TPApril

HR noticed they missed paying an ee a few vacation days in a paycheck a few months ago. In correcting this missed salary, would the 401(k) be considered late and require lost earnings, even though the 401(k) is being deferred, withheld and deposited at time of actual payment of the portion of the salary that is late?

Thanks! All that being said, have you seen in practice a 5558 trigger an audit, and if so, within just a couple months of filing the 5558?

Plan Sponsor of HW plan has never filed 5500 and is preparing all past years with intention to submit to DFVC. They have asked that 5558 not be filed for most recent year because it could trigger an alert to the IRS that they are not filing and they could be penalized. Both their broker and CPA have advised them this. I'm just curious if anyone has ever seen this happen (ie, is there any connection between the dept. that receives the paper 5558's and the audit departments?), and if so, within what time period? Because there are many years, it would not reduce the DFVC penalty, but I like the idea of having one less year be late.

Welfare Plan, covering a division of larger employer, terminated on 12/31/16 and brought into the larger plan effective 1/1/17, according to the plan resolutions. So at 12/31/16 there were participants in the original plan but at 1/1/17 there were none. Is this how to finalize the 5500 - For 2016 include all Schedule A's to show premiums, commissions, etc., but show zero participants? If they file a 2017 5500, the beg of yr count is zero.

Thank you. Recordkeeper says their dates reflect date received. I don't visualize asking ER for their bank records back to 2011 as the only other way to document.

Thank you for your comments. Belgarath - I thought one of the proposals (effective 2020?) was to change the definition of 'large plan', that's what I'm referring to. BG5150 - yes to other compliance issues, including a missed plan document restatement. None of the issues you list have popped up as this plan is in place more for employees than owners who have not historically contributed. RatherBeGolfing - I would love to use the mailing date, but all I have is the check date, unable to verify when the checks were mailed. If we do use check date, delinquent contributions are cut in half. Plan Sponsor says recordkeeper 'took forever to deposit the checks'.

Thank you that's excellent advice and I will take it (I recognizing you are offering an opinion). One more comment on the plan - it's the type of plan that will benefit if they change the definition of large plan to participants with account balances. Large number of low paid staff who had made eligibility, very low participation rates. Oh, one more comment, until very recently they were mailing in their contribution checks instead of uploading online.

Takeover plan was being done in house (no tpa). Reviewing 401(k) deposits back to 2011 (2010 5500 is last to report delinquent contributions). 2011-2013 as large plan did not file audit report, and will not pay for audit report now In 2014 plan went from large to small Average delay from payroll date to deposit date from 2011-2013 is 35 days, though one time they deposited in 6 days. Contemplating the following: -how many years to review? to 2011, or back 3 years? -apply small plan safe harbor of 7 days to analyze large plan timing, or apply 6 days or 35 days or until 15th of following month for that period? A thought would be appreciated:)

Belgarath - thanks, i should have added more info - plan is fully insured and over 100 covered employees, and in one of the 50 states.

Any reason a medical plan offered through a non profit (nongovernmental, nonreligious) association would not be considered a Plan Sponsor and therefore be required to file Form 5500? Association in question is unhappy at the $4,000 DFVC penalty and would rather do nothing. Yes the potential consequences have been explained.

thinking about it, I guess they wouldn't need to file if it's self insured, no trust set up.

I don't believe so, but not really sure

When a medical insurance company provides its own insurance to its own employees, would that be considered Self Funded to the extent they would not file a Schedule A on their medical plan 5500? Should they be filing a Schedule C?

What general approach would you take - Plan sponsor always files timely, then they miss one year, notice it and file. Then after filing they receive penalty notice. Choices are amend filing for DFVC and then pay $750 provide a detailed letter explaining why you couldn't file timely and asking for complete removal of late penalty my approach beforehand woulda been to file as dfvc from the get go but that's another item.

I seem to be more familiar with new plans allowing for immediate participation for existing employees. Assuming there are over 100 participants on that initial start date of the plan, then, assuming plan year is over 7 months, my understanding is that an audit needs to be performed.

What did you ever conclude?

Plan Sponsor has asked for 2 employer contribution types, with similar eligibility, as follows: Individual rate groups - this would be immediately vested prorata allocation - this would be subject to a vesting schedule There are no HCE or key employees receiving contributions. Contemplating plan design options, but not sure I'm seeing it in the volume submitter document we're setting it up with. Is it as simple as setting the first contribution as a QNEC?

Plan is a mess. 5 years ago, while dealing w/downturn, company released auditor & TPA as they wanted to maintain plan but needed to reduce costs. For 1st 2 yrs count was btwn 100-120, so they filed as large but no audit. They then went < 100. All this time, they reported no delinquent 401(k) contributions, in spite, as we have found, many. They want in good faith to clean up the plan, pay lost earnings, submit VFCP, amend last 3 year 5500's (small plan years). But they refuse to pay for auditor to audit those 2 years (2011-2012). We have explained that the VFCP will include those years and we've explained risks. Just contemplating next steps but wondering if anyone has any thoughts.

On the one hand, yes it's cringy...on the other hand, VCP's such as the one we are indeed doing for said plan do bring in extra revenue....and keep us on our toes with compliance issues...

Let's just say it all sounds easier said than done. Am I curious to know why it doesn't reconcile? You better believe it. Yes I've exhausted every type of reconciliation item I can think of and a number of hours I won't be billing them for. This particular takeover plan was doing it in house and former employee tasked with the 5500 did not leave records. Yes I have looked for potential fraudulent transactions. My inquiry above may seem simple, but I've always managed to reconcile every other account over a good number of years and have never had to proceed as such. It's actually a good case study of why 5500's are best left to professionals.

tpa firm cannot reconcile 5500 with prior year's trust on a new account. thinking to file current 5500 with actual opening balance, which would not match prior year's 5500 closing balance, and also without amending prior year's 5500 since cannot reconcile that year's opening balance as well. curious of other best approach practices to this scenario?

While I don't recall our source or reasoning for determining this practice, as regards to late H&W plan 5500s, we typically send out only the past 3 SAR's, and even then, we don't ask the sponsor to reconcile who receives them but have them send it out to the recipients of the most recent 5500.

Nope, came out of company general account

On this same line of thought on a plan with immediate entry for 401k and then 1 year wait / mid-year entry for match, say the plan used compensation from date of participation, would the 401(k) used to calculate the match also be from date of match participation, or rather from the beginning of the year?

That's where I'm not clear. Their W-2 pay included the dollar amount of the gift (with tax), and there was also 401(k), but they received the full amount of the gift, and also the 401(k).