justanotheradmin

If the employer is paying the premiums on life insurance owned by the plan the premium payments are employer contributions to the plan. Having the premiums paid by the other dollars in the participant's account is no different from a participant investing in something with fees and the fees are taken from that person's account. Or a participant who is transferring dollars from investment A to investment B. Just because the participant wants more dollars in investment B doesn't mean the employer is going to put the dollars into investment B for the participant.

Post-nups are a thing, and should be a standard part of any family law attorney that prepares pre-nups. As would be updating beneficiary forms both before and after the marriage occurs. The soon-to-be spouse cannot waive a plan benefit they do not yet have rights to. They don't have rights under a qualified plan until they are actually married. The plan does not (cannot) look at any pre-nup. So once the spouse actually has rights under the plan - that's when they can sign a waiver of the benefit on an updated beneficiary designation.

Did the TPA use actual rate of return, rather than the DOL calculator? Unless the TPA was told that the plan would be submitting the correction to VFCP, the calculator should not be (though it often is) used. I'm also wondering why the same person or company isn't doing the lost earnings + Form 5330 + VFCP if the plan wanted all three. It seems unusual or inefficient to have someone different prepare just the VFCP submission.

agreed. I dislike that the guidance uses the term "allocated" because like you, I use it to refer to the year to which is accrued, which is not always the same as the year in which it is actually deposited. So when reading and discussing with others I try to remember to point out that the usage of "allocated" in this guidance is not the same as what I use with my close peers in the industry. So I agree, when the dollars are deposited - that is when the taxable event occurs.

If there are fees that are going to be paid from the plan assets, for the QTA, recordkeeper, custodian, auditor, advisor, TPA etc typically all of those should be addressed first, before payouts occur. In bankruptcy - if the plan accounts are to cover the fees - as most plan allow - then you don't want the people who took their time taking their distributions to bear a disproportionate portion of the remaining fees.

Only speaking to the question about Sole prop and EIN (not addressing any of your filing or business entity issues). Sole proprietors can, and do, get EINs all the time. They are available through the exact same process online as with any other business that needs an EIN, on the IRS website. they might need them for retirement plan purposes, such as here. Or because they have employees and will be doing payroll and remitting payroll taxes and issuing W-2s, etc lots of different reasons why having an EIN might be needed for a sole prop.

well how much are you actually doing? sending them a link to the DFVCP page and telling them how to answer the questions? and then telling them to click okay and follow the instructions to make the online payment? Seems like that's just an email, or maybe a phone call if they like someone to be with them while they click on things. Assuming you are charging for preparing the 5500s themselves, and marking the DFVCP forms, I don't see how it would be much more. If you charge by the hour for extra assistance items, maybe one hour?

No. That does not sounds normal at all. I've only ever seen letters for missed Form 945. I've never had the IRS call about 945 or something like it. if they call again the plan should get the agent's number, name, and their supervisor's name and number. It sounds very fishy. Not to mention the information given is wrong.

Thank you Peter, that thread was very insightful.

Anyone have any resources / contact information that can be sent to an attorney in Missouri who is not understanding the retirement beneficiary and federal rules for death benefits? Or alternatively - tell me my understanding is wrong and I'll tell them and the sponsor to listen to the attorney? Fact Pattern: Death distributions needed from standard 401(k) and DB (PBGC covered) small employer retirement plans. Everyone is in Missouri. No named beneficiaries, so the default plan document beneficiaries apply. In this case the default beneficiary in the plan document is the estate. Period. Decedent did not have a will, based on court filings total value of assets likely is less than $40,000 (including the retirement plans) Estate/Probate was not opened within one year, and in lieu of doing the Small Estate Probate (Which is still allowed after one year), the heirs did file and receive a Decree/Determination of Heirship. Which does happen to have an estate number on it, so the court can track it. Attorney for the heirs wants the plans to pay directly to the heirs. The plans are insisting on a TIN so the death benefits can be paid to an estate. Which I agree with. The confluence of federal laws for the plan, the fact that there IS a beneficiary, so the determination of heirs doesn't really matter for the plans, etc, are confounding for the heirs' attorney. Other than just telling the plans to hold firm, any other ideas? information they can send them? Any Missouri estate attorneys want to chime in or want me to send their contact info to the heirs' attorney?

Thank you Peter. It is heartening to know someone else noticed many of the same things and that you concur with my conclusion. With 2023 as the first year with an actual MEP schedule, and not an attachment, I had not given the particulars of some of the questions much thought before now. I have never tried contacting OCA, and honestly don't know how fruitful it would be for me. But if someone else wants to try, I would be interested to hear what information they receive. Here is their contact information for anyone curious. https://www.dol.gov/agencies/ebsa/about-ebsa/about-us/organization-chart#oca

Question from Schedule MEP 2e Does the plan include any individuals not participating through an employer or who are individual working owners? Yes or No Does anyone have information on the working owner questions on Part II of the Schedule MEP? I have read the instructions to the schedule, as well as the referenced CFR. Assuming a small 'closed' MEP of business entities, where each entity is a participating employer on the legal plan documents. Entity A - S-Corp has two owners who are part of the plan, along with a number of employees. Entity B - LLC, no S-corp election, one member owner, no other employees, self employment earnings, also participates in the plan Entity C - sole proprietor, no other employees, self employment earnings, also participates in the plan. Entity D - LLC, no S-corp election, one member owner, several other employees that are part of the plan, owner has self employment earnings and also participates in the plan I would think the answer would be yes for all. The definition of working owner doesn't preclude the business from having other employees, so even Entity A has a "working owner" two in fact. Am I understanding this correctly? If there is a MEP and the owners are NOT part of the plan (do not have earned income, no contributions etc) then I would guess the answer to the question on the schedule would be No. I appreciate any light someone can shed. Thanks!

The bankruptcy trustee or plan administrator should contact an ERISA attorney if they do not know how the plan should be treated during the employer's bankruptcy. If the plan is PBGC covered they should likely be contacted immediately as well, and the plan termination would go through them. If the plan is underfunded - the plan administrator will need to see if they need to make a claim for employer assets as part of the bankruptcy. In very small plans, there are occasionally options for an owner to forego benefits, but you should really talk with an actuary and ERISA attorney.

That is incorrect. The due date depends on a variety of factors, amount particularly, but many plans are on weekly, monthly, or quarterly deposit timing. If the tax is not required to be remitted right away, and it is small enough to be sent in with the Form 945, it is subject to the form filing due date, typically January 31 after the year ends. The 20% withholding is 945 tax type, so if you look for information on that, you should be able to get additional information. Note: When the Form 945 is due is not the same as when the actual $$ must be sent in. The $$ typically have to be sent in sooner.

Thank you Paul! I knew there was someplace simple I was overlooking.

My apologies I know this information is floating around somewhere, I just haven't been able to easily locate it. Does anyone know the fee for a VCP pre-submission conference? Is the IRS doing them? I know it is only as time and resources permit. On the IRS website I couldn't see the information about fees specifically for a pre-submission conference, just the regular VCP submission fees, which I'm familiar with. Or are they $0 since the intention is that there will be a VCP immediately forthcoming with the regular full VCP fee? Thank you all!

well - if the overpayment puts the tax favored status of the recipient at jeopardy, I don't see why the plan that received the money that was not eligible for rollover would want to hold on to it. And 401(k) plans are trusts, so the trustees and plan administrators can take action without the participant's consent all the time. Holding on to money that is NOT eligible for rollover - seems like a very bad idea. Send it back to where it came from.

What Peter describes is especially important for plans that valued annually but not at 12/31. I would also mention that some plan documents address this, as well as overall cash vs accrual methodology, and I have seen some (typically in their basic plan document of a pre-approved doc) say that the account balance is also increased by accruals for that period, even if not deposited until after the calendar year. The regulations don't require this, but the document can specify it. For example, if a 3% Safe Harbor nonelective is accrued for 2024, but not deposited until 2025, the plan document might require the valuation as of 12/31/2024 be increased by the 3% Safe Harbor accrual, even though it was not deposited by 12/31/2024. So if the 2025 RMD is calculated and processed using just the cash value of the account as of 12/31/2024 (assuming a calendar year end plan), it would likely be short, if the document specified accruals must be included. Perhaps not an RMD failure under the regulations, but possibly an operation failure for the plan. Just a gentle reminder to read the plan document carefully.

What is your question? What do you want to know? Please ask it in a conversational way. Just curious if these posts are coming through an online translator, as all your posts are very very formal and not written in a way that is easy for a native English speaker to understand. If you are not a native English speaker - perhaps try asking your question in your native language and see if people respond or perhaps can understand your question better.

Wall Street Journal Prime rate. I've never seen any other Prime rate used for retirement plan loan purposes. And no - the TPAs I know of check it - but some recordkeepers only update theirs once a month even if the rate changes in the middle of the month, as long as it is consistently applied to new loans I've never heard of an issue with it.

unless the person was entered into the plan immediately upon hire - no, the 30 days advance notice is the grace period. The default deferrals should typically start on the first pay date on or after 1/1/2025. Pay attention to the pay period end date as well. Many plan documents differentiate between pay date (W-2 cash basis) and accrual (when the hours are worked). If there is a pay date on 1/5/2025 and deferrals should apply to it - do it. Even if the hours for that pay date were worked in 2024.

Having 8 people in the plan can mean very different things. Testing, especially for profit sharing contributions, might have to include all employees, or employees who are eligible but not participating, in the plan. How many employees you have this year (even part-time or short service) can be an important determining factor, even if you don't want them to receive any profit sharing into the plan. When you send your data to your TPA make sure to include everyone - even if you don't think they are eligible. I would hope that any owners that are interested in the maximum overall contribution starts by maximizing their own deferrals. If that is not occurring - that is definitely step one. Beyond that your TPA can do the calculations for maximizing profit sharing, seeing is a discretionary match is feasible (typically restricted to 4%) etc. If the owners are similar in age to the NHCE, the testing will look very different than if the owners are older than the NHCE.

if it walks like a duck, quacks like a duck, smells like a duck, its probably a duck. That being said - there aren't enough details to know. The real question isn't "Are proceeds from the sale passive income?" It's "Will he(as an individual) have earned income at a sufficient level to make it worth starting a 401(k) plan?" The money he receives for the business sale - where is it being paid? to an LLC? to him personally? Etc? If it is actually going to an LLC or entity - what is going to be his personal earned income from that entity? Zero? For example - if he has a LLC with an S-Corp election, but no W-2, then he has no earned income. If he only receives a K-1 Form 1120S, then no earned income. If its a 1065 K-1, is there earned income reported on it? His CPA will need to tell you if he actually has earned income.

10%

100% agreed. There are just so many pitfalls, I rarely see real estate in done well in small plans. I wonder about the improvements - are they developing land? improving buildings? putting up buildings? etc. What is the real estate currently used for? is it literally just a tract of land held for investment? is it rental property etc? Are they flipping the properties? leased farmland? etc. They should discuss those with someone who deals with real estate in plans.