PensionPro

We have a strange situation. We prepared a 2018 delinquent Form 5500 for a large plan in December 2021 and the auditors assured us the opinion would be finalized and sent by 12/31/21 but they only sent in February 2022. The issue is the version of F5500. We had prepared it on the 2020 version which was the latest version available at the time. Now the 2021 version is available, do we need to reenter data onto the 2021 version and submit or is it fine to file on the 2020 version? If anyone can share their experience or insight that would be much appreciated.

My question really was am I forced to consider all catch up in the second plan because sequentially the contributions to the second plan are over the 402g limit. Participant deferred 19.5k in first plan hits 402g limit, then makes 6.5k "catch-up" in the second plan. I am inclined to say no, and use ADP catch-up in the first plan. Thanks for your help.

One test for two different plans covering different periods? I am not sure about that but could you explain why you think there should be one test. I am trying to figure this out and I appreciate any help in thinking this through.

It is the same employer who was participating in one MEP for part of the year, then in a different MEP for the rest of the year. The employee received one W-2 from the employer showing deferrals of $26,000. We are in a position to determine testing in both plans.

The simplified facts are ... A catch-up eligible individual participated in a CY 401(k) plan through September 30, 2020 and deferred $19,500. A portion of the plan gets spun off and the individual defers $6,500 in the new plan in Q4. Can I use $6,500 as catch up in the first plan and not use any catch-up in the second plan? i.e. treat the individual as deferring $13,000 plus $6,500 catch-up in the first plan, and $6,500 and zero catch-up in the second plan. It seems that should be fine, but I want to check if I am missing something. Thank you!

Here is the situation. We are filing Form 5330 for a prohibited transaction between a plan and the employer. The plan is on a 12/31 calendar year, and the employer is on a 6/30 fiscal year. Do we have the option to file the Form 5330 with either a 12/31 or 6/30 fiscal year end? The instructions seem to indicate that is the case. Thank you. Specific Instructions for Form 5330 Filer Tax year. Enter the tax year of the employer, entity, or individual on whom the tax is imposed by using the plan year beginning and ending dates entered in Part I of Form 5500 or by using the tax year of the business return filed.

If a deferral only plan wants to use a non-safe harbor definition of compensation for deferral purposes such as excluding commissions I believe there is no discrimination issues if the plan passes ADP testing using a definition of compensation that satisfies 414(s). The question is ... are there any restrictions in the Code or regs (cites appreciated) for how compensation may be defined for deferral purposes - with regard to reasonableness or nondiscrimination and so forth? Thanks.

That reg says you can exclude all match or exclude match up to 4%. I am not entirely understanding the argument that "it follows that a plan is also permitted to include the match." I do not necessarily disagree with your position but trying to understand it better. Perhaps there is another part of the reg that supports that position further?

A 401(k) plan provides safe harbor match of 100% up to 6% deferred and permits employee after-tax contributions. In performing the ACP test can I (a) include all match and after-tax, or (b) match over 4% and after-tax. I am really looking for cites from the statutes or guidance for option (a) above, which I have not been able to find. TIA!

A non safe harbor 401(k) plan with 3 months eligibility wants to add the 3% SH nonelective by December 1 as provided by the SECURE Act. However, they only want to add this feature for not otherwise excludible employees who are age 21 and have a YOS. They will test the otherwise excludible group under ADP/ACP. Can they do this? I could not find anything that prohibits it. Thanks for any comments, insights, and citations.

Thanks, Larry!

Filing VCP for a SIMPLE IRA and the forms are asking for the 3-digit plan number. Do SIMPLE IRAs really have plan numbers? Should I leave it blank or just put 001 in there? Thanks.

It is a discrimination issue under 401(a)(4) as well as an operational violation - failure to follow the terms of the plan with respect to allocations.

Plan has consistently been using the prior year method testing otherwise excludible employees separately. In 2017 plan failed testing but did not do refunds in time so plan can not permissively disaggregate otherwise excludible employees to calculate the refund/contribution under the one-to-one correction. Is the one-to-one simply a correction mechanism, or does it cause the plan to have a change in coverage for testing purposes because 2016 and 2018 are being tested on an otherwise excludible basis but not 2017? I could not find anything specific in the statutes or guidance, and appreciate all comments.

nondeductible because of 404 (just seeing this, sorry for the delayed response)

Husband and wife one participant plan has made nondeductible contributions in several years. They still have over $100,000 of nondeductible contributions being carried forward to 2019. They want to retire in 2019. What happens to the nondeductible contributions that can no longer be carried forward, and what is the plan sponsor's excise tax obligation? Thanks!

Three employers are members of a controlled group (A, B, C) and they each sponsor a 401(k) plan with different features. Each plan passes coverage separately - but barely. Let's say an employee transfers mid-year from Employer/Plan A to Employer/Plan C, is that employee considered in Plan A only or Plan C only or both plans for coverage purposes? Thank you for any insights and references!

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We submitted anonymous VCP in 2017 when the fee was 10k but under the new procedure the fee is only 3.5k. Is there any provision to apply the new fee schedule? The VCP process is ongoing. Thanks!

No. The participant was mistakenly attempting to take advantage of the Qualified Charitable Distribution rules pertaining to IRAs. Apparently, he was misinformed by the financial advisor. The plan may have to reissue the 1099-R for the correct higher amount.

The amounts were transferred directly from plan to charity. Does it violate the anti-alienation rules?

How about an IRA contribution for 2018?

A participant's RMD for 2018 from a 401(k) plan was calculated as $160,000. He transfers $100,000 to a charity and takes a taxable distribution of $60,000. We find out after-the-fact. How do we fix this now? My initial thought is issue 1099-R for a taxable distribution of $160,000 to the participant but curious about other opinions. Thanks.

Which document is that - Corbel, ASC, etc? Thanks.

Thanks for your opinion. It agrees with my thought process that if it is paid on account of termination then it is ineligible, but if it were amounts he would have received had he continued employment it would be eligible.