zero?

Thanks

Hi, 

Can participants still take CARES distribution? I thought June 2021 was last. 

Thanks

Since a sole proprietor reports all his contributions(including any elective, if any), what triggers reporting his elective (if any) on 5500 form

Our client, a sole proprietor, took on a partner and formed an LLC in late 2017.  We did a resolution of the LLC changing the sponsorship of the plan to the LLC from the SP, as a sole proprietorship never dissolves.

We faxed a letter to Ogden informing them of the change.

A Form 5500-SF was filed for 2017 under the SP EIN; we filed a 2018 5500-SF under the LLC and used the LLC EIN, noting the change in sponsorship in item 4.

Our client receives a letter from the TE Compliance Unit inquiring as to why the 2018 Form 5500-SF for the sole proprietorship had not filed a 5500-SF.  The Notice mentioned that this was not an audit, just a compliance check.

I spoke at length with the IRS person that wrote the letter and explained the circumstances (without a POA at that!)- she said she would note the file and that we call main IRS number; and they would be able to make the change, but we must make one of the two selections: 

a.  either file the two plans as a merger, which makes no sense at all; or

b.  file the sole proprietor plan as a "final return" and $0 at the end of 2017; show the LLC plan as a "new plan and show the money transferred from the sole prop plan in 2018.

Neither of these choices really make any sense, but the woman at the IRS when I did call only mentioned that "this is the way they told us to handle".

Usually when we receive an IRS Letter or Notice, we attach an explanation and receive about 4-5 love letters before the matter is resolved..

I am inclined to go with option b., if, as they say "this is the only way to handle."

I have a one man 401(k) Plan where they are looking to put in a Cash Balance Plan as well.  If the owner makes $165k, the maximim Profit Sharing contribution would be 6%, correct?

So they could do $19,500 in 401(k) + 6% of Comp + $108k into Cash Balance (he's 42-years old)?

Is there anyway to get the contribution to be more than 6% into PS?

My client has a fiscal ending 9/30 but their 401k plan year is calendar. We started a cash balance plan for them and wrote the plan document to use fiscal year comp, thinking that this is what they do for their 401k so it would simplify things to use one census. Also, because the two plans are combined plan tested. 

In February after the second plan year, we discovered that they are actually giving us calendar year comp and that the 401k plan document does base contributions on calendar year. Can I now amend the CB plan retroactively to use calendar year as well? Or is it too late to do that, being after the plan year end?   (The differences in comp would only affect NHCEs since the HCEs all earn over the 401a17 limits.)