chc93

Never heard of this yet. I just went to the efast.dol.gov website, and didn't see any indication of this change to the log-in process. If they already have links in an email, I would think the website will at least have information of the change.

Unfortunately, I think that ship has sailed... One client sent us the 5558 denial letter this morning. Our files show that certified mail with return receipt was mailed on 07/25/2022. The green return receipt card showed the IRS "Received" stamp as 09/22/2022. USPS tracking shows the envelope was received at the local USPS Regional Facility on 07/25/2022 (agrees with our files), then received at the next USPS Regional Facility on 07/29/2022 but didn't leave that facility until 09/07/2022. Then, delivered to Ogden UT on 09/10/2022... to be finally stamped by the IRS on 09/22/2022. So maybe the USPS is as much a problem as the IRS?

Hopefully by the time extensions for the 2022 plan years roll around, the proposal to file the 5558 electronically through EFAST2 will be implemented. Comment period ended Dec 5, 2022. I am hopeful... 2022-21584.pdf

Only issue with signing and mailing is that if the sponsor files more than 250 tax forms in a year, then electronic filing is mandatory. Suppose you fall into the mandatory box... you mail in a paper form... IRS says you must file electronically... you electronically file on Jan 6. Are you OK then?

We had this happen recently. Separate cash balance plan account and 401k plan account... but both under employer EIN. Worse, neither account reflected the plan name (cash balance or 401k). Applied for TIN for each plan. Sent client's authorization letters (one for each plan) to brokerage firm with full plan names and corresponding TIN's. Two new accounts were created, and assets moved from the old plan accounts to the respective new plan accounts. Seemed rather painless...

This happens every year about the same timeframe.

I'm not sure about reducing hours requirement for vesting retroactively. But maybe amend the plan now to provide 100% vesting immediately... should help to keep them around... especially since he plans to sell the practice soon, and assuming he terminates the plan, they will have to be 100% vested anyway. And sounds like he wants to fully vest everyone when he sells the practice. Note that selling the practice doesn't require 100% vesting... but terminating the plan requires 100% vesting...depends on the how the practice is sold.

Maybe do an in-service distribution (if the plan allows) but still set the plan term date as 12/31/2022 to get the income for the year.

Probably a good idea to explain why invoice is less than estimated range. Then if future invoices are "within range", may make more sense to client. Then especially if additional work is done and invoice is more than the estimated range, the explanations may be more easily accepted.

usually full vesting is required at normal retirement age...

I agree with CBZeller. Generally, DB plan documents we work with have excess to revert to the company. This is necessary if any excess will be transferred to a QRP. But then, we could always amend to allocate excess to participants (I think I have this right).

Well... hopefully this 5558 problem goes away by itself. There is work in progress to allow 5558 to be electronically filed through EFAST2. 2022-21584.pdf

Yes... as far as I know, the distribution election form is only good for 180 days after execution.

I agree with SSRRS. The 2022 RMD is based on the 12/31/2021 balance, and doesn't change for events occurring after 12/31/2021.

No idea... maybe the subs can be employed by the owner for the time that they work for the owner? So "part-time" or "on-call" employees that are allowed to participate in the owner's 401k plan?

The RMD is not required. The active participant didn't reach any point where a RMD is required. If the plan didn't have in-service distribution, the active participant cannot take *any* distribution until he terminates employment.

Thank you Lauren for the additional information to view the attachments prior to being available for public viewing online.

I saw this recently... proposal for 5558 electronic filing <highlights are mine> [edit: I just saw Lou S. reply] 2022-21584.pdf

A person called EFAST, and the answer was that it could take up to 20 days for attachments to show up online. They are reviewing each attachment for confidential information, SSN's, etc. If you get a "Filing_Received" status, you're good. ******************* EDIT: just checked a couple of filings. Filed 10/13, audit is online. Filed 10/17, audit not online yet.

We just got a few this morning. We have the certified mail receipts with the list of plans in the packages. What a pain...

I got the following from the EFAST2 FAQ... Q4: How can I submit a delinquent or amended filing? The Form 5500 Series Version Selection Tool will help you determine which version of the Form 5500,5500-SF, or 5500-EZ you should use. Refer to the form-specific instructions for more information on filing requirements. An amended filing should be submitted as a complete replacement of the previously-submitted filing. You will need to resubmit the entire form, with all required schedules and attachments, through EFAST2. You cannot submit just the parts of the filing that are being amended. <underlined is me>

I think I see this differently. The 5500 instructions defines "active participant" as follows: ******************* 1. Active participants (i.e., any individuals who are currently in employment covered by the plan and who are earning or retaining credited service under the plan). This includes any individuals who are eligible to elect to have the employer make payments under a Code section 401(k) qualified cash or deferred arrangement. Active participants also include any nonvested individuals who are earning or retaining credited service under the plan. ******************* Only reference is to employee service and not dependent on having benefits in the plan. So a profit sharing plan where a participant never got a contribution allocation is a participant for 5500 purposes. I've been doing it this way.

Maybe not quite on-point, but an example from a defined benefit plan we terminated a few years ago. Participant's estimated lump sum when distribution election forms were handed out was less than $5,000, so spouse consent form was not included. When final distributions were processed, lump sum distribution was more than $5,000. Plan termination was audited by the PBGC. They asked why there wasn't a spouse consent for this participant. Explained timeline of what happened, and they said OK and didn't ask for anything else.

So question is "one method consistently". For first year of the plan, cash basis. Then switch to accrual basis. Is one year enough to say "consistent" since there was only one plan year involved before the switch? Interesting...

I recall hearing in the past that if you filed a 5500-SF in prior years (whether you had to or not), then when you switch to 5500-EZ you will almost always get a letter from the IRS (or DOL?) asking for the 5500-SF filing for the year you switched to and filed the 5500-EZ. No big deal as is totally explainable, but still gotta go through the process... never a fun exercise. Note that this was when 5500-EZ filings were paper, so no connection between prior year and current year filings. Maybe with everything electronic now, this is no longer an issue.