Keith Lowery

When a plan in merges into a PEP, as we know, it needs to be shut down with a final year compliance testing and 5500 filing. It has become more common where as soon as the current TPA is notified of the intent to merge into the PEP, they stop their service and fail to complete the final testing and 5500 filing. What recourse does the client have to ensure the current TPA completes the shut down, especially since the fees have been paid for that service ? Besides the new TPA completing the final work, are other solutions available ? Thanks for your time.

Thanks Paul for your commentary. It is much appreciated !

Let me rephrase my question, is it possible to pay the MVA fee out of forfeitures ?

Can forfeitures be allowed to pay for the MVA ?

Sorry. Next time I will look at the BPD.

Ft William doc, 12/31 PYE. Eligibility is age 21, 3 months - elapsed time (not consecutive) and monthly entry. Hire date: 2/25/24 Term date: 4/11/24 Rehire date: 8/22/24 When should this person become eligible ?

Thanks again for everyone's comments. Let me try to clarify my original question. My question was not necessarily the details of exiting a PEP, but rather if anyone had experience with how recordkeepers handle this process of an employer leaving a PEP and no longer having a 401(k) plan. Specifically, do any of them have a solution in place ? The recordkeepers I have worked with indicate they would price the "spin off" as a separate new plan. This would add to the cost of shutting down the plan. Thanks again.

Thanks for the information. I understand the process to leave and terminate from a PEP. However, none of the recordkeepers we deal with have any process of doing this.

Interested to see if anyone has dealt with a recordkeeper that has a solution for a company that wants to leave their PEP. My understanding of the process is they must establish a new plan, transfer to the new plan, then terminate the plan. The recordkeepers that we have PEPs with currently do not have a viable solution for this process. Curious to see if anyone else is running into this issue and if you have a work around. Thanks!

Is there a DFVCP fee for a late 5500 filing that has no assets or lives ? I have a PEP with a Dec 2022 effective date. However, no plans joined the PEP until 2023. Thanks!

Thanks.

For a PEP with less than 100 account balances, they are allowed to file the 5500-SF, correct ? I am getting push back that they must file Form 5500 with Schedule I. Thoughts ?

My understanding is the mid-year safe harbor change can't be done after August 31st (assuming 12/31 PYE) because of the SH notice requirement....given the 3 month requirement for the creation of the new SH plan. If the new 401(k) SH plan is a nonelective contribution, is a Safe Harbor notice still required ? Thx!

Yes, that does help. Thanks for everyone's input. Much appreciated.

To clarify, the employee elected 15% from his paycheck. These funds were never withheld from his paycheck. What would show on his W-2 ?

401(k) plan where employer missed depositing deferrals for an employee. The missed employee deferrals totaled $30,500. A QNEC will be made to correct this plus a match and earnings. Can he continue to defer to the plan and receive a match since we are still in the same plan year ? Thanks!

Must all fees be applied to each adopter in a PEP ? One of the adopters in the PEP is the 3(38) for the PEP. They do not want to charger their 3(38) fees for just their plan. Are they allowed to do that ? Would it take a supplemental service agreement ? Thanks!

I have a plan that joined a PEP with an effective date in January of 2024. The assets have already transferred to the PEP. Now, they would like to make their 2023 PS contribution. Can they make this to the PEP ? In a perfect world, it could be made to the prior recordkeeper before the transfer of assets, but that is not the case. Any issue in making the 2023 PS to the PEP ? Thanks!

Thanks Paul I. I previously read the DOL informational letter, but felt like a clear answer wasn't provided. To me it didn't specifically state the employer adopting the PEP, but did talk about employees of the employer. Going by this, I am leaning as the employer adopting the PEP does not need an ERISA Bond.

Do the plan sponsors who adopt a PEP also need to carry their own ERISA Bond ?

Thanks Paul I for your response. Your 6 assumptions to this scenario are correct. To clarify my question, the Safe Harbor contributions that are funded to the PEP, should be reclassified as transfer funds under the Safe Harbor money type, correct ? I don't believe they can/should be a contribution ???

I have a client that completed their 2022 audit and discovered employees who are due an additional Safe Harbor contribution. The advisor is asking if these can be made to the PEP. My initial response is they should be made to the original plan and then a second wire/transfer can be sent to the PEP. The prior recordkeeper is unwilling to accept the Safe Harbor contributions as they have completed the termination. I thought maybe the Safe Harbor contributions can be submitted to the PEP and then have the recordkeeper reclassify these amounts as transfer funds. I know this won't be the last time a situation like this occurs with a PEP. Any thoughts ?