justanotheradmin

Looks like it is signed? https://www.cnn.com/2022/12/29/politics/joe-biden-omnibus/index.html

I don't know how many sole props would want a short plan year for 2022. For example, if it is signed today, a sole prop would need a short plan year from 12/30/2022 - 12/31/2022 to utilize that provision for 2022. From a practical perspective (depending on the plan's definition of compensation) I don't think it will be useful. As others mentioned, this is really going to be a provision used in 2024 for 2023 plan years.

Generally yes, lost earnings on any corrective amount is required. See Revenue Procedure 2021-30. More information is needed if you have questions about calculating the QNEC for the missed deferrals and the missed safe harbor match amount. Revenue Procedure 2021-30 https://www.irs.gov/pub/irs-drop/rp-21-30.pdf Additional information can be found here: https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide

Hi Folks! I know that in some cases attribution through a retirement plan trust is blocked for purposes of determining HCE and Key status. Is the same true for determining 5% owner status for purposes of an RMD? If that's not the right question please let me know. ROBS plan - the participant turned 72 in the second half of 2022. Their account of course holds the employer stock. they are very much an active employee. I'm thinking the constructive ownership of §318 applies and an RMD is required. But I'm wondering if I'm missing something. Can anyone confirm or deny?

The original entities would still be a single employer for plan purposes. Just because unrelated employers are added doesn't change the original entities from a single employer to a closed MEP. Sounds like you originally had a single employer plan. and now you have a single employer(comprised of the original entities) plus a bunch of new entities that make it an open MEP.

Thanks for the responses to let me know I'm not off my rocker. I'd rather not name names. I don't know if the action is limited to a specific salesperson or is a broader issue for that entire company. So far the e-mails I've seen are all from a specific sales person in a specific region of the country. I did think of the ASPPA ethics angle, but from what I can tell the salesperson doesn't belong to any industry organizations or licensing organizations. So I don't have anywhere to report them. They are not an insurance company, but that is a really great thought. I'm not sure we have the same kind of clients. I know there is a place in the market for most every kind of service provider, but our style of service and fees are very different from this particular bundled provider. So I don't think it's where we typically would look for new business. I'm not opposed to data mining per se. Companies data mine 5500s all the time. I've seen evidence of it on other solicitations over the years. But using it to blatantly lie about their 5500, and throwing us under the bus while they are at it crosses a line.

My apologies if someone else has already brought this up on one of the boards. If so, please redirect me there. Have other people encountered this recently? What are your thoughts? This past week several of our clients have received e-mails from a large bundled provider attempting to drum up business. (we are a traditional TPA) The e-mail states in part "Your TPA is filing your 5500 wrong" and then goes on to explain that Lines 10e and 8f MUST match, and that they are opening themselves up to audit and penalties from the DOL. The e-mails have screenshots of the two lines from their most recent filed Form 5500-SF. I was outraged when I saw the e-mails. I'm just wondering if my outrage is a bit displaced, or perhaps a disproportionate response, because like many folks we are really really focused on getting everything done by 10/17 and things that I would typically be able to shrug off are getting under my skin. Clearly this has bothered me enough to make a post. Thoughts?

Can I tag onto this question? If the union and non-union plans are not permissively aggregated - and someone changes status during the year, and immediately enters the non-union plan. is the Top Heavy minimum to that employee based on only non-union compensation? Or full year compensation including compensation earned during the early part of the year when they were covered by the collective bargaining agreement?

If you know the employer's EIN you may be able to check here to see if there is a Form 5500 for a retirement plan https://www.efast.dol.gov/portal/app/disseminatePublic?execution=e1s1 You would input the EIN (without dashes). It is possible to search by name, but I find the results are less consistent. Absence of a Form 5500 doesn't necessarily mean they don't have a 401(k) plan, as there are a variety of reasons why it might not show up, but if there is one listed, you should be able to request a copy of the summary plan description(ask in writing). If they don't give you one, you should ask why - usually the only reason would be if you aren't an eligible participant.

Why a 4/1 start date? Best practice is to give the employees 30 day notice, even if it isn't technically required for a new start up plan. I'm guessing you want the Safe Harbor Match formula to be calculated on an annual basis and not per payroll basis if you are wanting the full income counted. But I would make the safe harbor match start date as 1/1/2021 even if the deferral start date is 4/1/2021.

Like the others have said - you are overthinking it. With each person in their own group, as long as the tests pass you can give each person a custom amount. If you decide one year that you really like the employees with purple hair, and those are the ones who get the $$ then that's what you do. In a different year if you decide you really like the the employees who drive hatchbacks, and those are the ones that you want to give $$, then that's what you do. In another year, if you decide you really like all the employees name DAVE, and want to give them $$, then you do! It's really that simple.

In reading your post there seem to be several questions - Are deferral elections (your 20%) applied on compensation net of tips? There should be something in writing, so that if they are, the participant can adjust their requested deferral accordingly. Are deferral elections applied on compensation net of withheld taxes? This would be VERY unusual, but I suppose it could be case. Again, something should be in writing that they can provide to you. What compensation is required to be considered when calculating the match? I suggest asking them for a few things - ask in writing, and keep a copy of your written request. 1. Copy of the deferral election form (or website screenshot if an online portal is used) where it states that deferrals are not taken from tips, and are calculated after taxes are withheld. Or any other written notice that states this 2. Copy of the summary plan description, and safe harbor match notice (if your match is safe harbor). This should state if tips are excluded from the match calculation or not. It's not unusual for tips to be excluded from deferrals. But that should be stated somewhere, in writing. If that is the case, you would typically need to make a higher deferral election on your non-tip compensation so that overall your deferrals are what you want them to be. In your case 30% or 40% as the case may be.

Is the employer contribution subject to a vesting schedule? Assuming the contribution is allocated correctly - in proportion to compensation - how much would the daughter actually get to keep when vesting is applied? If there are forfeitures, the forf amounts might be available next year, depending on the document provisions. Edit: Assuming the daughter is terminated and is taking a distribution of course.

What type of entity is the sponsor? C-Corporation? S-corporation? LLC - with an S Corp election? LLC taxed as a Partnership / Sole Prop? Something else? If it is an S-Corporation, LLC with an S-Corporation, or C Corporation - the owner's "draws" would be regular profit or perhaps equity payments, but in any case would not earned income for plan purposes. They would need W-2 based compensation in order to keep having contributions to the plan. If the sponsor is an LLC taxed as a partnership, or something else with self-employment earned income - I'd ask the accountant for make sure the person has actual earned compensation. The term "draws" is sometimes used loosely, and doesn't always mean the person had actual earned income, even though they received money from the business. I'd check with the CPA if you are unsure about the specific classification of the money received as a "draw".

The plan does not use Principal's doc. It uses a common pre-approved volume submitter document provided by their TPA. Principal restricted the loan sources based on the plan provision form that was submitted at contract set-up, which makes no distinction between sources for proceeds and sources for calculations. They are saying their software has no way to distinguish from "lienable" and "loanable" sources (to borrow @MoJo 's terminology). The plan does use Principal's website to facilitate participant loan requests, so when a participant tried to request a loan, it was only calculating / allowing 50% of the deferral balance. The plan is a few years old, but this appears to the be first time a loan has been requested. I find that software limitation to be absurd and wanted to know what others think. Looks like the plan might be shopping for a new recordkeeper.

Forget the aggregating two plans part. The participant is 100% vested? why can't the full account balance be considered? (I'm arguing that it HAS to be considered, but baby steps) The loan dollars would only be paid from the deferral money. I think it depends on the plan's interpretation of "made" Are you saying if the loan wanted all sources considered for the 50% calculation, but only certain sources for the actual proceeds/repayment the loan policy would have to be written with that level of specificity? Or are you saying that's not allowed at all if the source from the which the loan is paid out is restricted? Why not less specificity (i.e the existing language) but interpreted consistently, and in this case in favor the participants?

Plan uses a common record-keeper/custodian that also processes participant loans online. Principal. The plan assets consist of only deferrals and safe harbor match(100% vested, not QACA). The plan's loan policy restricts the loan proceeds source to just deferrals. Well, I suppose that's how my interpretation has always been of this particular policy language. "Source of Loan. Participant loans are may be made from all available contribution sources, to the extent vested unless designated otherwise under this section." For this plan it is designated otherwise and specifies that only Pre-tax Deferrals and Roth Deferrals are eligible. John Doe participant has the same amount of $ in deferrals and SH match. The record-keeper is unable / refuses to process a loan for 50% of the participant's vested balance (essentially 100% of the deferral balance). They are insisting the only way it is possible would be for the plan to amend it's loan policy to allow loan the loan to be take from all sources. I disagree. Loan source restrictions on proceeds are common, for a variety of reasons, I see it done a number of different ways. What I don't usually see (maybe have never seen) is a source restriction on the 50% max value part of the calculation. I don't even think that is allowed, but I'm not able to find a citation. I remember the days when sponsors had two plans, a money purchase, and a separate 401(k) PS, and we would aggregate the balances between plans for the 50% calc, even though the loan was only allowed from the 401(k) plan. Am I wrong? If I'm right, does anyone have suggestions for pushback to the provider? Citations?

Also - I don't mean to belabor your question - it was just unclear to me from your original post if you were using the term "participating employer" in the more general sense, as in - they are using the plan. Or if the more technical sense - meaning they have actually signed the plan document on behalf of their entities and the entities are specifically listed in the document by name as participating employers, or they have signed participating employer agreements that are part of the document. Sometimes this is referred to as being an Adopting Entity. Since "Affiliated/Participating employers" was the phrase used in the original post, I assumed (perhaps incorrectly) that you were using Participating employer interchangeably with Affiliated employer, or in a similar more general sense. But the answer to your question likely lies in the specific, technical question - are they adopting entities (whether by proactive signing, or by default provision in the plan document)? And if the message board readers know the answer to this question, they can be more helpful. Good luck.

There are a couple of assumptions being made - perhaps you could clarify or confirm - Are all four entities part of the plan? Just because they are an affiliated service group doesn't necessarily mean they are all part of the plan. Some plan documents do not automatically pull in related employers, others do, best practice is to have them all signed on as participating employers if that is the intent. Similarly - Are you sure the W-2 compensation is eligible for deferrals? Part of this may depend on the answer to the first question, but I would also double check the plan's definition of total compensation, and plan compensation. It could be that the compensation has to be included for plan compliance, but if it is from an entity that isn't part of the plan, it might not be eligible to defer from. To answer your actual question - does your plan document say that contributions attributable to the payroll of a specific participating employer must come from that employer? this kind of language is fairly common on documents for MEPs, but I see it on some single employer plan documents too. If the document doesn't say, then the plan probably doesn't care where the required contributions (Safe Harbor match) come from. That's an issue for the business CPAs to all work out when doing the deductions for the four entities. Are you the business accountant trying to figure that part out?

I'm curious, I rarely see small 401(k) plans with compensation as the calendar year, though many pre-approved plans do allow the option. I think for it to work the way you suggest, it would need to be very clear, such as plan compensation being defined as compensation in the 'calendar year ending in the plan year' , which would make the compensation period disregard the short plan year. Is that really how the document is written? More typically, I see plans use the default, plan year, which for a short plan year, does get limited to ACTUAL compensation earned during the short plan year. The compensation limits being prorated is a separated issue. To avoid the issue you've encountered, we often draft new plans with special deferral and safe harbor start date of 10/1, but the plan effective date is still 1/1. This makes is clear that is the employer wants to give a discretionary employer contribution ( or add a DB plan), the plan year is the full calendar year. There are some compelling reasons to have a short plan year from 10/1 -12/31 for an initial plan year, but I don't see them often. Which document provider do you use? Or are you willing to share the language from the 401(k) plan? Also - I suppose they could adopt a PS only plan effective 1/1/2020, would that make the actuary feel better when combined the PS, 401(k)/ SH, and CB benefits for testing?

I don't know the answer, but I would like to know the answer as well. We have a number of plans that want the tax credit, but only want the EACA to apply to new participants. They do not care about the extended correction period.

I recently saw a DB plan that was overfunded because the owner died suddenly. The son inherited the business (with the attached retirement plan). The business wasn't worth much in an of itself, but the tax attorney that the son hired found a buyer. The buyer happened to have an underfunded DB plan. The buyer merged the two plans, solving his underfunding issue. The son got cash from the sale of the business (and the plan), the buyer got their plan well funded for a cheaper amount than an outright contribution would have cost. Seemed like a win all around. Maybe the H/W can take their benefits and figure out something similar to do with the excess left in the plan? Not sure it will work, just sharing an idea.

I saw some new articles saying the case was being settled. https://www.planadviser.com/parties-lawsuit-401k-account-fraud-agree-settle/ Does anyone know any of the details? I'm curious to hear how it worked out. Considering it seems the plan administrator couldn't even provide a summary plan description when asked I didn't have a lot of confidence it would settle without a lot of conflict.

VCP is needed if they never had a document.

Plan sponsor would like to use PPP loan proceeds to pay a portion of the administration expense. Expenses are billed quarterly, so there would be an amount due during the 8 week period. They would like to know if it would qualify for forgiveness if they use the money that way. I haven't looked into it much, but I'm leaning towards it wouldn't qualify since it seems to be limited to retirement plan contributions, not expenses. But i'm hoping one of you that has done all the reading and paid attention to the SBA information can confirm, or tell me if I'm mistaken.