Bill Presson

So the plan was terminated 10/17/2022. When were the assets distributed? If not until 2023, then the 2022 year is still a full year. But that would still mean 7/31/2023 would be the deadline for filing the extension.

And amend to everyone in their own group going forward.

Lou, Op's situation is a little different from this. Your client is paying cash unless the participant chooses to defer. The OP's client is making a PS contribution unless the participant chooses cash. Still can be done and I've had a handful of plans that did the latter over the years, but it's not very common.

Frankly, it doesn't matter if any of us are concerned or not. It's all a lottery (and I kinda mean the short story version). We had a 5558 for calendar year 2021 that was filed timely and received by the service in Ogden before July 31, 2022 (certified mail return receipt signed and dated). The IRS sent a CP216H rejection to our client dated July 31, 2023. Not the only silly thing to happen in the past 12 months with 5558s. Thank goodness electronic filing is just around the corner.

The transaction you described is basically what needs to happen. What I would recommend is that the insurance guy contact his home office’s advanced consulting office and get the exact instructions on what to do. If he refuses, tell the client to hire an ERISA attorney. Lots of possible liability sitting here. wcp

I assume you're putting the old EIN in question 4 of the 5500 ez? That would tie to the 5558 anyway. I would do that and wait for a letter. We have to deal with rejected 5558s for no good reason anyway.

Vesting is based upon a 500 hour year for those people forever even if they actually become eligible under the regular requirements

Time for the fiduciaries to negotiate a reduction in the revenue sharing.

They may have a right of first refusal of the stock (especially for the stock in B) or options both of which might create a controlled group.

Depends on whether you’re reporting on a cash or accrual basis.

Staying within the incidental limits is key. People often think you can use the "aged" money and just avoid the incidental limits, but that's just treated like an in-service withdrawal. Likely better to look at transferring the policy out of the plan.

They can file what they filed the previous year or file what is required for the current year. And any plan can voluntarily hire a CPA firm to do an audit whenever they like.

Assuming OP is accurate, what a stupid document.

You should follow what the document says. Likely the forfeitures should have been used in previous years, but can't roll back the clock. So eligible employees likely getting a little bump.

EOB is (or can be) web based as well. We use both.

I'll jump in the deep end: when it is at 99 on the first day of the plan year. But most wouldn't file as a small plan that year if the likelihood is it would be back to a large filer within a year or two. The 80-120 rule is to help avoid audit whiplash.

Agree with MoJo. The only exception might be if they could qualify for QSLOB treatment, but that requires 50+ ees in each and other very stringent items.

Thanks David. Please jump in more often.

It was the same plan, so 001 is correct.

Welcome back, Larry!

Look at the investment statements. It's easy enough to see if the money came out or not. If the company is paying the premium (which I oppose), the best you could do is figure out how to treat that as contributions to the plan. If the only money in the plan is rollover money, then the insurance premium exceeded the incidental limits immediately and the entire premium each year is a taxable distribution. It's treated just like an in-service distribution. Rollover money doesn't count in the incidental calculations. How did the rollover money not exceed $250k? The premiums paid into the policy will have expenses and cost of insurance. Frankly, you've got a mess and people that only know parts of the rules sold this and set it up. You're best bet is to get ERISA counsel involved and see what can be salvaged. What you use as the beginning balance (and it's whatever the value was on 1/1/22) is the very least of the issues here.

If it's safe harbor, why are you even doing ADP/ACP?

Hourly is the way it would need to go. But, you'll want to know up front what the estimate is. They can't give a reasonable estimate until they look at everything to even know what the problems are. That initial review could easily be $2,000-$3,000 just to determine what is broken and how to fix it. Fixing it could easily be twice that much. TPAs historically undercharge for their work so you will likely find someone to do it for less. But if I was going to do it (which I'm not), I would get the review costs up front as a retainer and go from there.

You likely have some issues but I don't know if they are big or not. And there's no way to know without diving in and gathering all of the information. The problem isn't that it's too small of a job. The problem is that it's such a big job and they likely won't get paid for all their time.

They're being silly. Good stuff here: https://www.irs.gov/retirement-plans/verifying-rollover-contributions-to-plans#:~:text=It's not necessary for the,a rollover contribution is valid.