Looking for some guidance...In 2023, the IRS added Part VIII "IRS Compliance Questions" to Form 5500-SF. We are filing a late 2021 Form 5500-SF using the DFVC program. Since we have to file this on the 2024 Form 5500-SF, do we need to complete these questions that didn't apply to the Form 5500-SF in 2021?

Here’s a hyperlink to the IRS’s FY2025 Lapsed Appropriations Contingency Plan:
https://home.treasury.gov/system/files/266/IRS-FY24LapsePlan.pdf

BenefitsLink neighbors, what do you think:

Would stopping IRS examinations be welcome or unwelcome?

Would stopping rulemaking and other interpretive guidance be welcome or unwelcome?
 

Is there any guideline that we will need to use up the qualified replacement plan balance before an employer can make a deductible profit sharing contribution? (i.e. if we have $150,000 under the QRP and the PS allocation is $100,000 for the plan year, can we use $50k from QRP in year 1 which satisfy the 1/7 rule and make $50k deposit for tax deduction? 

Thank you, 

Connie

Another one of my favorite topics - control groups etc.....

Small Investment Company (2 owners) owns a store in one state, but no other business in that state, nor any other location of the store or a similar type of business.

They do however have unrelated holdings in other states.

Is this an attorney question?

Happy Friday, everyone. I am wondering if any of you have some insight on reporting after-tax (non-Roth) distributions vs. Roth distributions. 

We have an individual taking a distribution of his after-tax (non-Roth) money. There are questions as to how reporting this transaction is different than reporting a Roth distribution. The main question comes down to which distribution code(s) the payer is to use in box 7.

For a [qualified] Roth distribution, the payer indicates:

• the full distribution amount in box 1;
• $0.00 in box 2a;
• the Roth contribution (basis) amount in box 5, and
• code "7B" for box 7
• year of first Roth contribution in box 11

This is what has been proposed for the After-tax (non-Roth) 1099-R:

• the full distribution amount in box 1;
• taxable earnings portion in box 2a;
• the after-tax (non-Roth) contribution (basis) amount in box 5, and
• code "7" in box 7

Anyone know if this is correct?

Hi All,

For employers that offer an HSA and HSA Employer Contribution, what is the best practice for when employees leave the company? Medical benefits are scheduled to term on last day of month (in the example below, it would end on 2/28). When should the employer stop their EE & ER contributions? For example, pay period is from 2/17/2025 - 3/2/2025 and pay date is 3/7/2025. If an employee terminates on 2/24, should they receive the full employer contribution even if the pay date falls in March? What about their EE contributions? Should employers still deduct the EE contributions from their March check, even if benefits ended on 2/28? 

I know the answer is no but second guessing because someone is challenging that it can done.

I own the LI policy, not my plan and I want to pay with plan assets, the question how can I do that, policy is not owned by the plan

What am I missing here?

I receive a Health and Welfare Benefit from my employer of $4.50.   If i defer health insurance this is supposed to be deposited into a 401k.

However after 15 months of employment and checking 401k balances   it's as if there behind almost a year for deposits.

Does anyone know if they can hold these deposits?   I do not contribute and extra from my pay into the acct.

I can't get a straight answer from my employer.

 any thoughts would be appreciated.

Thanks 

Seb

Rather than spend an entire day putting different contribution scenarios into a recordkeeping system (e.g. Relius, etc.) to get this test to pass does anyone have a spreadsheet with the testing formulas built in they can share that is set up to plug in compensation, contributions to come up with a pass/fail? 

TYIA! 

Hello,

We're having a differing of opinion in our office on this.  We're taking over a plan in existence since 2011.  We are mirroring their prior document. The client didn't sign our doc by the 2024 plan year. 

1) Should we just use the prior document to administer the 2024 plan year and create our document for 2025? or,

2) Can we still prepare our document for the 2024 plan year even though it won't be signed by the Plan Sponsor until 2025?  Again, no changes being made, just a mirror image of the prior document.

I appreciate all responses.

I was looking through the plan documents on ASC and I'm seeing language in a few places that we don't use about offset- mostly relating to employer contributions and safe harbor contributions offsetting them. I also see language for this in a few spots within Relius. How exactly does offsetting a source work and why / when would you use it?

The recently proposed regulations state that plans may include a provision deeming high-paid individuals (HPI) as having irrevocably elected to have their catch-up contributions treated as Roth. Should this provision be incorporated into the plan document itself, or should it be added as part of the SECURE 2.0 amendment?

Suppose you have a small 401(k) plan that has been in place for 10 years.

There is an employee who has worked about 700 hours per year for 4 years now and has never been eligible because of the one year / 1,000 hour requirement.

My understanding is that the plan does not need to provide employer contributions but does need to offer the employee the ability to fund salary deferral contributions.

Question: Can the employer fund 3% of salary contributions to LTPT employees if it wants to? If so, would those employer contributions be subject to the gateway and rate group tests of 401(a)4? Employer contribution test of 410b? I would think not because those contributions are not mandatory to begin with.

Does anyone agree / disagree?

Thanks!

Hi,

I am now going thru an exercise since I found out I was delinquent un filing the requisite form (5500), since the threshold is 250K, should I be filing for those years only when my plan assets were above the threshold or do I need to file or all the years, since the plan began?

I am assuming once I file for the specific starting year, I will file continuously as the plan assets have been above 250K!

Thank you in advance for the help.

Had an interesting question this morning. Client with an ACA (not an EACA nor a QACA, and no auto-increase) wants to limit the auto-enrollment to full-time people only. Only applicable guidance I can find is 1.414(w)-1(b)(1) and (e)(3). Under Treasury Regulation 1.414(w)-1(b)(1), and 1.414(w)-1(e)(3), the ACA need not cover all employees in the plan, and a covered employee for these purposes is as defined under the terms of the plan. Assuming the document provides an “other” election, so this should be allowable. Not sure this was an intended consequence in the regulation, but seems to allow what client wants to do. Not a BRF issue either. Anyone ever run into this request?

Anyone else get pushed 5.26/5.36/5.00 as the January rate update, which then were presumed to need to be corridored into 5.25/5.31/5.50?

It's like someone in Jacksonville didn't line up the columns right when updating their master to push out to users, since the first two rates are the December 2nd/3rd, while the 5.00 is the January 1st segment.

401k plan adopts a QACA and uses the LTPT exclusion for deferrals, and they will not be eligible for the safe harbor contribution. Once the LTPT has become eligible to defer, are they subject to the auto enrollment rules or can the plan be drafted to exclude this LTPT group in a QACA? This is a pre-enactment plan not subject to the 2025 mandate. Thanks!

ok, so, ummmm, first time such a request has come in for an MP plan...participant is curious about an annuity....any recommendation on what company to contact?

Company A buys Company B in a stock sale.  Company A's plan has no provisions for employer contributions.  Company B's plan has a discretionary match subject to a vesting schedule.  Company B's plan is to be merged into Company A's plan.  Under Company B, a participant is 60% vested under a 6-year graded schedule.  When the plan's are merged Company A's recordkeeper will need to set up a source for Company B's match, and the participant's match will need to be set up at 60%.  

Question.  Would I be correct that as the participant continues to earn vesting service the vesting for the account must increase accordingly.  Further, would Company A's plan need to be amended to accommodate the protected vesting for the merged Company B accounts?  

Thank you.

Never a dull moment

Company X had a proposal. Did not confirm that they wanted the plan.

In the meantime, opened an account in 2024 without a document, made a deposit, deducted for 2023.

No 5500 filing, no SB, no AFTAP, do not know if PBGC.

Now time for 2024 contributions/deductions.

How do you correct this?