pmacduff

I know this is basic but I'm just tired and burnt out... Dad owns 80% of company, two unrelated individuals own 10% each. Adult son works full-time for company - is Dad's 80% attributed to son?

This is a calendar year plan. It's a small CPA firm with only one or two partners over the years. Has a few employees currently but perhaps in the early years a return was not filed if it was a one person plan with assets under the cap? Then someone goes to file when assets exceed $250,000 and uses the current plan year date of 01/01/1998. All the Plan Document documentation definitely shows the plan effective date as 12/01/1988. It was originally an attorney drafted document (not that they needed one, it's a pretty simple plan with few provisions).

Here's an odd one - possible takeover plan. Plan Documents reflect a plan effective date of 12/01/1988. The 5500 forms going back at least until 2009 on EFAST show the plan effective date to be 01/01/1998. Can this be changed on the 5500-SF prospectively or should the past 5500 forms actually be amended? Thanks in advance.

Thanks all for your comments and insights. It seems as though adding the 5558 electronic filing option would be such an easy thing to do (heavy sigh) - I suppose that's why it's not in place yet !

Just wondering what others have experienced this year - We filed a few 5558 forms at the last minute (July 28th to be exact) and sent them via certified mail to the IRS address in Ogden, UT. (Historically, the USPS doesn't usually get a signature but we haven't had any issues and the USPS website eventually shows the package as delivered.) Anyway - this year when I use the certified mail tracking number it still shows as "moving through network" on the USPS tracking site. However it does show the mailing was received at the USPS Salt Lake City Distribution Center. Am I being overly concerned?

Thanks Lou. Ironically the Plan WAS formerly a multiple employer plan. All of the other entities dissolved and/or left, so the plan was restated as a single employer plan at that time. I think that then the second company came on around 2019, so correction would be for 2019, 2020, 2021, 2022 and now 2023. Not as bad as it could have been as you mention, though, since both pass testing and there is a participating employer agreement for that second company. However - I found some information online in reference to "if you were not in a controlled group but operated the plan as though you were....." it states that "because the plan doc would not have contained the proper MEP language you have both a plan doc failure and failure to operate according to plan terms - VCP should be filed." Company will be referred to ERISA counsel if they haven't already contacted them.

ok - try the link in my message -

I see one post from back in March of 2015 in the "Correction of Plan Defects" board that seems to lean toward saying it wouldn't remove the TH exemption. I'll see if I can come back and edit this post and insert the link.... https://benefitslink.com/boards/index.php?/topic/57083-401k-with-safe-harbor-match-makes-qnec-for-missed-defferal-opportunity/

yes - fortunately both plans are ok when tested separately. Thank you for the input.

Thanks CB. Both companies are in the same 401(k) plan, with Company #2 signed on as a participating employer. The plan isn't set up as a MEP and has been reported as a single employer plan. Trying to see what needs to be done in order for the client to straighten this out.

The first company is a fruit farm and the second company is a cold storage facility.

Here's the data: Company #1 owner A = 50%; owner B = 50% Company #2 same owner A = 25%; same owner B = 25%; owner C = 25%; owner D = 8%; owner E = 8%; owner F = 4%; owner F wife = 4% Owners A, B, D, E and F are brothers, owner C has no family relationship. Company #2 does 100% of it's work for Company #1 (no outside companies). Would this be an affiliated service group relationship or any other?

Thanks Paul. I did refer the auditors back to the vendor for explanation. Apparently it was explained to the auditors' satisfaction because we just got the final copy of the financials for last year and can have the client file ! I consider myself pretty good with math, so another part of this was my wanting to understand how the vendor arrived at the payout & forfeiture amounts. I could not make heads or tails of the amounts, even accounting for the coronavirus distributions.

The participant gets the larger of the two calculations per those top heavy rules. Plus what Lou said.

Here's a odd one for this afternoon - We are TPA on a plan that requires the independent audit report for the 5500 due to size. The plan is with a large recognized national 401k vendor. The auditors are currently doing a review of selected participant distributions. They were unable to match the amounts forfeited on two individuals based on the vesting so of course came to me for explanation. I also could not match the amounts that were paid out/forfeited so I checked both my system and the participant hard copy distribution form. Both of those reflect the proper vested percentage for each participant. I then went to the vendor for explanation as to how the vested percentage was computed. In both cases the participants had taken a Coronavirus withdrawal back in 2020 and the vendor is telling me that affected the final payment and subsequently the forfeitures for each participant. That would indicate to me that a portion of the Coronavirus distribution was made from non-vested funds. We're not talking about a lot of money here because this particular client limited the CVD to $3,450 per participant. Both participants had deferral accounts and for one of them the vendor didn't even take 100% of the deferral account before taking from the Employer sources. It's pretty confusing to me anyway. Ultimately I guess my question is - I was unaware that it was even allowed at the time to take non-vested funds as part of the CVD distributions. Does anyone know if this was a thing? Thanks in advance!

Yes that's my understanding too - total participants with account balances as of 01/01/2023 (for a calendar year plan) will determine whether or not an audit is required for the 2023 plan year.

That you for the response, greatly appreciated!

Thanks Lou - that was my thinking as well.

I need to be sure that my thinking is correct on this situation: Plan fails 2021 ACP test. A refund of match is made to the HCE in February 2022. Participant account lost money for the 2021 plan year. Refund to HCE is made timely and net of losses. Well known national 401k vendor prepares 2022 1099-R form, boxes 1 and 2a are the same amount and equal the gross amount of the refund and not the net amount that the participant received after losses. Is that the correct way to do the 1099-R form? For example, I always understood that had there been earnings on the account, the participant would have received a 1099-R form for the gross distribution (including gains) as long as it was timely distributed. Therefore if there are losses on a timely distributed refund, the 1099-R form should reflect the actual distribution amount after the losses are applied. Am I incorrect or missing something - or was this 1099-R improperly prepared? TIA for any comments.

When you run your profit sharing transaction - select the new VOYA profit share source account (assuming that's where the contribution will go?). I think the transaction doesn't know which investment to use and if you don't have investment elections in each individual participant account, the transaction won't run because it doesn't know which investment to use. As to the transfer - if you have the managed accounts brought up to date in Relius as of "x" date, then you should be able to do a transfer transaction by account and move 100% of the managed to VOYA. As long as your pooled accounts were tracked by source, it's not really any different that a client moving from one investment platform to another (i.e. Empower to VOYA or American Funds to VOYA, etc.). I hope this is helpful.

Bumping this forward again...too easy or too hard????? Hello All - I'm sure this is a very easy question but I need clarification for my elderly brain. [Calendar Basic 401(k) safe harbor match plan. - 1 YOS, age21, quarterly entry.] Large portion of client's work force is seasonal (work, term, rehire) so of course we are tracking them for LTPT eligibility. Here is my question: Employee works over 500 hours in 2021. Terms in 2021. Rehired in 2022 and works over 500. This person has 2 years of eligibility credits toward LTPT service, correct? Different employee works over 500 in 2021, terms, rehires in 2022 but not over 500. This person's LTPT service counting can start over since the consecutive PY cycle is broken, is that right? I'm getting myself confused on those who term as well as the whole "consecutive" idea. Thanks in advance for any comments.

my two cents - sometimes the cost of maintaining two separate plans will rival the cost of an audit on one plan anyway..... (i.e. administration, reports, plan docs, etc.)

Correct - the "final filing" box is not yet checked; that will be on the 2023 return. Thank you for the input!

I'm sure this is easy but want to confirm anyway - 5500-SF filer - pooled fund plan - termed 10/31/2022. Participants were notified and paid out/rolled over in late December. Plan has a very small balance at the end of 2022 due to residual earnings that will be disbursed to participants in early 2023. As far as Part VII; question 13 - 13a is "yes" and "0.00" reverted - I assume that for 13b "Were all the plan assets distributed..." the answer is "no" because the final residual payouts have not yet been completed? It strikes me that answering "no" might create issues although I can't for sure say why I think that. Reading to much into it I suppose - i.e. you termed the plan but didn't pay out yet? why is that? Of course that question will be marked "yes" on the final 2023 filing.

Yeah - I'm with Lou - I don't think you can cancel those but can file an amended form.