thepensionmaven

We handle 2 plans for a dentist who is a PC; sold the assets of the practice, employees received W-2 for period 1/1 to 2/28 2024. I am suggesting $0 profit sharing, he knows he has to do a 3% safe harbor on the employees' W-2 1/1-2/28/2024 Question is, what comp do we use to calculate the cash balance plan (assuming the liabilities are greater the the assets)? Obviously, if assets greater, no contribution. I don't see how plan(s) can pass 401(a)(4) or 401(a)(26), possobly w/o a contribution. The owner will continue the plan as a PC, but I believe his payout will be 1099 which will be funneled to PC and become PC income for plan purpose.

Check out the following article https://ferenczylaw.com/article-defined-benefit-plans-determining-professional-status-of-plan-sponsors-for-pbgc-coverage/ Section RULINGS WHERE THE PBGC FOUND THAT THE OWNER WAS A PROFESSIONAL We spoke to a PBGC “higher up”, I believe a supervisor at the time, who initially balked at the question, and when we pushed for an answer, mentioned that a pharmacy where sundries were sold, more than 40% of the business revenue must be “phamacy related” in order not to be covered. Applying for a PBGC coverage determination is a long and expensive process and we have seen responses of up to 6-8 months. Of course the supervisor has now retired. Hope this helps.

The insurance agent/broker is a pig and rolled over a portion of the account balance to IRA (sure he wanted the commissions at this time) and did not mention to us until the other day; also, there are two employees that have not yet been paid out.

We have small Cash Balance plan for owner and two participants; the owner passed away, the spouses needs to take his RMD by 4/1 Would his RMD be calculated on his age, 73 or the spouses, she’s 68. Would the RMD be calculated on the retirement benefit or thehypothetical account balance?

Sorry, I meant 2019, client and broker did not do a good job of communicating. Only 6 employees in the company, deferrals, if any were sporadic, safe harbor was done on a “maybe” basis. ADP passed each year as the owner deferred les than those who did defer. Does one ever show the first year of a plan with $0?

We have used Datair for the past 10 years, no doubt other systems are easier. Used to use ftw until they were purchased and the prices skyrocketed and we went back with Datair. Recently looked at few again, for a few reasons, mainly the database updates are clunky. Also the only reason I use Windows is for Datair. Was recently considering ftw for its simplicity and easier to use and cloud-based structure. Word of caution, switch at an easier time of year ( if indeed “easier time” does exist),, when you have the time to convert and learn the system, not 3 months prior to any needed document restatements as there is just not enough time. FTW will help with conversions, but only if one has a block of 100 plans of the same type; ie DB, DC with 401k, DC with SH and PSP.

We set up a 401(k) plan with a 1/1/1999 effective date, first deferral was made in 2020 and according to the TPA, no 5500s have ever been done. File initial return with all $0?

RatherBeGolfing - I agree with adding the specific disaster notification as an attachment; but after speaking with IRS on this matter, I was told that DOL does not forward any attachments when they forward Form 5500 to IRS. That, in and of itself, does also seem strange.

Thanks for your input, Bill.

I just received a final accounting on a terminated plan, from the fund holder for the period 1/1/24-7/1/24 (not 6/30/24) I’m assuming the plan year for the final return would then run 1/1/24-7/31/24, therefore the final return would be due 2/28/25? Saved from a late filing for 6/30/24?

Seems very professional, very useful for many calls; now I just have to figure out how to perform the calc I need! My actuary still used Michael’s program, just plugs in the segment rates.

It seems as though you are spending much too much time on this and getting nowhere. Limit your losses and drop them.

Totally agree with Bill Presson.

Good point, I didn’t do a servicing agreement. I prepared 5500s but withheld my valuation report and Schedule SB. The client never asked for the information, the accountant did. unless I get an email or letter from client stating my services are not required, I believe I do not have to hand over any documents unless and until I am paid for them. Thing is, I have not yet billed the client and the accountant hinted I was not going to be paid anyway. Wd must be very careful choosing those we do business with. I’m just concerned about any lawsuit and/or any unethical practice for not turning over the requested information.

I don't know where else to post this. We were introduced to an accountant in March of 2024, who was looking for a new TPA. She has clients that needed annual reviews and 5500s, Schedule SBs, etc. We quoted the numbers and typically wait until the clients' tax return are due before preparing our work. Well, October 1st comes and this woman demanded that since she gave me new clients, I had to do her clients' work first. I was paid in advance by 3 of these clients, and quoted contributions and prepared Form 5500 for all of these The accountant pulled all this new business on the grounds that I wasn't fast enough; the clients that paid in advance demanded their money back. Now she is asking for the valuation reports and Schedule SBs for the others, that I had not billed, so they obviously didn't pay. I consider any work I do as my work product, until I release it, which will then become the clients' once I am paid for my services. I was not paid, I believe I am under no obligation to release anything, especially the Schedule SB, for which I pay my actuary for signing. Any opinions?

I can tell you what it looks like now. My client has the plan accounts with Schwab, the plan checking account is with Schwab. Schwab screwed up and did not honor the EFTPS process when they used the plan checking account to pay the 945; at last minute we prepared Form 945 with plan EIN. Since Schwab messed up, I had the client put the Schwab check into the corporate account and pay withholding from the corporate account, using 945 withholding. EFTPS confirmed the date and amount of payment. Meanwhile, the client is receiving IRS letters and invoices for the withhold not paid under the plan ID# and the invoice keeps mounting. It has taken over 12 months for the IRS to move the amount withheld from the corporate ID number to the plan ID number. Each time we call to check on this, we are told that "our system for these types of transactions (moving a payment from one EIN to another) has been down since January 2024. Your best bet is to keep calling back every 3-4 months". The moral to the story, file Form 945 after receiving confirmation, even if the confirmation is after the due date. Better to be a bit late on filing than go through this mess.

Another client just returned from 3 months in India. Original 5500-EZ filed 10/12, same situation as above, but I believe one of the reasoanble causes is the client being out of the country. Returned home today and received an IRS penalty notice. Would an amended 5500-EZ work?

Their regions are specifically enumerated in the IRS Notices as well as FEMA. Software passed EFAST, but apparently was not in "live" mode, of which e had no idea. Instead of Letter of Reasonable Cause", which has taken 3-4 months to abate with IRS previously, IIRS has already provided Special Extension.

IRS issued a penalty for my client for filing after 10/15, when in actuality, they did file, but our software did not make it through to DOL. I'd like to be able to amend under "Special Extension" FEMA Disaster Zone Declaration 36-12 as well as IR 24-234 (9/10/24). The IRS Notice mentions a delayed due date of February 2, 2025, which also states the extension also applies to "information returns" of which 5500-EZ applies. Worth a shot???

Several clients received CP-283 Notice before receding anything prior. The initial filing had a Reasonable Cause letter attached to it, but I understand DOL does not forward to IRS. Rather than waste the time, we were advised to file under DFVC, pay the $750 and respond to the IRS Notice with a copy of the amended 5500-SF filing and check the Box DFVC, with a coverletter to IRS along with their invoice. Anyone have a similar experience, and what would the cover-letter say?

Let me add to this as the plan is now terminating 12/31/24. Notices have been sent out to the participants. Rach has completed an change of ownership form indicating the contract will be in essence "rolled over" from the profit sharing plan to an IRA in the participant's name. This is the way Equitable does it - I'm not agreeing, just attempting yo CYA of the trustees and myself as the TPA. As far as I'm concerned, this is a rollover as the contracts are leaving the plan, such that the plan will eventually ave $0

We're trying avoid LTPT rules altogether, which, most will admit, are too onerous and very few, if any employees would contriubte. Each participant completes a salary deferral option form with two check boxes, to which only one applies: "I wish to contribute $ _______ per pay period " I wish to contribute _____% of my pay each pay period Would not 0% or $0 suffice for the 401(k) portion??

W have a 01(k) plan which was effective in 2021. Accountant wants to add Roth contriubtions and recharacterize all prior contriubtions as Roth. Need some cites, seems crazy.

I assume that wiykd be, as I mentioned, eligibility 500 hours for deferrals, 1999 for employer non-elective and profit sharing? Allocations for employer PSP can remain last day and 1,000 hous?

Accountant has approached us for best scenario to avoid LTPT, as he says “who do you know that’s works between 500-1000 hours that can afford to defer” 1. Amend plan to use elapsed time for eligibility, 1 year with no hours for entry, require 1000 hrs for any employer contribution 2. Age 21, 500 hrs eligibility for deferrals, Age 21, 1,000 hrs for employer contribution 3. Employees signs the enrollment form with a $0 deferral each pay period OR 4. Corporate resolution stating the plan sponsor is electing out of the LTPT provisions Curious to see if any of these are being considered or are being used already.