TPApril

Auto enrollment is set to 3%. Participant who had opted out and never deferred is rehired. I can't seem to find this in the Plan Doc. Would they need to opt out again, or would the original opt out still stand? Not sure to what extend number of breaks in service would affect this.

Is there any reason a participant who has been 'temporarily laid off" is eligible for a distribution? I don't know the company's definition of 'temporarily' but he was apparently told he can take a distribution, but I feel like employee is not truly terminated.

Slightly related. Plan sponsor requested the transmission of their contribution on the funding deadline of 9/15. Trust reporting recorded it on 9/16. I'm thinking we can still treat it as having been deposited timely, ie by 9/15?

Good question, but it would seem that EZ's are private in part because they indicate an eoy balance wholly attributable to the owner, which would be the case here.

Beginning of Plan Year had 2 participants, 1 owner, and 1 terminated employee. Terminated employee took a full distribution during the year, so that.. End of the Year has owner only and can now file Form 5500-EZ, except.. Assets are under $250,000. I think better off the plan files 5500-ez anyway but never encountered this situation before.

I'm just curious if anyone has had a 5500-EZ filer who was required to file electronically because they have at least 10 electronic returns (as my understanding effective 1/1/24)? Does the IRS actually check this?

I simply cannot remember my resource as it is a number of years, or maybe it's just the 5500 instructions themselves, but I had understood that the Characteristic Code 4L was for Business Travel Death Benefits and that AD&D uses 4Q for Other Benefits. I'm curious how other professionals record that?

For some reason, a plan has allowed a lower paid participant to contribute Voluntary After Tax instead of as Roth 401(k). Annual contributions are around $1,000. I can't seem to think of a reason why this would be better for the participant. Aside from that, Voluntary After Tax Contributions are not even in the Plan Document, so I'm wondering if it's an oversight and they can be reclassified at the recordkeeper as Roth Contributions.

Thank you very much! To answer your question of why the DOL Calculator was not used - the calculations were performed by the bundled recordkeeper a few years ago, and only recently presented to an outside consultant to have a VFCP prepared for the plan.

I'm curious how much detail EBSA requires on a VFCP application for Lost Earnings? Whereas we have individual amounts that were calculated by the recordkeeper for each period, the recordkeeper will not provide their actual calculation, ie how they calculated it. Per application requirements, is it sufficient to just submit the individual lost earnings amounts that were deposited for each late contribution, or do we need more than that?

One-person plan has annuities in his plan. He has beneficiaries designated for the plan (his children). However the annuity company is asking for a beneficiary for their records. I'm unsure, is the Plan the beneficiary, so that the Plan can receive the proceeds and then distribute the assets upon death? Or do the annuities designate the children specifically since that is who is ultimately getting the proceeds?

In prior year, terminated plan paid out all participants, but apparently there is a remaining forfeiture account that had to do with incorrect contributions to participants (not due to unvested participants). Recordkeeper/TPA was supposed to use that forfeiture account to pay for closing fees. Fast forward 9 months later and that forfeiture account is still sitting in the trust, when the intent was to file a final 5500 for that prior year. Seems like 5500 is to be filed showing zero participants but with a balance, but I just don't know.

New plan being set up. The EIN request was submitted and granted with an old address. Having never been used yet, is it a big deal to just forget the first EIN and get a new one? Or file form 8822b to correct the address?

No 5558 was filed for a calendar year plan. Their corporate taxes were extended and are due 9/15. I've never had a calendar year plan 5500 due on 9/15 but it would seem like that fits the definition of the Automatic Extension?

This is a legacy plan with a set of long time partners. One partner has an LLC investment that pays out dividends, but the K-1 has shown a negative balance for two years now, with the most recent year even more negative. Not sure how to treat this for calculation of total assets in the plan?

401(k) and corporate plan years end on 6/30. Plan fails ADP Test and excess contributions will be returned (w/earnings). What I'm unclear, and we do not share accounting advice as it is, but do those contributions still get treated as plan year 401(k) for corporate tax purposes?

Participant is under age 59 1/2 and has less than 5 years in the Plan. Participant took a hardship withdrawal and Plan Sponsor created 1099-R's splitting the h/s between both 401(k) and Roth. Plan Sponsor did not realize earnings on the Roth portion are taxable and they didn't calculate a taxable amount on the earnings of the Roth that were allocated to the H/S. They are asking now, after the fact, if the Roth portion of the H/S can be treated fully as basis. I looked in the Plan Doc but couldn't find that it specifies. It only says that a Plan Admin can choose how to order the money types. They chose to go prorata, and yes they are informing the TPA just now about this from last year.

okay maybe it's a silly question. Terminated participant receiving RMD's passed away with no surviving spouse. His daughter is handling his affairs but was never specifically set up as a beneficiary. Can she be treated as a Designated Beneficiary? fwiw, the account balance is under $1,000.

When running the ADP test, I recall it's easier to switch from prior to current year testing than vice versa. I also recall that it must be done by end of the plan year. I'm curious if there are options to change it from prior to current after the end of the plan year?

Brian - thanks! Revisiting this, since the wrap plan effective date is 1/1, we are treating opening counts for these prior individual filings as a 0 and no benefit arrangements.

Plan is wrapping all benefits into one new wrap plan 5500. So closing out the prior plan filings - it is unclear to me - since they no longer have benefits at eoy, I'm thinking we uncheck Insurance under Plan Funding/Benefit arrangements and just have General assets of the sponsor checked?

I resisted this for many years but finally realized for some of the smaller (and oftentimes older) clients, it's just easier. For clarification, because my original comment was poorly written - I always get the actual signature on the 5500-SF or -EZ. What I meant to more clearly refer to in my comment/question was the Authorization statement - all plan sponsors are required to sign such an authorization which is separate from the actual 5500 signature. I was just curious if, after all these years of e-signing and a transition of so much communication as electronic, if there was a trend towards simplifying that second signature?

So I'm in need of an electrician and my business happens to have an electrician as a client. What is a best practice protocol? I'm not interested in getting any kind of discount so I hesitate to inform the owner that I'm reaching out to their business for fear they might offer a special rate. But I worry that best practice is I should let them know first.

Just curious - for those 5500's we file, we always request a written signature on an annual basis to file 5500's on behalf of Plan Sponsors (we only do this for the super small plans). Generally, they email a pdf with the signature. Has anyone transitioned to getting this authorization by email only? ie. have the plan sponsor respond yes by email without a wet signature?

Ultimately we are eating our own fees on this and having them send it over to an IRA.