Belgarath

Just bumping this up - now that we've all been filing forms for 2023, any thoughts now?

All great advice. I'll also mention ERISApedia. A great resource, with some outstanding bells and whistles available. Furthermore, the knowledge and generosity of their time and expertise among the many participants on this board has helped me immeasurably over the years. While I'm at it, yet another thanks to Dave and Lois Baker for doing such a great job in providing this forum!

Probably not a CG. But remember, even though there is no family attribution from siblings, there could be, for example, certain options to purchase some or all of the other 21%, that would count as "ownership" for these purposes. Most CG determinations frankly don't seem to take into account such intricacies, which is why we always advise clients to seek legal/tax counsel before making the determination. Or at least do a deeper dive into the rules. P.S. I just read another post of yours where Cuse makes the exact same point with regard to options.

Thank you!

So if an employer with a 401(k) or 403(b) signs on with a PEP mid-year, I assume when the employer's plan is merged into the PEP, there is no required nondiscrimination testing for the period prior to the merger - in other words, the coverage/nondiscrimination testing is performed for for the entire year, and would be done by the PEP provider?

Employer A sponsors safe harbor plan. Employer B sponsors non-safe harbor plan. B purchases 100% of the stock of A, mid-year. Wants to merge plans more or less immediately. Since 1.401(k)-5 dealing with mergers, etc., is "reserved" there's no solid guidance on this subject. Given that, do you think it is permissible, since plan A uses the "maybe not" notice, to do the merger if the 30-day advance eliminating the Safe Harbor notice is used? Is it permissible to use less than 30 days (I can't really find any support for this, but maybe I'm missing something. Of course, the purchasing employer, in its merger documents and its plan, would have to address all the coverage, nondiscrimination, protected benefits issues, etc. Both plans are calendar year. We are the TPA for plan A, and naturally, we weren't told about this in advance, nor did the purchase and sale agreement address ANY employee benefit plan issues. Classic... Appreciate any thoughts. edited typo... And yet another edit - apparently all employees of A have already been moved to B - no further pay from A will be made. And B's plan was already amended to allow immediate eligibility for A's former employees. So a 30 day advance notice ain't possible. It doesn't seem reasonable that in such a merger/acquisition situation that A's safe harbor would be blown and ADP testing required, but again, no firm guidance...

That's current. I'm assuming, of course, that it is an IRS pre-approved document. The new restatement cycle is fast approaching - without double-checking, I believe it opens in January.

Suppose you have no common law employees and 3 unequal partners, and the theoretical "cost" for each of the partners is $50,000, $75,000, and $150,000. I'm not a DB person, but I seem to remember from a VERY distant past that the "default" is that the total cost is allocated to each partner in proportion the her/his partnership interest, but that this can be modified if there is a special allocation formula in the partnership agreement that provides a different result. Is that still true (if indeed it was ever true)? And if true, can it be modified each year as necessary due to changing demographics? Muchas Gracias.

Question - have you ever had a SAR filing date questioned by a regulatory authority or their auditor/investigator? I frankly can't imagine this being an issue in this situation. Wouldn't cause me any sleepless nights, at least...😁

Thanks Carol. I just love my job!!!

I haven't ever encountered an actual question on this. Most of the pre-approved documents I've seen contain a provision that "Reclassified employees" are excluded for employer contributions (but not for deferrals unless it is a Church) UNLESS the employer elects, either in the AA or in an Appendix, to INCLUDE one or more categories of "Reclassified employees." My assumption is that such employees are excluded, but not EXCLUDABLE for coverage testing, etc. Agree/disagree? I have some vague memory that these provisions were instituted due to Microsoft or similar situations, where employees who were treated as independent contractors subsequently were determined to be common law employees.

I love #3! As to #1, do you often see the plans maintained separately, then they merge as of the beginning of the next plan year? (Say, 1/1/2025) Seems kind of late to merge currently. Thanks.

So, corporation A purchases 100% of corporation B in a stock sale. Both corporations sponsor a 401(k) plan. 2 weeks after the sale, they now decide to look at the plan issues. So, clearly a controlled group now. Corporation A crediting service with Corporation B, etc., etc. Corporation A wants to now terminate Corporation B plan. But this brings in successor plan rule. How is this mess typically dealt with?

Many people here must be old enough to remember Readers Digest condensed books. That's what we need for the continuing barrage of Statutes, DOL and IRS regulation, etc.!

Thanks.

Not actually a 5500 question - is there any penalty relief program for late or non-filing of the 8955-SSA for ESOP plans, similar to the programs for late 5500 forms? Nope. 22. Is there a delinquent filer program for late filers of Form 8955-SSA? There is no delinquent filer program where only the Form 8955-SSA (or schedule SSA) is delinquent. Notice 2014-35, however, provides penalty relief in cases where the Form 5500 series return is also delinquent and the filer is eligible for and satisfies the requirements of the Department of Labor's Delinquent Filer Voluntary Compliance Program. See IRS Penalty Relief for DOL DFVC Filers of Late Annual Reports. Return to top P.S. it appears that no SSA reporting would be required for participants in pay status - e.g. receiving payments over 5 years, etc. - but I'm not aware of any dispensation for not filing the form if, for example, they must have a 5-year break in service, or reach age 65, etc..., or if a participant elects to postpone distributions.

Although I think the probability is vanishingly small, relying solely on the new comparability could bring top heavy into play where it MIGHT not be otherwise. Just a thought...

At least some pre-approved documents provide for an "other" election for excluding participants from the Safe Harbor contribution, where they specify that it must be "an HCE, or" ............... so I don't see any prohibition about specifically naming an HCE as excluded. But I'll ask this - why? Given that documents can provide complete flexibility to exclude all HCE's, but make a "discretionary" Safe Harbor to "any or all" HCE's - what would be the point of limiting the flexibility by specifically naming one HCE?

Thanks. I thought about this last night, as it had a chance to percolate a bit in my so-called brain, and that's what I came up with as well. I appreciate the confirmation!!

Thanks again.

Thanks!

Hi Peter, thanks for the suggestion, but that aspect has unfortunately already been investigated, and rejected. I probably should have mentioned that in the original post, sorry.

IRS Notice 2024-2, Section G, Q&A-7 re Section 332 of SECURE 2.0, provides the following: When the SIMPLE IRA plan is replaced by the safe harbor section 401(k) plan mid-year, the total amount that may be contributed as salary reduction contributions under the terminated SIMPLE IRA plan and as elective contributions under the safe harbor section 401(k) plan may not exceed the weighted average of the salary reduction contribution and elective contribution limits for each of those plans (weighted by how many of the 365 days in the transition year each plan was in effect). Thus, the total amount that may be contributed as elective contributions to the safe harbor section 401(k) plan is equal to: (1) The annual limit on salary reduction contributions under a SIMPLE IRA plan for the year (taking into account catch-up contributions described in section 414(v)), multiplied by a fraction equal to the number of days the SIMPLE IRA plan was in effect for that year divided by 365, plus (2) The annual limit on elective contributions under a section 401(k) plan for the year, under section 402(g), multiplied by a fraction equal to the number of days the safe harbor plan was in effect for that year divided by 365, minus (3) Any salary reduction contributions under the SIMPLE IRA plan for the year. (1) above specifically includes catch-up contributions under 414(v) in the calculation, whereas (2) does not. Does this mean the fraction in (2) is only taking into account the $23,000 limit, and not including the $7,500 catch-up? That's how I read it, although it doesn't make sense to me...

Interesting situation. An ERISA 403(b) plan - large plan, audited - was treated as a controlled group/affiliated services group for several years, when in fact, it was not - it was a MEP. 5500 forms did NOT have the MEP attachment. If amended forms are filed with the MEP attachment, would that require a new audit? It seems unreasonable, as nothing changes except the attachment detailing the breakdown of the assets between the participating employers - total assets, participant counts, etc., remain the same. Anyone ever encountered this?

Interesting line of thought.