RatherBeGolfing

37 minutes ago, austin3515 said:

My understanding is that when a 5500-EZ has less than 250,000 you can mark it as a final 5500, which is what tells the IRS that no filing is due for the following year.  I don't see anything in the instructions about this but I think it is better to do this then just not file one in the following year.

As far as I'm aware, this is not an option. It wouldn't pass edit checks since the IRS logic looks for $0 in EOY assets and no participants at the end of the year for a final 5500.  

Does it already allow for elective deferrals or is it just PS at this time? 

10 hours ago, SSRRS said:

For some reason, efast does not give an ack id for extensions? Just a Message that successfully filed. Not sure why.

I have always filed using third party software, which produces an AckID for Form 5558 filings. 

I would still start with EFAST, but be prepared to have to go to the Office of the Chief Accountant.

2 hours ago, Pixie said:

Client has 105 account balances (125 participants) at the beginning of the plan year.  I am assuming we can use the 80-120 rule to continue filing the 5500-SF until the number of account balances exceeds 120 as of the beginning of the plan year.  Any input would be greatly appreciated.

Im assuming this is not the first year filing a return for the plan, and you filed an SF for the prior year?

If so, you can continue to file an SF until you cover more than 120 participants and meet the other eligibility conditions (total of eight conditions).  See instructions to the 5500-SF, page 3, Who May File Form 5500-SF, for all conditions.

Sounds like you have an AckID then, so you can prove that it was filed.  I would start with EFAST support, but when it comes to issues beyond what can be found in the instructions to the forms, they usually refer you to Office of the Chief Accountant at the DOL at 202/693-8360.

@SSRRS

Did you file using third party software (FIS, FTW, etc...)?

Did you get an AckID, or did this prevent you from actually getting it filed?

While I agree it sounds like an error on their end, it will probably take quite a bit of back and forth to get it resolved. 

27 minutes ago, Paul I said:

FYI, the Directory of Federal Tax Return Preparers with Credentials and Select Qualifications lists 363 ERPAs.

The list shows name and address, and can be searched by name or proximity to zip code.

You can have a party and invite all your ERPA neighbors 🤣.

Without looking I know about 10 in my area, so we actually CAN have a party! 😆

46 minutes ago, thepensionmaven said:

Are they doing this to others  in the hope that they can reduce the number of ERPAs (which is already ridiculously low)?

I doubt it.  

Its more likely that the process is just chaotic and full of issues.  It has been since day one.

21 minutes ago, Bri said:

Are they asking you to renew as an EA, or as an ERPA?  That intro you pasted here doesn't say enrolled retirement plan agent

Agreed, this is  EA renewal which has a different cycle and different due dates

22 minutes ago, Bill Presson said:

just because the document says everyone is in their own group, it’s incredibly rare to actually have to test more than a handful of groups.

Said another way, its incredibly rare to test more than a handful of rates.  Everyone in their own group, maximize owner, and 5% to all others is very common (as long as it works for testing of course).

I have also seen an additional issue with EBSAs software.

The software looks for accounts with a balance at BOY.  It does not catch that if you are filing for the first year, you look at accounts with a balance for EOY to determine if its a large filing or small filing.  This is true even if the return first return is indicated on the 5500.  It will calculate a penalty capped at $750.

46 minutes ago, austin3515 said:

And the relevant fact and circumstance in my 4% SHNEC example is that everyone gets the same or more from their employer. 

 

Its likely that no notice is required at all for the SHNEC, so really the only issue is that some participants may have changed their elections for 1/1/26 to get the full match.  I could see an argument that they should have a reasonable time to change it less if they want to, but I don't think that is a facts and circumstances argument against the SHNEC.  They may defer more in the first pay period than they would have if they had not received a SHN with 4% match.  From a compliance perspective, I think they are ok.  They may have some upset employees/participants, though. 

4 minutes ago, austin3515 said:

If you want to be lock tight, you could do a 4% SH Nonelective.

Agreed.  And most documents say that the SHNEC is at least 3%, so you may be able to do 4% for 2026 and 3% for 2027 without the need for amendment.

Editing my initial answer since I misread the question .  You are asking if you can amend the plan by 12/31/2025 for a 2026 change from SHM to SHNE?  

Technically, you can make the change at any point before the plan year starts.  A question that could be asked is whether participants will have a reasonable time to make changes to their elections after you amend, and if they are negatively impacted by the change if they do not have reasonable time to change their elections.  I think you are fine since you are providing the SHNEC in place of the SHM and participants will not miss out on any of the employer contributions even if they do not have enough time to change their elections for the first payroll.  It would be different if you went from 3% SHNEC to 4% match and a participant did not have time to change their election to receive the full 4% match.

Happy Holidays from sunny Florida!

3 hours ago, Peter Gulia said:

Now that service providers use electronic-signature regimes, have plan sponsors invented new explanations about why a signature was not received before year-turn?

I may or may not have seen some of these manually signed documents due to "issues with electronic signature software" and other similar explanations.

2 hours ago, ESOP Guy said:

At least get into the '80s and get on Lotus 123 man!  

I actually liked Lotus back in the day 🤣. 

Congrats @Belgarath!!!  You are coming back to discuss SECURE 3.0 with us just for fun though, right? 

Right?  

Bueller???

Happy Thanksgiving everyone!  I hope you all get to enjoy time with family, a good meal, and of course, some football!

I'm not working tomorrow, but we have a lot of people out on Friday so that is my day to catch up on stuff without too much interruption.

In addition to what @Paul I said, I don't think the provider has to be local unless you actually require local services.   Data security should be at the top of the list for your provider requirements. Its a plus if they have other TPA clients and understand industry needs.  For example, what type of support they provide outside of standard hours, and how could this impact you during busy season / filing deadlines. 

@S Derrin Watson, you have been a trusted advisor, teacher, lecturer, and author for my entire career in the industry.  I can easily say that you, @Ilene Ferenczy, and Sal have shaped me into the practitioner I am today.  I wish you the best as you start this new chapter of your life!

4 hours ago, Keith Lowery said:

It has become more common where as soon as the current TPA is notified of the intent to merge into the PEP, they stop their service and fail to complete the final testing and 5500 filing...Besides the new TPA completing the final work, are other solutions available ?

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)

4 hours ago, Keith Lowery said:

What recourse does the client have to ensure the current TPA completes the shut down, especially since the fees have been paid for that service ?

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.  

9 minutes ago, austin3515 said:

I sure this doesn't end up being a scenario where we all send out our updates and they change their minds.  I forget what happened a few years ago with a change in the SSTWB that was a mess.  It's unlikely that Mercer and Milliman are not reading this correctly.

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.

On 11/11/2025 at 2:44 PM, austin3515 said:

I actually don't where the other view would come from?

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

1 hour ago, austin3515 said:

Just don't forget that counting hours generally means tracking LTPT which is no bueno.  I caution clients in the starkest of terms away from dealing with those rules.

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.