justanotheradmin

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.

The plan document will say. Look at the actual adoption agreement (if there is one) not just the SPD. Some are written to limit conversions only to people/sources that are eligible for distribution. This is similar to the older rules of in-plan-Roth rollover. Others are written to not limit conversions to people who are eligible for in service withdrawals. What does the document say?

So they are using the trust to engage in real estate business? That's what is smells like... are they reporting UBIT? This isn't just a large pension plan that happens to hold some real property as part of a diversified portfolio. It sounds like people whose business in general includes real estate investing and they are also using the plan for that purpose. Beyond the myriad of possible prohibited transactions, the anti assignment wrinkle, and just burdensome issues of having real property in the plan such as making sure all the property taxes are paid by the trust - how would they ever expect to get a mortgage for those properties? A mortgage requires payments, credit, etc. The trust doesn't have a credit score, or income statements like paystubs, would they co-sign the notes? that would be terrible I'm sure someone else with better experience will chime in with a more thoughtful answer, but my instinct would be to walk away. Even their current set-up seems ripe for issues.

By any chance was the employee who did the rollover in - a decision maker ? Owner, director, trustee, HCE etc? Depending on the structure of the service provided by the recordkeeper/custodian - I wonder who approved the rollover. For smaller plans - the participant might fill out a form to let the plan know they are submitting a rollover, and the plan administrator, trustee etc might have to approve that before the custodian or recordkeeper will actually process the incoming dollars. In my experience - when plans are brand new - there aren't a lot of rank and file employees chomping at the bit to get their money into the new plan. The ones who are best positioned to immediately do a rollover in are the ones who have known about the new plan the longest, typically the decision makers or power players at the sponsor. Edit to add: who prepares/maintains the plan document? if a bundled provider it is typically the recordkeeper as well. If is someone else - the recordkeeper might not have any idea when the plan document is actually signed or effective, and just goes off their provision intake form. Not saying that is right. Just saying I see it done that way.

What do you mean by 'supplemental refund' ? Are you asking about a pension plan? 401(k) plan? something else? Are you asking what happens when a person has a zero account balance due to distribution, and then receives an additional contribution? More specificity is needed to understand your question.

NOT ADVICE what about the 60 rollover rule? If the trust didn't exist - and the rollover $$ was deposited to an account in December, and then the account converted to a trust account in January, its less than 60 days...

All valid questions - its a very unique situation, so I don't know how comfortable I am putting the answers on a public forum. If I get permission from them to post more details I will.

Hi Everyone, Self referrals are welcome - a small ESOP company is looking for an attorney who can advise the plan/company about a real estate transaction they are considering in the very near future. For privacy purposes I won't post the details here, but if anyone could suggest an attorney they could contact, it would be welcome. If you send me your contact information - I'm happy to give more details privately to see if the scenario is something you are interested in working on - before I pass along your contact information to the ESOP. Thank you all.