Lou S.

Can you amend the W-2s?

If you are concerned file IRS change of address From 8822-B

Then don't the existing trust provisions apply?

416 specifically mentions plans under 401(a) and states that SEPs are DC plans for purpose of 416. I don't see any mention of 403(b).

If you are willing to argue that one days notice is reasonable, sure. It might, it might not depending of facts and circumstances. The higher the percentage of NHCs that actually start deferring on that fist payroll in October would probably be in your favor for reasonableness if the IRS questions it. If most folks don't start til much latter and the owner drops in the 402(g) limit from his bonus in December that probably wouldn't be in your favor for a reasonable notice period.

Some plans prefer to have the QJSA rules apply for beneficiary reasons. If the plan does not have the QJSA rules, the spouse must be the 100% beneficiary unless they provide notarized consent for someone else to be the beneficiary. If the QJSA rules, you can designate someone else for 50% of the benefit. This comes into play when say the owner has kids from a prior marriage that he wants to be beneficiaries.

Are they adding a matching or non-elective safe harbor? If they are adding a matching safe harbor then the safe harbor notice still needs to be distributed 30-90 days prior to deferrals starting to automatically be deemed reasonable notification by the IRS. However, you can distribute the notice less than 30 days in advance and still be deemed reasonable based on all facts and circumstances. If you are adding the non-elective safe harbor the notice is no longer required.

If the Plan is subject to the QJSA rules, Spousal Consent is required. If the Plan is not subject to the QJSA rules, Spousal Consent is not required.

It looks like the CARES extension gives plans that didn't grant relief from CARES distributions and loans but did suspend RMDs until 2025 to adopt a conforming amendment. For folks who need to amend by 2022 because they did offer CARES distributions and/or loan relief I imagine they will incorporate the RMD piece in the amendment. I know I had several plans that suspended RMDs but did not offer distributions or loans so this would apply to them but fortunately for me the CARES amendments have all been completed. The SECURE Act relief is nice, since that's something I haven't actually gotten to yet.

Catch-ups occur when you have exceeded a statutory or plan imposed limit. If the plan has no restrictions on deferrals then catch-ups can generally occur in one of 3 ways: 1 - any contributions in the calendar year above the 402(g) limit that are not in excess of the catch-up limit. 2 - recharacterization of contribution due to failed APD test (it is recharacterized as of the last day of the plan year) 3. - recharacterization of contribution due to exceeding the 415 because of employer allocations. (it is recharacterized as of the last day of the plan year) If the Plan has an imposed limit (like 5% of pay) I'm honestly not sure the date that the contribution is considered catch-up. For non-calendar year plans it's possible to get 2 catch-up limits in one plan year if they exceed the 402(g) limit in the first part of the non-calendar year plan. For the most part I agree with you that catch-up are generally the last dollar deferred.

Too late, needed to be done by the original filing date if no extension. If the Client has a valid extension and did not file by the original deadline I believe that would change the response as the could can file an amended return. Or it may be a replacement return in this case as I'm not a CPA and think there might be a subtle technical difference that eludes me.

It's been a long time since I sent in an actual check for withholding for a 945 but if it's under $2500 don't you file it with the 945 in January? I suppose you could print the most recent 945-V and cross out 2021 and write in 2022, that might work but I can't guarantee it.

I'm not sure what you are getting at. If you can't use the forfeiture to off set reasonable administrative expenses (assuming the document allows) then you need to allocate them in accordance with the terms of the plan document in a non-discriminatory manner. You don't an IRS "free pass" to do it however you like because the plan is terminating or the forfeitures are small. I get the client doesn't want to pay you to do the reallocation but don't make their problem your problem by doing it wrong. Is there a large enough forfeiture account balance to pay your fees to do the reallocation correctly and allocate the remainder to participants according to the Plan document? That might make everyone reasonable happy depending on your point of view.

Thanks Luke. I have no idea how either plan would possibly every track that.

I could be wrong, but this seems like the exact situation that a "reasonable cause" letter should abate all penalties. Something along the lines of "We request the late penalties be waived as the return was not required to be filed."

It is eligible for rollover. Not a perfect analogy but essentially the excess acts like an after tax contribution going in and a pre-tax contribution going out. The interesting thing that I don't think the IRS tax code considers if what happens if both of the contributions went in as ROTH to separate unrelated Plans? Mechanically what will happen is the employee essentially doubling the ROTH limit for the year since they are already taxed going in but neither Plan knows about the other so they will both not be taxed coming out. I think it's because the Excess Deferral rules were written before ROTH existed and were not updated when ROTH was added.

Do the reallocation in a non-discriminatory manner in accordance with the terms of the Plan Document?

To add to Zeller, neither plan did anything wrong (unless this is a controlled group) and as such there is no EPCRS correction for either plan to enter into. Essentially what will happen at this point is she will get a 2021 tax deduction of $19,500 but will be taxed on the full $39,000 when it is eventually distributed. That is she pay taxes on $19,500 both in 2021 and the ultimate year of distribution. It's probably exactly what Zeller said so my post might just be useless duplication.

I think I've seen case law going both ways over the years if I remember right about who needed to be 100% vested and not. I believe the presumption is that anyone that has less than a 5 year Break in Service who has not previously been paid out as of the termination date would become 100% vested as a result of the termination but I believe that was successfully challenged in at least one case (I don't recall which one) and full vesting of former employee participants was not required. The exception I believe seemed to surround an employer who was dissolving operations in addition to the pensions plan and there was no potential for re-hire of previously terminated employees who did not yet incur a 5 year BIS. There is some good info in this thread below from 2004 that seems to be related to your question (I think the 2015 bump in that thread is unrelated). But I can't recall if there is more recent guidance. I know there has been a lot of guidance on partial terminations but I'm not sure about full terminations.

Presumably the plan was offered but everyone said no. I think we had a plan like that years ago where a Dr. had a plan for his union employees and he had to maintain a deferral only 401(k) Plan for them. In that case it wasn't zero as I think 2 people put in de minimus contributions but when they left no one else ever signed up. The plan ran a number of years with no new contributions. But I think that was than 10 or more years ago that plan terminated. Assuming you have a valid plan that is actually offered to the employees but no one ever signs up I believe you can keep it going as long as you want as long as you keep the Plan document up to date, give the participants any required notices and file the 5500. I'm not sure why you'd want to as a Plan Sponsor but maybe there is some valid business reason for having a Plan that no one uses.

Can't they be pretty basic. Something like... PLAN NAME NOTICE UNDER ERISA §204(h) Benefit accrual under "the Plan" will cease effective (enter date). "The Plan" will be terminated effective (enter date). Plan Sponsor or Plan Administrator Contact Info Date of Notice

It depends some custodians are providing them, others are not. You would need to check with each individually custodian. At a guess I would say "most" of the larger bundled providers have programing it for their quarterly statements by the 6/30/22 quarter that just ended and "most" individual brokerages statements are probably not providing it. The Secure Act requires that the illustrations be provided "at least annually".

Because the DOL feels... ...and has made it a rule for plans to supply it to participants at least annually.

The presumption by the IRS is that you had a more than 20% reduction in eligible participants and a partial termination occurred, the result of which is 100% vesting of the affected participants. However this is not a bright light test, but rather a facts and circumstance determination whether or not a partial termination occurred. You might be able to argue why a partial termination did not occur. Evidence of a voluntary termination on the part of the participant might be helpful to your case that a partial termination did not occur. As to why he should be "forced" the IRS doesn't write the rules with small plans in mind generally. If a partial termination did occur and the participant benefit was forfeited when it should have been 100% vested you have a potential plan qualification issue.

You need to reiterate that they are transferring the assets in a TRUSTEE TO TRUSTEE transfer and the is NO DISTRIBUTION as the participant does not have a distributable event. That is you are simply replacing the asset provider of the Plan and that they are no longer responsible for maintaining the plan after the transfer. It often helps if the new account has the same name and EIN as the old and you can get a letter of acceptance from the new custodian. Of course if it's going from Schwab to Schwab and they still won't do it, I don't know what to tell you.