thepensionmaven

First off, an attorney was the one who advised three separate plans, basically so they dentist whose son is an "investment guru" can do his own thing with his own plan and not jeopardize the other plans. Originally one plan with pooled accounts, now segregated out into individual accounts, employees' portion into one plan, each dentists into their own. These are rollover contributions The 2022 contribution has not yet been made; the only money in these plans is the rollover money from the previous plan. I was reading a thread that mentioned there would not be any BRF issues as far as rollovers. The funds are participant directed with about 10-15 funds Nationwide has available. As far as what the plan says regarding investments, Investments L4. Participant Direction Participants may direct the investment of their following Accounts (select one): a. [ ] None b. [X ] All Accounts When you say "Trustee Directed", if the individual participant has discretion within a certain family of funds, how is that "trustee directed" Or, as an example, are you saying that in a plan with 30 participants, in order for a plan not to be "trustee directed" each each participant could theoretically go to a different investment house and pick his own investments? I can just imagine the nightmare here, with participants that do not know how to invest, just doesn't make sense. The dentist with the plan investments he gave his son to invest, is obviously the problem, but that should not effect the other two plans which are invested properly. As far as CuseFan comment, we/re not exactly speaking of investment savvy employee participants, I would seriously doubt they have even heard of a limited partnership. Back in the 80s, we were told to stay away from limited partnerships as a bad investment. One of the trustees is making that choice with his own money, the minimum investment I understand is $500,000. He's most probably going to loe it all nyway, so how prudent is the investment??

Dentist #1, the one I'm questioning, I got the name changed to the correct plan. He took 50% of individual account and gave it to his son to invest in an LP, which of course is a PT. We told him, he does not care. The balance of his account is an individual account with Nationwide. Dentist #2, account with all in an individual account at Nationwide Plan #2 invested all participants with Nationwide and a broker sat with them to determine risk tolerance.

I have a dental practice (PA, in the State of New Jersey) that sponsors three profit sharing plans, each with individual accounts. One for each dentist (Dentist #1 profit sharing plan; Dentist #2 profit sharing plan). The third plan is Plan #3 is for the employees of the PA. Keeping in mind, the plans are all sponsored by XYZ, DDS, PA. One of the dentists (Dentist #1) had decided to invest a portion of his account in a limited partnership and I've been on his case to see the original paperwork to determine if the registration was done correctly. I have a copy of the K-1, apparently the account is registered under the name of the Sponsor, but there is nothing n the paperwork that mentions this as an investment of "Dentist #1 Profit Sharing Plan". They way this account is registered, this is NOT a plan investment, the Entity should be "Dentist #1 Profit Sharing Plan and I think must be re-registered correctly.

Thanks, guys, for your opinions. On the other side of the coin, personally I think it's easier and more cost effective to file online. I prepare, client signs, faxes signature page back to me, and I file as TPA with E-signature attachment. You receive an immediate "acceptance", vs even with a certified, return receipt, I have had the IRS come back to the client to state they never received a copy of Form 5500-EZ. To me, after dealing with the IRS entirely too much, it's less of a headache just to file electronically. I was going to charge more for the paper filing, like $250 , for paper, postage, envelope with certified, return receipt as this guy is even suspicious of email. Sounds like it's not worth the trouble!

I just took on a one-participant plan, the guy does not want an electronic filing and has less than 10 tax return due for the year. From what I can tell by looking at 26 CFR § 301.6058-2, Form 5500-EZ can remain a paper form and is not mandated to be filed electronically. I file all my plans under EFAST as the "return receipt" is immediate, so this one seems a bit odd to me.

Ilene, the plan says to distribute among the participants if not used to pay admin expenses, makes no reference to those that have been paid out vs those who have not. This leads me to believe all who were participants on the effective date of plan termination must share, whether previously paid in full or not. I know the client can’t take it back.

No adm fees were ever paid from this account; does appear as though the PC (employer) is expecting to take the money back, but that’s not allowed in a PS plan? So if we must reallocate, would this be on the accounts of all participants, even those paid out last year???

I obviously did not charge enough, my fee included final 550s, 1099s. Fee paid from PC. Amount left in master account is from investment gain, or so the client says. No fees ever paid from this account, all participants located, no missing persons. Looks as though I need to allocate on the basis of amounts distributed - everyone rolled over. My question is, which participants to receive? All, including those paid in 2022? Looks that way

We have a profit sharing plan that was terminated effective 7/1/22. Most participants rolled over by 12/31/22, the remaining participants, exclusive of the owners were paid out between 1/1/23-5/12/23. After the owners rollover, there is an excess of roughly $2,500 sitting in the plan master account at Schwab and the client is asking what to do with it. Usually the excess is paid to the TPA as an administrative expense, but they are complaining because they had paid my fee 12/22; this is the only plan I have that the excess probably will not be paid as an administrative expense. To whom would the excess be reallocated, those that were paid after 12/31/22 or all participants of the plan that were paid out.

Thanks for the very concise answer and , exactly what we were looking for.

Yes, but my original question related to a non-REA profit sharing plan. In that case, would spousal consent be required if the distribution was over $5,000. I surmise that if the plan is not a plan subjected as a REA safe harbor, even if the distribution was over $5,000 no spousal consent require.

Agree.

Thanks, wasn't sure if the >$5k applied here

If a profit sharing or 401(k) is a REA safe harbor, and therefore does not require spousal consent, is consent nevertheless required if the distribution is greater than $5,000

Coming from an insurance company pension department, if a profit sharing plan was funded with individual bundled annuity contracts and a participant terminated employment and wanted to keep the same underlying investments, it was advised to change the ownership from the XYZ profit sharing plan to the individual and the beneficiary to a non-plan beneficiary. Plan does not require spousal consent regardless of over $5000. Insurance company, of course, told the plan trustee no 1099 required as this is a rollover, even though same contract. We all know insurance company personnel can be and usually are giving out wrong information and IRS requires 1099s for any money leaving the plan, whether rolovrr or cash distribution with withholding. Question, is this transaction truly a "rollover". I am inclined toward a "yes" and the participant is due a 1099, code G for rollover.

Hi, I think we've met. I do have a couple of summaries, but do not believe they fully answered my questions. You can email me - steve@thepensionmaven.com

We have client that sponsors both a cash balance and 401(k) safe harbor. A participant terminated in 2019 and was paid from both plans in 2020 and receive distributions of the entire account(s). She has subsequently returned 6/17/2022. Since less than 5 years, she enters both plans on her date of rehire. She was FT when she quit, returned PT. I seem to remember "once a participant, always a participant" so it is irrelevant she is now PT and must receive the safe harbor based on W-2. Cash balance accrual is 1,000 hours. Even though she may not have worked the 1,000 hrs, the question is, does she re-enter the cash balance plan and is entitled to receive the "hypothetical allocation"? of course, the client tells me yesterday they will not be filing an extension and needs the contiubtio numbers today! (What else is new.)

Client just inquiring at this point, I do not know, but was going to wuestion. What if this was an HCE?

For some reason, the last salary deferral for a participant did not go through payroll. In an effort to get the contribution invested by 12/31, he wrote a personal check, which was then deposited into his account. How does one correct this???

This was brought up by another TPA. I believe they were speaking of employer contributions. I would have put each partner in his own group and had the one that was not contributing, contribute $0

Recently took over a safe harbor 401K with 5 partners, no NHCEs, each in his own grouping for allocation purposes. One of the partners wishes to contribute $0 and we were told by the previous TPA that if the partner did not contribute, he is not considered part of the plan and therefore could not have a contribution allocation of $0??

I'm not sure whether to post this in 401k, DB or this message board. We administer a combination 401k/new comp PS/ cash balance DB (non- PBGC) Accountant telling me another client sponsors same type of plan design, but his client is also doubling the max by contributing non-deductible as well. Unless I'm missing something here, aren't the non-deductible contributions considered Roth and therefore excess contributions??

Although 2x the paperwork, if the entry date of the plan are 1/1 and 7/1 and a participant will not be contributing right away, I will get them to sign an election form with 0% or $0. Since they are already participants and my doc says you can make a deferral change at any time, when they start contributing, we do another election for but mark it as a "change." This comes as a result of representing many clients at IRS audits.

Participant has been taking distributions for a few year based on the pre-2022 IRS Table. What does he do for 2022 and forward?

I represent many clients, even firms under audit that an accountant asks me to handle. Being in businessfor quite awhile, you kind of know how in depth the auditor will be. I try to review each of my plans proactively for compliance issues and attempt fix prior to an auditor finding an issue. 401(k) is the most blatant, and I try to get rid of those that are 80/20s by either plain firing or 2x my annual fee. I'm an ERPA(I believe there are only 1,000), use 2848 on each audit; even on the prior ERPA days as an "unenrolled tax preparer( and never had a problem) Obviously, audits are extremely time consuming, I bill hourly at 1.5x my hourly rate, some complain, but I stress the fee is worth more than gold in order to obtain a "no change" from IRS. Some "complain" but I reiterate We did get them a "no change".