RatherBeGolfing

We see this way too often, and have started defaulting to completing the work for the client unless the prior provider affirm that they will do it and provide a timeline for the work so that we can make sure it gets done. No matter who is responsible, the client wont be happy when they have to pay penalties a year or two later. It takes more time to do damage control, so we have opted to do it during the takeover. About 30-40% of our takeovers come from MEP/PEP providers, and they are usually the better ones to work with (with some notable exceptions) As for recourse, there is no easy answer. Is there a service agreement? What is in the service agreement? Does it spell out the responsibilities of each party? Does it detail the fees, how it will be billed, and what happens when services are terminated? Unless your takeovers come from pretty much the same place, every situation is going to be different. Are you having a hard time getting information from prior providers? We have noticed that there are a few big providers (who will remain nameless) that are getting more and more difficult to work with during the takeover process.

Changes are unlikely. We got the new limits late, there is really no time for changes. The statute is unclear, so the IRS decision to keep it at $11,250 is a reasonable interpretation. More likely outcome is that clarification is sought over the next year so that we can have confidence in the COLA next year.

IRS has confirmed it is staying at $11,250...

Same. We are doing more and more elapsed time to get away from LTPTE issues. We also have more employers with little to no service requirements. This isn't as cost-prohibitive as it once was with the new participant count methodology, top-heavy relief, affordable MEP/PEP solutions, etc. FWIW, I think the days of excluding employees from plans are numbered. Our legislators and regulators will continue to close the retirement plan coverage gap, which means that our plans will need to be more inclusive.

$12,000 is what seems logical, but... The plain language of 414(v)(2)(E)(i)(II) says 150% of the amount in effect for 2024, which would be $11,250.

Sure they can. They know how many returns you have filed. DOL is getting pretty good at data mining and analysis. Just like late or missing returns, it is only a matter of time before they start enforcing electronic filing mandates. We file all EZ electronically.

Are you talking about filing an amended 2023 return before they fix the errors they are now aware of? They would be knowingly filing with incorrect information, or am I missing something?

🤣🤣🤣 Thanks I needed that today!

Artie, thanks for the correction!

It requires a common paymaster scenario, so I assume the good reason would be that you can just use the issued W-2 rather than breaking out how much each entity is actually responsible for.

You are correct.

Scroll down on the page. You have to file the form first with DFVCP box checked. After about 24 hours, you can proceed with the DFVCP app. With a recent update, you now enter EIN and PN, and the website will populate the details and calculate the penalty.

Possibly, but I also wouldn't be surprised if its 99% AI. Amazon is getting flooded with AI generated books in all categories. I haven't looked at the books in question, but the 50-100 page appears to be the sweet spot in non-fiction. If they are accurate and people find them helpful, I'm not necessarily against it. I do worry about AI trend and accuracy though, I have seen ChatGPT come up with some scary stuff when asked basic questions. Last week an advisor asked a question about a company having more than one plan in the same year, and ChatGPT said it was a violation of the exclusive benefit rule...

We will delay as long as we can, but will timely deliver notices with the current limits if the new limits are not available. We will then update as needed. Its not ideal but manageable for us. I don't like the idea of estimates in notices.

As long as they are otherwise eligible, the fact that they filed under DFVCP for 2020 does not restrict them from using the program for subsequent failures.

It sounds like they are trying to say that Part-Time Employees are excluded, but a PTE that works 1,000 hours in the first year or 500 hours in 3 consecutive years will not be excluded. My concern with this language is that the 1,000 hours is limited to the first year and the 500 hours for LTPTE is 3 consecutive years which was later changed to 2 consecutive years. Is it also applied to all contributions? Is there another provision limiting LTPTEs to deferrals?

We are going to party like its 2027. This is going to be process-heavy, and it does not make sense for us to have one set of rules for 2026 and then change them for 2027. We will likely find issues in 2026 that will inform us on revisions for 2027, but we want to stay consistent. Side question, is anyone considering a defaulting catch-up to Roth, and requiring a participant to opt out? It is clear that a participant must be allowed to make pre-tax contributions in order to designate them as Roth contributions, so you can't require that catch-up can only be made as Roth. But default with an opt-out to pre-tax with appropriate notices and disclosures could limit the need for corrections.

A lot of early articles were drafted using an AI summary of the final rule I bet... I had a few different ones summarize for me and all said 2027. Its not always best to be first to publish!

Recent thread on this. In short, you must comply with the Roth catch-up requirement in 2026 on a reasonable and good faith basis, and you must comply with the final rule in 2027.

I would agree with this interpretation if all notices were consistent. For example, If you have the information necessary for the communication in the SPD, but then have a subsequent annual notice with more generic language like "The Company may, in its sole discretion, make a matching contribution on your behalf...", it would be an issue.

@Peter Gulia the IRS uses the term "communication" rather than "notice". The timing of the communication is no later than 60 days after the last discretionary match has been deposited for the plan year. I don't see how you can comply with the timing requirement by simply putting it in the SPD. Are you anticipating distributing an SPD each year after the last deposit for the year? There is no model communication, so any communication that satisfies the required elements (timing and content) would suffice. Also, there is no statutory or regulatory requirement for this communication. The notice requirement language was included in Cycle 3 plan documents as part of the compromise discussed above. Failure to provide the communication (if required by the plan document) would be an operational failure.

Ferenczy Benefits Law posted a flashpoint yesterday highlighting that the Roth catch-up mandate is still effective in 2026. Link to article Shoutout to @Ilene Ferenczy *Edit to add that Spark also released a summary stating that good faith compliance is required for 2026.

Indeed it is, thanks Bill.

Ok. Well, the 5500 is the easy part. EZ for years when no employees were covered, otherwise SF. The user fee is capped at two years, so the penalty for late 5500s shouldn't exceed $2,500 assuming at least two EZs and two SFs (2x$500 +2x$750).

If you are just asking which form to file, you file an EZ for the years it was a one participant plan, and an SF or (5500 with Sch I) for the years when it was not a one participant plan. I would take it to an ERISA attorney ASAP. Can he even afford to "save" the plan considering all the issues?