austin3515

We agree the earliest due date for a late ADP refund (Calendar year plan) is March 31, 2025, right? We've never waited very long but that's how I'm reading the instructions. That means we would need to file an extension with payment until March 31, 2025? i.e., presumably this will be worked out by then... Not everyone in my office was comfortable filing on paper in light of the less than clear "permission" the IRS was granting.

Honestly knowing that the IRS has to approve the providers filings, I feel a lot better making the connection to "If the IRS's systems do not support electronic filing." I.e., if the IRS has not approved the vendors files, then the IRS systems do not support electronic filing. I wish the line was a little bit straighter but it does seem straight enough...

Well I received this message from customer support who was clearly copy/pasting. I probably don't have enough leverage to get to the senior exec who provided that message.

One of the major providers who is not yet ready to offer e-filing a form 5330 told us that their lack of ability to provide this service meant that the employers would be able to rely on the following exemption posted on the IRS's website and file on paper. Do people agree with that? My assumption is that the IRS told somebody at this major provider that that was the case. Otherwise, they would never tell me that it was an option. https://www.irs.gov/retirement-plans/mandatory-electronic-filing-for-certain-form-5330-filers-using-the-irs-modernized-e-file-system-mef "If the IRS's systems do not support electronic filing, taxpayers will not be required to file electronically. In general, the filer should maintain documentation supporting the undue hardship or other applicable reason for not filing electronically." Perhaps it is a stretch to suggest that the provider's inability to process and e-filing of the 5330 is part of the IRS's systems, but again, I find it hard to believe that the provider would've told us this if they hadn't received that response from the IRS. The "undue hardship" provision does seem to leave the door open towards a response of "my vendor was not able to do the e-filing".

I can see having one QDRO for multiple plans when they have the same plan administrator/sponsor or same controlled group perhaps. But a QDRO is a court order ordering someone to do something. I cannot see how such an order could obligate two unrelated parties to do 2 different things. I don't see it.

Completely but definitely worth a shot to file all of them under DFVC even the one for which you did get the notice. I assume that the DOL notice received did not include any penalties anyway. I think the only scenario where rejection, etc. would be relevant would be an attempt to get them to waive any penalties assessed.

Well I can't say I blame the IRS. It was too much change all at once, that was clear.

I have also learned since posting that there is an 8915-F for a similar repayment related to Qualified Disaster Distributions. Perhaps they will amend that form to include all of the various distributions that can now be repaid. Working on a training and it seems to include: QBAD's, Qualified Disaster Recovery, Domestic Abuse, and Emergency Expense. so hopefully they will give us some direction on how to do it.

I suppose the lack of urgency is probably related to everyone's understanding that no one will pay back these distributions 😂

I've scanned several articles and notice 2020-68 and I cannot find the answer to what I think is an obvious question. IF someone repays a QBAD how do they get back the taxes that they paid on that distribution?

Well if it were me, I would quickly file under DFVC and tell them so. My view of the matter is that they want people to comply and file the 5500's. They are not out to punish those who cooperate. No promises but I can't see how it hurts. I think technically it may not be allowed because one of the conditions is that th DOL has not reached out to you, but I just don't think they would reject the DFVC on that account.

All super valid points. Well I couldn't have made my point any better than you have for me. Whether a plan needs an audit or not should not be based on how a TPA happens to interpret the 5500 instructions. Thanks for making my point! By the way the alternative of hirng a $500 an hour ERISA attorney to answer this question for my clients is likely not going to impress than much either.

Ordinarily I would agree but the fact that there is debate about something so stupid is a perposterous waste of time. Do tbey need an audit or not? Should be simple. I have enough complexity to deal with 👍. now that being said I am convinced that the text is clear an unambiguous. Does anyone even see a gray area in that text? I see no ambiguity. Do I wish they used the words “count people with receivables only?” Yes I do. But I really think that’s only interpretation of the words they did choose

Ahh, I see this now (I didn;t see yours at first). The key thing is "or for whom a contribution has been made to the Plan for this plan year or any prior plan year." It does not say when that contribution has been funded. So I do think counting receivable only people is a clear and direct interpretation of what they said...

Seems to me there should be one standard that we're all using to decide if our clients have to spend $20,000 on an audit. Man I hope someone clarifies this... I feel like ARA or ASPPA needs to get an opinion. Without clarity I take the very reasonable position of whatever is best for my client. Shameful the the DOL did not realize that this was an obvious question to be answered.

110 people have account balances at 12/31/2023. 100 people get a profit sharing contribution after year-end, including 20 who do not have accounts presently so if I could the receivable only participants, there are 130 participants. Has the DOL gone to trouble of defining what they mean by "account balance" and whether or not it includes receivables? Obviously it's the difference between an audit and no audit.

Definitely add plan terminations to this list.

@Tom thank you!

60% of $50,000 is $30,000. Not every plan has $100MM. Personally I don't see how this could possibly be considered an Excess Deferral. The contributions never should have happened in the first place because they were not eligible. EPCRS says the plan should be put in the position they would have been in had the failure never occurred. I find it extremely hard to believe that when a plan that uses the Key Employee exclusion as you describe in a pre-approved plan, and then has a failure where a key contributes through some oversight (like a new hired family member contributing), that the response is to give the top-heavy minimum. I would implore anyone who has a preapproved document that excludes keys to pose this precise question to their document provider. If the response is "the top-heavy minimum is due" then there is essentially no point to that checkbox. That checkbox is just a nondynamic way of doing the same thing I am proposing, inoculating against top-heavy. I'd say the plan is worse off having made the election, because not only do you have to do the top-heavy minimum but you also have to refund all the contributions. What would be the point? You could have just told the keys not to contribute (again you're talking about just the sole owner typically).

This is all not correct in my opinion. In a plan that requires this language we would monitor in the same way we monitor that plan already. Calendar reminders, etc. Annual mentions on phone calls. This can be done and we are already doing it for plans on the brink of top-heavy (say 50%+). Implementing this provision is no different than what HR already has to do to prevent the top-heavy minimum in the first place, and believe me we are making a big deal about this on those plans (as everyone should) because we know the radioactivity is off the charts. In anticipation of your next question, the need for the exclusion is because despite our best efforts it is still humans who are in charge of execution and sometimes humans make mistakes. Not to mention if their kid/spouse works over the summer and sees fit to do 401k. So in case you thought the purpose of this Innoculation was to avoid of sound administration, I would like to correct the record. And as far as operational failures go I do not need to tell you I'm sure that EPCRS has guidelines for correcting contributions to ineligible to participants. You're suggesting the only correction for non-compliance is to do the top-heavy minimum and that is not the case. EPCRS tells me how to correct. And as a reminder, it is Austin Powers International Man of Mystery. Not Don Quixote 🤣

Our opinions of what makes sense for how clients should spend their money often coincides but not always. I doubt it will come as a surprise to you that we ran all sorts of projections, SHMAC, SHNEC excluding HCE's. It just didn't fly. SHMAC without HCE's was barely $25K. Let's face it as a small business owner, a $25K expense is a Big Frigging Deal. Nope, they didn't want to do it. And absent the top-heavy rules, that would be a perfectly fine plan design and in fact Congress had no problem with a 401k only plan design for them for the first 6 years of the Plan. The only thing that's changed is some turnover among the staff but NOT the owners. Again the injustice is that if you happen to have 300 employees and 3 keys a plan can have this plan design no problem. The sole difference is one is big and one is small. If you can find me another difference between the two I'm all ears.

The nature of these plans is such that we are excluding either 100% of the HCE's or something similar, and maybe there will be one Key NHCE. So sure passing coverage is never a given but this should be as close as you can get to deemed passing. Now, hopefully anyone who is designing plans will be paying attention to whether or not the design will pass coverage.

Well those are not viable options for the clients I am talking about. Not one of them. So again because they are closely held and in business for a while, they are severely limited in their options (and therefore so too are their employees). Anyway I am a big fan of the Top Heavy Innoculation clause. Curious if any last thoughts on whether or not other people think it works. Thanks you @C. B. Zeller!

OK I must be the only person in the industry who thinks these rules are unfair (except I'm not). One thing I can promise you is my client who just found out they have to drop $60,000 for a THM is not a big fan (takeover plan for us). I'll speak on their behalf 👍.

I do know that contributions every year are tested for nondiscrimination. And I do know that the reason that plans become top-heavy has a lot more to do with a) how many relatives work for you; and b) how long they have been in business (owners balances go up, and employee balances stay consistent due to turnover). And if you think there is an injustice plaguing the employees of small plans that needs to be remedied when the higher ups accumulate too much money, then those concerns could be easily addressed in larger companies as well. How about a rule that says if the average account of the C Suite Execs exceeds a million then that plan is top-heavy? Just because they're bigger, is your concern about this unfairness alleviated? And that's precisely what some have to do in response to these insane rules. Tell me how that serves the American People, a worse plan with lower limits and no match of any kind. All to avoid the top-heavy nonsense. Austin Powers For President - 2024. Yeah Baby!!