Cherry Park Advisory

I think your concern is valid, but the answer probably turns on how the plan is administered rather than the cash-out provision itself. Under ERISA and the plan document, the involuntary cash-out threshold generally applies to the participant’s total vested account balance under the plan—not just the balance held by one vendor. If TIAA doesn’t have visibility into assets held at Fidelity and Vanguard, someone (whether the plan administrator or another service provider) needs a process to aggregate those balances before authorizing a distribution. Otherwise, there is a real risk of administering the provision inconsistently with the plan’s terms. I’d want to confirm what data-sharing or administrative procedures exist under the RetirePlus Pro arrangement before concluding it’s a problem, but absent that, I think your caution is well placed.

I agree that, on an accrual basis, the Form 5500 should reflect the contributions when they are owed to the plan rather than when they are deposited. For related lost earnings, if they have been calculated (or can be reasonably estimated) and are owed to the plan, they should generally be accrued as well. If they have not yet been determined, the treatment may depend on the facts and the applicable accounting guidance.

I generally wouldn’t amend the Forms 5500 solely because a retroactive bond was later obtained. The original filings accurately reflected the facts for those plan years—that the plan was not covered by a fidelity bond at the time. While obtaining retroactive coverage is a prudent corrective action and may protect against prior losses, it doesn’t necessarily change the historical fact that the plan lacked the required ERISA bond during those years. I’d document the corrective action and retain the retroactive bond documentation in case of a DOL inquiry, but absent other errors on the return, I don’t see a compelling reason to amend the 5500s.

There are no “ER deferrals” — employee amounts are deferrals; employer amounts are usually match or nonelective contributions. For the 5500, you generally report the late employee deferrals only. For correction, you calculate lost earnings on the late employee deferrals. You’d only calculate lost earnings on the match if the match itself was actually late under the plan terms. So: report EE deferrals on the 5500; review the match separately based on when it was due. #cherryparkadvisory

One nuance here is making sure you’re applying the current participant-count methodology. For defined contribution plans, the determination is generally based on participants with account balances at the beginning of the plan year. If there are 105 participants with account balances and the plan otherwise meets the Form 5500-SF requirements, the plan would still be treated as a small plan. Of course, you’d also want to confirm the plan satisfies the other Form 5500-SF eligibility conditions.

One thing to watch for is that a plan termination date and a final Form 5500 filing date are not the same thing. Even though the plan terminated in 2023, a final Form 5500 generally isn’t filed until all assets have been distributed and the termination process is complete. In this case, because distributions weren’t completed until 5/31/2024, you’d typically have a short plan year final return for 2024.

Something like: I generally agree with Effen’s distinction that the delinquent 5500s and the missed MRC/Form 5330 issues are separate compliance tracks. From a practical perspective, I wouldn’t want the plan sponsor waiting to clean up one before addressing the other. My bigger concern would be understanding the full scope of the funding-related compliance implications after three years of missed MRCs. Beyond the 5500s and excise taxes, I’d want the actuary to assess AFTAP certifications, PBGC premiums and filings, Annual Funding Notices, Schedule SB reporting, and any potential benefit restrictions that may have applied during the period. At that point, the late 5500s may be the easiest part of the remediation effort.

I’d add one other consideration: if the plan transitioned from a group annuity to mutual funds during the plan year, it’s worth confirming whether any assets were invested in a direct filing entity (CCT/CIT, PSA, MTIA, or 103-12 IE) at any point before the conversion. Schedule D is based on investments held during the reporting year, not just at year-end. If the plan was invested solely in registered mutual funds for the entire year, then Schedule D generally would not be required.

I’d add one other consideration: if the plan transitioned from a group annuity to mutual funds during the plan year, it’s worth confirming whether any assets were invested in a direct filing entity (CCT/CIT, PSA, MTIA, or 103-12 IE) at any point before the conversion. Schedule D is based on investments held during the reporting year, not just at year-end. If the plan was invested solely in registered mutual funds for the entire year, then Schedule D generally would not be required.