TPApril

Paul - thanks much for your thoughtful time. fwiw - we were not involved with the plan when this happened, so everything described happened historically and is one of the reasons they are no longer with both the prior TPA and recordkeeper. We are currently reviewing what did happen and anything that may still need to happen, including possibly correcting 5500s. nonetheless, because the extra 401k was never withheld from paychecks, it did not affect their w2 at all. when it was taken out, it was returned to ER with related earnings. it was recorded btw as negative 401k transactions so that on an accrued basis the correct amounts would show. part of our challenge is that this spanned two plan years, so there is no clean zeroing out. question is for those who did receive distributions (they took their full account balance which included the erroneous deposit) - these distributions were shown in full on the Benefits Paid line for the second year. For the first year then maybe Other Contributions makes sense, but it was so arbitrary, wondering if a QNEC needs to be made for everyone else after all. this btw is only the beginning of the problems related to the negligence of the original TPA's, which we had no clue when we took over.

Ok, so always something new, at least for me.... In the last month of the plan year, the payroll company correctly withheld 401k from paychecks, but deposited a multiple of 2 payroll withholdings into the participant accounts. This was discovered during the next plan year and pulled out of participant accounts. No 1099-R was issued since it was not a distribution. However, some participants took distributions before this was corrected. Due to the relatively small amounts, the Employer will not be asking for the money to be returned. This leads to 2 initial questions: How to show this on the 5500, I'm thinking: Year 1: instead of Employee contributions, show as 'Other Income'? Year 2: Show as 'Admin Expenses - Other'? For those who took distributions - show their extra deposited amounts instead in Year 1 as an 'Employer Contribution' instead of 'Other Income'? (treating this as Non Elective Contributions may lead to other issues, but still contemplating that).

I'm curious if the CPA firms that prepare the financial statements for large plans have a standard determination of when a deposit of 401(k) contributions is late. ie 7 business days after payroll or the 15th business day of the following month? Also, ever seen a company get away with the excuse, I mean reason, that the new recordkeeper didn't get set up so there was no way to submit the first few months of payroll until much later?

Participant pay in 2021 means Participant is HCE in 2022. Participant terminates 12/31/22 with pay $3,000 below HCE limit for 2022 Participant receives last paycheck in 2023 for $5,000 (ie $2,000 over HCE determination for 2022). Pay definition is W-2 so final paycheck not included for plan purposes. Our conclusion is to include Participant in 2023 ADP test as NHCE but wondering of other thoughts?

Is there a new option to contact someone at the DOL that you are working on putting together past 5500's, including this past year, and submit them all together at one time? CPA seems to think there is. I don't think I missed something, or did I?

So...with further review, it has been determined that an additional contribution to NHCE's would reflect 0.004%, totaling $97 shared among about 60 participants, many of whom have already taken distributions. I'm thinking leave in the additional (de minimis) contribution (which does not violate 415 limit), consider rounding to 4 decimal points and it's a zero and that's that, with no additional NHCE contribution and no mistake of fact not allowed withdrawal.

Yes that is correct! In fact, this represents 0.012% of their pay. With everything they have gone through accounting wise with the close of business and allocating costs among the various players, I anticipate they absolutely do not want to make an additional contribution.

ahhh...relevant questions.... contribution just made last week. The plan is based on an old school arrangement with multiple single professionals sponsoring their own plans, all tested in combination with the employee plan. So the limit is that it must be no more than 9% so there will be no nonelective ER contributions to the staff (just safe harbor ER). Normally yes we would have applied it to current year, but the business closed last year and these are all final contributions. The plans will all be terminating.

This is for a 1-person plan. Owner overdeposited by < $50. PS amt needed to be exact due to certain limits. I'm thinking to just cut a check out of the plan to return it.

justanotheradmin - i did reference it as a DC plan in the original post. You ask good questions. This has always been a 1-person plan. Owner just made their last contribution, there will be no more. The investments are the same as it would be in an IRA because it is a self directed plan with one of the national investment firms. Should they terminate the plan, they will transfer it over in kind to the IRA.

There seems to be pushback by a recently retired sponsor of their own DC plan who has an unusually large account balance and does not want to terminate as recommended. They believe the funds and investments are safer under a retirement plan than an IRA.

It has been determined that 2 years ago, a plan failed the ADP test. The HCE (not an owner) terminated and already took a rollover distribution the following year, so it has been over a year since that distribution has been taken. Earnings have been calculated through date of distribution and an amended 1099-R will be issued. When they (hopefully) withdraw this non-taxable amount from their IRA, are their additional earnings that need to be calculated, or is this amount simply frozen in time at the date of the actual distribution?

Alas - I agree, but my firm is not actually working on the project, we've just been asked an opinion on what to put in that field. I don't expect the company to change statement source. They plan to show annual accrued benefit at NRA since this is an annual statement and they want to "look good". Point well taken :).

It's a traditional pension plan. What doesnt make sense to me is that the payroll provider's uneditable template adds up the year's safe harbor contribution plus profit sharing plus the entry for pension plan. That's why I wasn't considering lump sum as an option to begin with, but had contemplated a present value of the accrued benefit earned during the year, but even then, I don't care for that idea, particularly how to go with an appropriate interest rate. There was no intent to do a projected benefit as this is left to the periodic pension plan statements (and we do hold salary increase projection at 0%). Easiest approach might be total accrued benefit (payable at NRA), along with a separate statement explaining to ignore the sum of ER contributions + pension plan benefit. Also gotta deal with vested status.

Plan sponsor is preparing a total rewards statement showing what the employee's pay and benefits sum up to and doesn't know what to put down under the Pension plan line. Doesn't seem to make sense to put their accrued monthly benefit. I'm curious what other plan sponsors do? Put down the value of the accrued benefit earned in the year? put down the present value of the accrued benefit earned during the year paid as a benefit at normal retirement age?

I know the answer but just thought i'd throw it out there. company always deposits 401(k) on time. first 401k with new recordkeeper, despite best effort they couldn't get it through until past 7 business days. I think we still need to report it but I feel like it's a reasonable period due to circumstances

Just a curiosity. Plan had an extension filed, and lo and behold they filed 5500 by original due date, with form indicating 5558 had been filed. Not that this is a particularly important question, but would the SAR due date be 2 months after original due date, or after extended due date?

Thanks Paul! The Notice is brief. My next question is: File them as snapshots in time, or can we exclude participants who would be filed as both 'A' and 'D' during the period?

Interestingly, never had a late 8955-SSA alongside late 5500's filed under DFVC. Plan in question never filed a 5500 for 3 years. Last 2 years of that there were 8955-SSA's that needed to be filed. File them late? Or file one consolidated 8955-SSA along with current year?

Company buys another smaller company and keeps its operations separate with its own EIN. But all employees are in the owner company's medical and benefit plans. No specific joinder agreement was signed. Two options of how to treat: Continue filing as Single ER Make them sign a joinder agreement and identify as multiple ER plan, with the understanding that prior year is being signed as Multiple ER based on currently signed Joinder agreement

Great, so you agree there is only one filing - 5500-EZ and DFVC combined. Thanks!

First time filing under DFVC for an EZ. I recall with regular 5500's, you file the 5500 first, then file the DFVC request. Seems unclear with the instructions, other than that you cannot do an electronic filing to get DFVC relief. Mailing address for 5500: Department of the Treasury Internal Revenue Service Ogden, UT 84201-0020 Mailing address for 5500 under DFVC: Department of the Treasury 1973 Rulon White Blvd. Ogden, UT 84201 So unclear to me if there should be just the 1 DFVC filing, or a 5500 filing as well?

Company was purchased by another in October. Calendar year plan year for welfare benefit plans. It was a quick sale apparently with no contractual guidance on sponsorship of the benefits, but they continued through the end of the year (& actually still continue). They are planning to have the 5500 filed under the name of the original owner who contracted the insurance carriers file for the full plan year. Ever seen where they file a short plan year and close out the plan, and the new owner would take over the 5500 filing for the last few months for another short plan year? Or very simply show the new owner as the plan sponsor as of a 12/31 snapshot of the plan?

I don't think that's possible. Under these circumstances, the plan Sponsor always signs the 5500, so their signature is the confirmation they have reviewed it. Was just curious about the separate authorization form.

For authorization so file 5500 on behalf of clients, we get them to sign the authorization form every year. Is that necessary? Is one authorization good enough for future submissions?