Perhaps governmental plans lack the requirement to allow for five (5) consecutive periods of severance/year breaks in service to forfeit amounts where an extinguishing distribution of the accrued benefit or account balance has not occurred. Please provide helpful citations for this inquiry. 

Hi,

Thank you all as always for the insights and help. It's one of those days. 

Need to file a DB 5500 and schedule SB for 19, 20, 21 , and 22 with the DFVCP.

1.Since it is now 2024, the 2022 can be filed on a 2022 5500. Correct?

2.  However, the 2021, 20, and 19 must be filed with using a 2023 form and inputting the plan year on the 2023 form..as 1/1/ 2021 thru 12/31/2021 and the same for 20 and 19?

2. How is the schedule SB e-filed for 19, 20, and 2021? As an attachment only?

3. And what about the attachments that are ussaly attached with the e filing of the SB (assumptions, provisions, etc.)?

Thank you.

an EOY valuation small plan, the plan sponsor made the contributions throughout the plan year and nothing else was made after the plan year. I will need to project the contributions as of the valuation date 12/31/2023 then subtract these amounts from EOY asset value as the market value in the valuation. 

but in AFTAP calculation, I just use the EOY asset value without project the contributions, am I right? are there any regulations specifically mention these? thanks!

Hello, we are looking at terminating a multiemployer employee benefit plan that provides vacation benefits to the participants. Contributions are made through payroll deduction by the participant's employer. I can find plenty of info from the IRS relating to the termination of a retirement plan, but little to nothing on welfare benefit plans. Can anyone provide guidance? 

I am assuming we will need to:

1. Amend the plan to state a termination date

2. Ensure all assets of the plan are distributed properly

3. Maybe file a Form 5300?

4. File a final Form 5500

The following cases hold that if a divorce Participant has remarried and retired before a QDRO has been perfected, Federal law holds that the Participant's new spouse vests in the right to receive the survivor annuity and the former spouse (prospective Alternate Payee) irrevocably(?) loses the right to receive that survivor annuity. 

Hopkins v. AT&T Global Information Solutions,  105 F.3d 153 (USCA 4th Cir. 1997) - at
http://scholar.google.com/scholar_case?case=9954117838131396049&q=hopkins+at%26T+global&hl=en&as_sdt=2,9

followed by Rivers v. Central and South West Corporation, 186 F.3d 681 (USCA 5th Cir. 1999)  at-
http://scholar.google.com/scholar_case?case=2296953953561556363&q=rivers+central+and+south+west&hl=en&as_sdt=2,9

Dahl v. Aerospace Employees' Retirement Plan, a 2015 case from the U.S. District Court for the Eastern District of Virginia (and cases cited therein) - 
https://scholar.google.com/scholar_case?case=3487596170773082469&q=dahl+v.+aerospace&hl=en&lr=lang_en&as_sdt=20000003&as_vis=1  

See also Vanderkam v. PBGC, 943 F. Supp.2d, 130 (2013) setting forth a thorough discussion of this issue.  

And the 2015 case of Dahl v. Aerospace Employees' Retirement Plan, No. 1:15cv611 (JCC/IDD), United States District Court, E.D. Virginia, Alexandria Division. https://scholar.google.com/scholar_case?case=3487596170773082469&q=dahl+v.+aerospace&hl=en&lr=lang_en&as_sdt=20000003&as_vis=1

But I come across statements from time to time that if the new spouse consents to waiving her right to survivor annuity benefits (how that happens is never addressed), then a QDRO can be effective to restore survivor annuity benefit to the former spouse.  

I also have contemplated what would happen is the new spouse predeceased the Participant, or if the Participant and the new spouse divorced, whether not a new QDRO could restore QJSA rights to the former spouse?

Any ideas?  Case law?  Statutory references? 

Thanks, 

David 

If you are (or know) a small TPA (<300 plans) looking to begin a transition to retirement and want your clients to get the amazing service they are used to with a family-owned, well-established TPA firm (currently <1000 clients), please send me a private message. My firm is family-owned and operated, has been in business for 40+ years, and has a full succession plan in place. We have the infrastructure and processes to take on a block of business while still providing the personalized service of a small TPA. If you don't want to sell out to private equity, VCs, or the huge national recordkeepers acquiring TPAs (I am bringing those clients on fairly often when they get upset that they lost the personal touch), we may be a good fit. I am willing to entertain various business structures. Thank you.

I'm not aware of any formal guidance on this issue - plans are often effective January 1 in such situations to avoid prorating limits, etc.

Curious as to how folks generally feel about this? The EOB refers to an old IRS Q&A response at an ASPPA meeting opining that it was allowable, but of course that's unofficial. (Naturally, no retroactive deferrals allowed!)

Thoughts?

Company was purchased by another in October.  Calendar year plan year for welfare benefit plans.

It was a quick sale apparently with no contractual guidance on sponsorship of the benefits, but they continued through the end of the year (& actually still continue).

They are planning to have the 5500 filed under the name of the original owner who contracted the insurance carriers file for the full plan year.

Ever seen where they file a short plan year and close out the plan, and the new owner would take over the 5500 filing for the last few months for another short plan year? Or very simply show the new owner as the plan sponsor as of a 12/31 snapshot of the plan?

Participant makes a Roth 401k election 1/1/24, they just notice that nothing is being withheld from paycheck in June, however, the correct Roth contributions per election have been funded to participant's Roth account (not sure how this happened). So, nothing withheld from paycheck but Roth is funded. The correction, in my thought process, is MDO, since failure to implement correctly. I would use EPCRs to correct the MDO, provide notice and fund a qnec, but question about the Roth that has been funded. 

My thought was to transfer the $5k that has been funded out of his Roth to the forfeiture account and use later. Is there an issue with that since it is in a Roth source?

Is there a better solution in this case?

Thanks in advance! 

Legal settlement agreement calls for (among many things) no company contribution to a (now) former employee and plan participant. Covers what would have been a short plan year for the former employee. The employee did make some 401(k) contributions, and would be eligible for safe harbor plus profit sharing company contributions.

Simple question - can this be done?

the PSC requires last day and 1000 hours

if the plan has 3% SHNEC, then for those participants who worked less than 1000 hours or terminated in the plan year will need to get PSC to meet gateway regardless PSC allocation conditions.

how about SHM? SHM is not included in gateway test, but if a participant made deferrals and is entitled to SHM but didn't meet PSC allocation conditions. then is he/she required to get PSC to meet gateway minimum or he/she doesn't need to be tested on gateway test?

thanks!

Can a 401(k) plan require its participants to be scheduled to work at least 20 hours a week to receive an employer match? Employees are eligible to enter the plan on their hire date, but I'm wondering whether a plan could restrict the match to only those employees who are scheduled to work at least 20 hours a week.

We have a situation where force out amounts from qualified plans were rolled over to a non-Roth IRA and the rollover contained after-tax amounts and pre-tax amounts. When the IRA owner later takes a distribution, how does this get tax reported on the 1099? Thank you!

A client wants to offer a generous reimbursement program for surrogacy benefits. (Fertility is already well-covered under their health plan.) The reimbursement program would not reimburse any medical expenses of employees/spouses/partners/dependents. However, it would reimburse medical expenses of the unrelated surrogates. Is there a reasonable argument that this is NOT a MEWA? What are the risks here? Thanks!

the stability period always starts on 1/1 for 417(e) purpose and it starts on the valuation date for funding assumption purpose. am I understanding it correctly? tried to find the regulation about the definition but can't find the specific definition of the start date. 

This issue started in 2022 (before my time at my company and is still lingering through 2023) and I just wanted to get some opinions on how to correct:

Employer deducted several participants Roth as pretax (2022 W-2s reported as pretax) but deposited as Roth with recordkeeper. 

We discovered while working on 2022. On annual admin report, we reported as all Roth (tying to RK, but differing from W-2s).  

We gave them these options to correct 2022: 

·  Employees can choose to maintain their Roth election. The employer has two options to report the mistake:

o Issue corrected W-2s and the amount will be considered taxable to the employees for year 2022.

o Include the amount that was incorrectly designated as a Pre-Tax deferral in each employee’s compensation in year 2023. Given it was an employer mistake, you may elect as the employer to compensate these employees for the additional amount owed in income tax (treated as current year income). This would be a complicated process, requiring an estimate of how much each employee would owe in taxes. You would need to reach out to your accountant for this.

They have not amended the W-2s and do not intend to at this point, nor have they made up the taxable amount.  

This lingered into 2023, so they first few payrolls were also incorrect.  The employer does not intend to amend the 2023 W-2s either and had indicated to use what was reported on the W-2s and make adjustments at the RK to match the W-2s (i.e. move money between sources).  When we sent a correction to the RK to make these adjustments, they indicated since 2022 was not done this way, they didn't think 2023 should be either.  

We aren't sure how to handle - the IRS would surely be upset they are missing out on the taxes and the DOL would surely be upset the deferral elections were not processed correctly.   

Any insights on how you would handle?

I have a husband wife CPA firm.  The plan is designed with a 59-1/2 normal retirement age.  They ask if they can take partial distributions from their accounts and roll the money into their IRAs.  Neither are RMD age.  Anything wrong with that?  

Had a participant in RMD status die in 2023, and her account was to be split amongst her five daughter beneficiaries (which, ugh, but at least there was a valid beneficiary form!).  Three of the beneficiaries took their distribution in 2023.  Each share of the account is <$3K, and the plan has a $5,000 (I guess $7K now) forceout limit.

Presuming the remaining two don't elect to take their distribution in 2024, do we have any options?  Of course, we need an RMD based on the 12/31/23 balance, fine.  But can we force these amounts out of the plan?  The recordkeeper is ready to do so - they don't have any problem sending it to an IRA custodian.  Just not sure that I'm 100% comfortable going along with that.

Thanks!

I am a CPA preparing tax returns.   The client has a Schedule C with $475,000 net income.  He is contributing $55,000 to a 401K and almost all of his QBID is phased out.   He also has $140,000 pension income plus some investment income.   Charitable contributions are approximately $75,000.   MFJ, 69 years old.

I would like for him to adopt a DB pension plan and defer a large portion of his net profits.   My questions are as follows:

1.  Should he elect c-corp tax status?   If so, does he need to pay himself a salary?   I am thinking of a $200,000 DB contribution and a $200,000 salary, leaving some cash in the c-corp to be taken as dividends in later years (once fully retired).   Is there a minimum salary that he must pay himself?

2.  If c-corp status is not elected, can he still set up a DB plan for himself even though he is not an employee?   Does he pay SE tax on profits before the contribution, or on profits net of the contribution?

3.  He has not yet filed his 2023 returns.  Is it too late to set up and fund a DB plan for 2023?

I would appreciate any feedback on this.   New territory for me.

Regards,

Brad

Is a free-standing HRA that only provides benefits to retirees subject to PCORI?