ESOP Guy

The real problem is you amended one of the key data points that their computers use to track 5500s. To the computer the amended return look like an amendment to a return that didn't exist. You should be able to get it fixed once you get the situation in front of a human. It won't be easy because since Covid working with the IRS has been hard. However, with persistence this will most likely end with no penalty.

Not exactly the answer you are looking for as we use one of the large paying agents. But our policy on ACHs is simple. You can only get one if you make an online election and input the numbers yourself. It is on you to get it right. If something goes wrong we will help obviously but we take no responsibility nor liability for the numbers a participant inputs for payment. Anything else is a risk management is unwilling to take.

You have it correct for the example you gave. And yes I have seen people not get the 2nd YOS by leaving the job a day or two before an anniversary. The real trick with elapsed time is making sure you don't lose track of the Service Spanning Rule. Using your example above if that person was rehired on 10/20/2025 they would get the 2 YOS the day they are rehired and their 3rd on 4/5/2026. That gap is ignored because of the Service Spanning Rule.

You need way more help than you can get from this board for free. There are people on this board who are qualified to help you but it won't be cheap. Your problem is fraught with all kinds of legal issues. I know that isn't answer you wanted but it really is the best answers. Unfortunately, the people who helped you in the past didn't warn you about issues like this long ago. You can literally search real estate in plans on this board and you will find threat after thread of people having this and other problems of putting this kind of asset class in a plan like this. I feel for your problem but it won't be cheap nor easy to get a fix.

I am not 100% sure I fully understand the first paragraph. But if I do I don't think you will find clear guidance in the regulations. My best guess based on what you wrote I would stop and see if you can get a call with client, ESOP TPA and yourself. A SHNE can go into an ESOP and that TPA needs to know how to do it right. They have to treat it like it is a SHNE and all the related restrictions. Or it can be done in the 401(k) plan and if the combined plan are Top Heavy for example the ESOP TPA needs to know about the SHNE is for that and combined 415 obviously. This stuff take good coordination and communication between the 401(k) TPA, ESOP TPA and client or it will go wrong badly. I am going to say it again there needs to be a conversation here to make sure everyone is on the same page and people need to get used to communicating annually to make sure everyone understands what is happening in all the plans. This is especially true if the SHNE is being paid to the ESOP.

I think what you need to consider is one is wrong but it is just as likely the one that is giving you the money as it is the one that isn't. Your questions seem to imply you think you are being shorted by the one. It is just as likely you got a windfall from the other.

Audit lottery. Put the check in the personal account. If you get a 1099-R you treat it the way that reflects. If you don't get a 1099-R don't report anything. If the IRS comes along and hits you up how much can the tax and penalty be? This is the perfect case for playing the audit lottery.

I have seen plan documents that for some reason forbid Alt Payees from designating a beneficiary.

The right participant search firm can do a "death audit". They are checking against the Social Security Administration record of SSNs that have been reported as the person is deceased. I just couldn't tell you how quickly it is updated. As noted in an earlier comment either funeral directors or corners have to report deaths to the SSA so they know to declare the SSN no longer active and if they are paying benefits to stop

I don't know about fraudulent obits but I can tell you we have found over the decades a shockingly large number of possible beneficiaries by reading obits. Including several times we called the church where the service was held and ask the minister to reach out to any known close relatives of the deceased to help get the process started. Those tended to be for small amounts as asking for people to call to get money can create issues. The first time I did this was for a benefit of about $80 and everyone was willing to risk paying the wrong person to get the benefit off the books. A guy who could prove he was the sibling saying he was the last surviving relative got the money as that who is the person the minister talked to. That was over 20 years ago and as far as I know no other person claiming to be the rightful heir has come forward.

Inspira is the most common. Next is Penchecks. Typically, if the client uses Penchecks as paying agent they use their IRA service as it is integrated.

The search services I mentioned does have a level of service that does send a letter to them to confirm it is good by letting them know they are being looked for by a plan. If an address is found we often times suggest the our client reach out to them to get them paid as it is rarely an employee who is lost. They will have the best ability to detect if something is amiss as they have background data on the person. However, at some point once you think you found someone you get them forms to sign. If a person signs for someone they aren't they did the crime. I get a fiduciary has some responsibility but I have never seen this blow back on a client who has used a reasonable process. The fiduciary obligation don't require them to be mind readers after all.

I really like PBI locator services. The thing I like about them is they will give you a letter regarding what they did to find this person. So if someone like the DOL asks about due diligence you produce this letter.

As Rigby said in my mind. All the rules talk about is vesting. Anyone terminated and made 100% vested via these rules would still have to follow the normal rules for when they get paid.

Common: no Allowed: yes Nightmare: I think so Thoughts: make sure you price this one correctly and understand which limits and comp... you use Recommendations: Talk to the client and find out why they set it up this way. I once had a client that had done this because back in the '70s when it was all set up their payroll system really couldn't get comp and hours for any period than what the W-2s were done. But now they have a system that could do it and the longer we talked about it they sync the two up. Have fund.

I agree

If it was a merger they are in TH testing like any other type of plan being merged into another plan. Also, don't forget a merger will mean protected benefits. These assets are in a type of pension plan and for these payments a person has to be offered J&S annuities of various types as a form of payment. They can opt for a lump sum, and most people will do so, but this is the big hassle of these plans if it is a merger. These assets still have just about all the restrictions on them as if they are in an MPP still. Do your homework.

I got an email from a client concerned about how much data is public on EFAST2. They have had this plan since the inception of EFAST why now I don't know. The CEO is saying he was reading on all the instructions that he saw something that said you could request some or all of your data to not be made public. I couldn't find anything in the instruction or on the website talking about this. I thought I would throw it out here before I go back and say, "can you show me what you are reading" if anyone has heard of this? I mean if you could do this every company would try and it would be more common knowledge around a firm like I work at which has hundreds of employees. Have we missed the boat on this somehow? Any help would be appreciated. Thanks

Yup The estate will have to get an EIN and file a tax return on its income most likely also. An estate is the worst possible beneficiary.

The one time this happened to me the firm I worked for agreed to pay for the person to get the needed help from someone who knows how to do this. To be clear I was the person who made the mistake. I know no one likes to pay for this kind of error but it really does seem like someone owes her this level of curtesy/professional responsibility. I think it is the new recordkeeper's fault. They should have a process to ask for a W8Ben if one is not on file 100% of the time. Although oddly if there was no W8Ben my understanding the withholding was supposed to be 30% not 20%. I would look into the current recordkeeper as it really does seem like they don't know the rules about this. https://www.irs.gov/instructions/iw8ben#:~:text=Provide Form W-8BEN to the withholding agent or payer,withholding rate under section 3406. I quote: Provide Form W-8BEN to the withholding agent or payer before income is paid or credited to you. Failure to provide a Form W-8BEN when requested may lead to withholding at the foreign-person withholding rate of 30% or the backup withholding rate under section 3406. end of quote That was the issue when I made the mistake. I thought the person had refused to complete the W8ben and they had sent one in the prior year. I missed that fact. So I set them up for the 30% instead of the 15% and it wasn't caught in review. And no I don't think itis income connected with a US Trade or Business. This person ought to be getting a 1042S from the recordkeeper so in my mind they ought to be helping here. If you go to the pdf version https://www.irs.gov/pub/irs-pdf/i1042s.pdf Appendix A there is a code 15 for pension payments. If you go to the codes instructions on page 24 it gives the link to the appendix A. I think the online version takes you to Appendix A also. Hope that helps.

The times I have seen this the legal guardian can set up an IRA for the minor.

I was in undergrad when that movie came out. A friend of mine got a student job in the computer operations room. He had access to the system that was more than maybe you should give to a student. All the workers came to work one morning and the first message they got on their work terminal was: Do you want to play a game? How about Thermal Nuclear War?

Another voice questioning how all participant's have an interest in the real estate if this is really a pooled plan. If it is a pooled plan the participants are beneficiaries in the trust and they have an interest in that on each asset. I have seen this kind of transaction done before also, but a good lawyer is simply a must.

I agree as presented the math doesn't seem to work.

This! You aren't paid enough to make this call in my opinion.