I’m handling a takeover plan where assets were incorrectly reported on the 5500. The plan is brokerage-held with separate accounts, but one of the accounts was excluded from the 5500 filings dating back to 2020. I plan to amend the filings, but are there any penalties associated with this type of issue?

My plan is having 21 Age, 1 YOS and quarterly entry. PYE - 12/31/20224.

One employee hired on 2020 and not completed 1000 hours on anniversary period and from 2021 to 2023, not having 1000 hours in any of the plan year, but having more than 500 hours in each plan year. He is not a part time employee. 

Whether we can make him as eligible employee based on LTPT rule?

I have a doubt in 410b report.

My plan doesn't not have allocation condition for profit sharing contribution, and employee terminated with less than 500 hours inactive (i.e., current year terminated employees).

Whether these employees (HCE or NHCE) should comes under "Terms with 500 or less hours of service" in excludable employee section or these employees is Non- Excludable employees.

1. If possible explain me with allocation condition, last day rule with 500 hours

2. Only 500 hours allocation condition.

I am no cash balance (or DB in general) expert, so when a potential client asked that since they can do their PS as Roth (not that I'm recommending that!), why can't they do their cash balance as Roth... I didn't have a good answer.

I don't see anything about this anywhere, so I'm assuming it's just not a thing.  Is the logic that since it's not individual accounts, you can't tax it properly?

Thanks.

We read where the penalty on a missed RMD is 10% rather than 25% as long as the missed RMD is paid from the plan within two years. Is this a Self Correction or (if the plan were audited) would the IRS automatically just assess the 10% if they saw it was corrected within two years.

Thanks.

I have been told there has been some recent guidance from the IRS (Jan 10 2025?)  in Applying Mandatory AE in that to new participants or new hires is not acceptable under the new guidance.  Is this true?  And if so, what if a plan sponsor has already received an affirmative election by the participant to contribute or decline to contribute? Do they have to go through the process all over again?

A defined benefit plan existed for over 10 years. The only participants were the two shareholders. Each owned 50%.

An amendment was executed that froze all benefit accruals and terminated the plan effective December 31, 2023. It is now past December 31, 2024. I know that unless there were reasons for the delay, all assets needed to be distributed by December 31, 2024. In this case, there were no reasons and it is now after December 31, 2024.

Question:  I would think that as of now (January 15, 2025) we would have an active plan with benefits frozen as of December 31, 2023.

Does anyone disagree? agree?

Thanks.

I have a plan that is a 6/30 year end. For this plan, there is 1 participant that always has 401k reclassed as catch-up to avoid refunds.

This has not been an issue in prior year, because he never actually contributed catch-up - his 401k for the plan year and calendar year was less than the maximum 401k.

For the period 1/1/24 - 6/30/24, he contributed $15,000 and we had to reclass $2,500 as catch-up to avoid refunds.

Does this necessarily limit how much we should have limited his 7/1/24-12/31/24 contributions? 

Is he limited to $12,500 for 7/1/24-12/31/24? If he contributed $15,000, is a refund fo excess deferrals required?

Preparing a plan to be submitted to the IRS for approval.  One of the requirements is that the cover letter summarize how the provisions of the plan are affected by each amendment (related to changes in the law listed in the cumulative list).  Any guidance or examples of how this is addressed in a cover letter?  Is it a matter of simply attaching the model amendment prepare to address the changes? 

https://www.dol.gov/agencies/ebsa/employers-and-advisers/guidance/field-assistance-bulletins/2025-01

Now maybe it is just me, but how is this preferable to using, for example, Penchecks, or Millenium Trust, or whoever? Seems MORE difficult to me, but maybe I'm missing something.

I'm used to contribution deposits reflecting the type of contribution (ie 401k vs employer)

This one cpa is depositing the sum of 401k and safe harbor into the plan's brokerage accounts with the sole label of "payroll deduction" (as I learned when questioning the 402g limit excess).

I'm curious how serious that is?

The IRS extended several filing deadlines to 10/15/2025 due to the LA wildfires.  Does this automatically extend the restatement deadline for DB plans as Rev Proc. 2018-58 seems to indicate?  Thanks.

Participant's divorce decree from a decade ago granted his ex-spouse 50% of the pension benefit accrued during the term of the marriage. No QDRO was ever filed and the participant passed away a few months ago. The ex-spouse has retained an attorney to draft and file a posthumous QDRO. The draft DRO itself is well-written, but the original divorce decree submitted with the draft DRO is a problem. It lists an incorrect plan name and awards the ex-spouse benefits from that plan. There is nothing to indicate the parties ever intended for the ex-spouse to share in the benefits from this plan.

In some cases, a court will grant nunc pro tunc (retroactive) orders to correct clerical errors, etc. However, there are cases stating a retroactive order cannot be used to create new substantive rights that didn't previously exist. In this case its not clear whether the local family law court would modify the original decree, or whether the plan could accept that modified order. (The participant had remarried and there is a viable argument that 100% of the survivorship rights vested in the new spouse at the time of the participant's death.)

Any thoughts or ideas are appreciated. The posthumous QDRO rules from the DOL are not instructive and the cases are all over the board, even after PPA.

I own 100% of my company

My dad and his wife (my step mother) are both employees.

My dad is HCE/key. How about my step mother?

20 years ago I opened an account with Smith Barney. At the time we filled in me as a sole proprietor and used my social security. Over the years I update the plan with new addresses.  The business of operating under my own name continues to today. During that time I opened a pass through LLC and made contributions via my accountant. At some point I stopped contributions and over the years the account grew to $250k. I paid him to do the first form 5500 which he used my business name and EIN. Thereafter I continued to file using that template. I closed the LLC in Nov.  Since the 401k is in an active business name and SS, I want to keep it open. Form 5500 requires an EIN for which I don't have for the sole prop. Also, the indivdual 401k is in a SS number.  How do you rectify having a new "sponsor" as myself and I assume get an EIN number? 

If filing for a client 5 years of 5500s for a DB plan with the DFVCP, can you charge for this service. What is reasonable?  Hourly rate for the time spent on this?  Thank you for any thoughts.

My plan year end is 12/31/2024 and having Safe Harbor match.

One employee is deferred and received the SH Match on pay roll basis. He is terminated in between on 6/25/2024 and withdrawn all the account balance.

My doubt is, whether the employee's deferral and SH Match contribution should be included in testing or not for 2024 plan year?. 

If it is included in the testing and that employee is HCE and having refund, how to proceed with the distribution of excess amount? Already the employee is doesn't have any account balance, then how to proceed the distribution?

I went through the forum and thanks for the good information.

Here is the situation: Company A has NQDC (non-qualified deferred compensation) plan, and was acquired by company B. Company B has no such plan and wants to terminate the plan and do a lump sum distribution to plan participants. Are there alternatives to the lump sum option to reduce the tax liabilities for the participants?

Thank you for comments.

Was married to CPD officer for 15 years.  Divorced, he got a percentage of my marital portion because I retired also from CPD and he also gets a monthly payment from my pension.  He is still active.  He is retiring this Summer but remarried last summer, will I still get a percentage of his marital portion(lump sum)  AND a monthly amount once he retires?

I am looking to gather data to compare plan enrollment statistics between Safe Harbor Match and Safe Harbor Nonelective contributions. The assumption is that offering a SHNE may not provide employees with an incentive to enroll for elective deferrals, as they would receive the contribution regardless of their participation.