https://www.irs.gov/newsroom/irs-relief-now-available-to-hurricane-debby-victims-in-all-of-south-carolina-most-of-florida-and-north-carolina-part-of-georgia-various-deadlines-postponed-to-feb-3-2025

The sponsors in the affected areas can get relief on filing their taxes and making deposits, but I don't see where this gives an extension on the 5500 filing deadline?  Am I missing something?

Governmental entity mistakenly filing Form 5500-SFs for years.  Should we simply stop filing (and risk inquiry from DOL/IRS) or notify DOL/IRS that they will stop filing 5500s because they are not subject to ERISA?  

If a new cash balance pension plan is being implemented now effective January 1, 2023, can the plan exclude employees who terminated during 2023 even though they would have satisfied the eligibility requirements as of 1/1/23?  Can there be an exclusion for any employee who wasn't employed on 12/1/23 for example?  Or would that be considered an impermissible service exclusion?

Alternatively, we can provide an accrual for 2023 with a 3 year cliff vesting schedule and exclude all vesting service prior to 1/1/23.  There is an existing 401(k) profit sharing plan that will continue.  Per EOB, if there is a second plan of the employer that doesn't terminate within 5 years before or after the effective date of the new plan, that is not considered a predecessor plan for purposes of excluding vesting service prior to plan establishment.

Any other options?

Thanks.

The 2024 Instructions for Form 1099-R just came out and page 16 provided the following guidance regarding the Box 7 distribution code for the various new SECURE 1.0 and SECURE 2.0 distribution types (QBAD; EPED; TIID and DAV):

".....use Code 1 even if the distribution is made for .....a qualified birth or adoption distribution, an emergency personal expense distribution, a terminally ill individual distribution, or an eligible distribution to a domestic abuse victim under section 72(t)(2)(B), (D), (E), (F), (G), (H), (I), (K), or (L)."

However, I didn't see any guidance on which code should be used for qualified disaster recovery distributions under Section 331 of SECURE 2.0 / IRC 72(t)(11). Did I miss it? Should we use Code 1 or 2 for qualified disaster recovery distributions?

We have a client XX that was acquired by YY in 2021, but they opted to merge the YY 401k plan into the XX plan rather than the other way around (usually the seller’s plan transfers into the buyer’s plan). The assets transferred in June 2022. As part of the merger, they changed the plan name and the plan EIN of the XX plan to the YY plan name and EIN effective 6/30/22

The issue is a final 5500 was filed for the legacy YY plan for PY 2022 (after assets transferred to XX). But that same EIN is still being used for the current merged plan. I, along with the plan auditor, suggested amending the plan number of the current merged plan to 002. 

The recordkeeper, however, is saying that in order to change the plan's three digit number from 001 to 002, a final 5500 needs to be filed for 001 showing assets going to zero. The "transfer out" from the XX plan and into the YY plan would be captured in Schedule H showing a "transfer" to YY-002.

I understand that if a plan terminates or transfers/mergers, then a final 5500 should be prepared. But the plan did not terminate in this case. The seller's plan name and EIN were amended to match the buying company's name and EIN. 

I'm thinking there should be a retro amendment changing the 3 digit plan number of the current merged plan to 002. Amend the 2022 XX filing to reflect the changes of Plan Name, EIN, and plan number in line 4 of Part II. Then the Final 5500 for the legacy YY plan should be amended to have plan 002 in the 5(b)(3) box of Part IV of Compliance questions.

I feel like this would be the most logical and easiest for the DOL to follow. But I've been receiving conflicting information, from ERISA counsel, on whether it's required to file a Final 5500 if you're changing a three digit plan number. But I feel like those who view it as required is just because it almost always correlates with a termination or merger.

Any and all feedback is appreciated. I wasn't involved in the plans back in 2022 so trying to clean up now. 

Plan sponsor is an LLC taxed as a partnership.  They sponsor a safe harbor 401(k) with elective, safe harbor non-elective and profit sharing.

They are on extension .  Plan is on a platform with Equitable.  Contributions for the employee are correct.  As far as the partners, they always mess up the allocation, Equitable returned some money as they claimed there ws too much contributed to the elective portion; this took 3 months to straighten out. The client continually makes the contribution to the wrong "bucket"and Equitable returned one of their deposits.

Maybe a dumb question, but for a partnership, how does one determine the split among deferral, profit sharing and safe harbor?

We had advised them that any contribution made during the year go to profit sharing, and then redistributed to their different "buckets."

How is it determined how much goes into which in order that the contriubtions for the employees is done correctly.

Company A has a traditional 401(k) plan with a safe harbor provision, no automatic enrollment, plan has been around several years, well before SECURE 2.0. 

Company B - does not have a plan. 

Company B owners - purchase Company A as an equity purchase as of 7/1/2023. Company B intends to become a participating employer in Company A's plan as of 1/1/2025. It is a control group. Assume the transition period runs until 12/31/2024. 

The two companies are similar in size for number of employees, about 30 each. 

Is the resulting plan exempt from the automatic enrollment rule of SECURE 2.0? Or would it need to add an automatic enrollment provision that satisfies SECURE 2.0 as of 1/1/2025? what say all you lovely people? 

I just want to make sure there's no issue here and I'm not overthinking it.

There's a Plan with only owners + family members participating in the 401(k) portion of the Plan.  They are doing a basic Safe Harbor Match (110% of the 1st 3% plus 50% of the next 2%).  So obviously the Plan is Top Heavy and only the owners + family are getting the Match.

My understanding is that this plan is exempt from Top Heavy Testing, since they are doing the match and are offering the 401(k) Plan to all employees each year (no one else wants it).

Thanks in advance!

A plan was required to be audited in the past but no audit required now since the # of account holders dropped just below 100 as of 1/1/2023 and 1/1/2024.   Looking ahead to 2025 - what if the account holders go to 105 as of 1/1/2025?  I'm reading that the plan can file as per the prior year if between 80 and 120 account holders.  So in this case the plan could file 5500-SF for and no audit for the 2025 plan year? Filing the 5500 wrong certainly has bad consequence which is why I'm asking.  Thank you.

Our plan document uses the IRS safe-harbor rules for hardship withdrawals.  Am I correct that overdue student loan repayments do not count as approved reasons for hardship withdrawals?  I don't want to deny the request until I am sure.

I have read threads about this and it still seems unclear.

We are looking at a plan that is a 1 participant DB that has existed 9 years but has never had an AFTAP. Benefit accruals are not frozen through year 5. Benefit accruals are frozen years 6,7,8 and 9. Clearly the participant does not get benefit increases for years 6-9. If she worked more than 1,000 hours each year in years 6-9 does she at least get a 415 limit increase for years of participation? I would think not. 

This appears to be a plan that has always been well funded. If an AFTAP is done this year (above 110%) is there any way to restore accruals (and 415 limit increases) for years 6,7,8 and 9?

Thanks!

I know the answer but just thought i'd throw it out there.

company always deposits 401(k) on time. first 401k with new recordkeeper, despite best effort they couldn't get it through until past 7 business days.

I think we still need to report it but I feel like it's a reasonable period due to circumstances

Hi all--I'm getting conflicting advice on what should hopefully be a straightforward issue.

I work for a US-based small business, and we have a wholly-owned French subsidiary. US business is the parent co & pays the US employees, while the French sub pays our French employees. Meanwhile, we also have a few remote individuals in countries like Canada & Portugal, and we use an EOR (Rippling) to pay them.

I am looking to set up a 401K for our US employees and speaking to potential plan providers. One plan provider said our structure should present no issues when it comes to controlled groups since any associated rules would only be looking at US employees; however, another provider has been adamant in saying that all non-US employees (French & otherwise) will be included in Department of Labor non-discrimination testing due to controlled group rules.  If the latter is true, this obviously prevents an issue for us since (1) we cannot actually offer a 401K to non-US employees, and (2) wages are very different across country lines.

Can someone please advise?

I am getting mired in what should be a very simple problem:  Whether the employer has an obligation to contribute earnings in a situation in which an employee's entire after-tax contribution for the year is correct, but the timing of it is wrong.

Example:  Susie has regular compensation of $345,000, plus a $50,000 bonus she receives on January 15.  She elects to make an after-tax contribution of 5% of compensation.  The employer erroneously fails to treat the bonus as compensation for purposes of the plan.  This has no effect on the total amount of her after-tax contribution for the year, because her compensation in excess of $345,000 would have been disregarded.  However, if the bonus had been taken into consideration,  a $2,500 after-tax contribution would have gone into the plan in January, and then contributions would have stopped in late October.  Presumably, the employer has no obligation to make a QNEC, because total after-tax contributions for the year would have been correct.  However, is it obligated to make up earnings for the period from January 15 through when contributions would otherwise have stopped?

Rev. Proc. 2021-30 does provide that:

Quote

the Plan Sponsor may treat the date on which the contributions would have been made as the midpoint of the plan year (or the midpoint of the portion of the plan year) for which the failure occurred.

So presumably we could treat the date on which contributions would have been made as July 1, even though we know that they would actually have been made on January 15.  But we still have the issue of whether the sponsor is required to make up earnings for the period July 1 through end of October.

Hi All,

I'm a relatively new EB/EC attorney and looking to increase my knowledge of ESOPs; how to create, administer, etc. 

Do you have any recommendations for secondary sources, guidebooks, etc. to help me learn more?

Thanks in advance.

Can someone please confirm that the 415 limit is per unrelated plan?

If someone participated in a plan for the first part of the year and maxed out their contributions at 23,000 (in 2024) and then went to another job with a 401k plan that permitted after tax contributions - with the new plan, would the participant be able to contribute a total of $69,000.  Do I have this correct?

Can anyone point me to a US Treasury Reg or IRS document that spells out that the 415 limit is per plan and not by participant?

Thanks in advance.

Company F sponsors a 401k PS plan and wants to join a MEP.  Can they terminate their current plan and roll the money into the MEP as a rollover contribution (I don't think they can take it out due to successor plan rules)?

Of course, they want to do this immediately... and both plans are SHNEC.  I figure as long as they give each person 3% of total comp for 2024 (probably all into the MEP), that's what counts.

Any other pitfalls?

Thanks.

Please Help, can’t find where the plan was in 1997 or balances or a statement or anything to be able to have that subtracted from a Quadro any advice? I have checked with the plan administrator. They don’t seem to know anything I checked with Fidelity before they rolled it over to an Ira. It was under one company name, but I can see that the company changed their names several different times in different various ways I looked up the 5500 form, please help 

Participant has passed and spouse passed some years ago.  We believe 3 adult children are beneficiaries.  Question - I imagine the beneficiaries will need to waive the annuity as the default distribution option just as the participant would if he had lived and elected to roll to an IRA?

Thank you

I must lead a charmed life; it has been a long time since I've had a 401k plan not refund within 2.5 months (that I can recall; I'm also getting older).  Now I've got one, and I was positive that the earnings on the refund were included in the amount reported on the 5330... but that's not what the instructions seem to say.  It says the tax is on the excess contributions and are the amounts "actually paid" over what was allowed... and doesn't mention earnings.

Am I just mis-remembering this rule?  Is it really just the base amount of the refund that gets taxed?  If the earnings are included, is there a cite for that?  Thanks.