RatherBeGolfing

In my example, the RM would receive everything from the back office departments and communicate it to the client. So while all departments have a hand in things throughout the year, the client only works with the RM. Almost as if the RM did A-Z. There are going to pros and cons with every approach, but I think you get more bang for your buck by compartmentalizing your employees. You just don't need a someone making $80k processing distributions 10 hours a week when you can have a cheaper first year employee doing it...

I think it depends on company circumstances. Average plan size and type of plans... how much tech do you utilize? Is everything done manually or can annual emails be sent as a batch, etc? these things all factor in. The more manual work is needed by the RM, the fewer plans they can handle. 150-200 should be doable though, and the number increases as you offload time consuming work.

Everything runs through the RM, and they communicate with the internal departments like compliance, distributions, etc.. That makes them the single point of contact for the client.

The smaller the TPA, the more common it will be for each person to have A-Z responsibilities. As employee count and plan count grows, the more common it will be to segregate departments. Unless you are a boutique or "white glove" type of firm, I think you have to segregate department to achieve any kind of scale.

Timely article that came out in ASPPA NET yesterday afternoon: Flexibility on the Use of Forfeitures—Not so Fast!! Lawsuit against Thermo Fisher. Document states that forfeitures can be used for expenses and to reduce contributions. Thermo Fisher opted use forfeitures to reduce contributions over a 6 year period, while also paying plan expenses from plan assets. Claims are breach of fiduciary duty and engaging in prohibited transactions. Dimou v. Thermo Fisher Scientific, Inc., S.D. Cal. No. 3:23-cv-01732 (9/19/2023)

Thanks MoJo!

I haven't seen much talk about this... Proposed rule published 2/27/2023. It did not receive many comments (ERIC, ARA, ABA, and ABC among the few that submitted comments). The proposed rule would establish a requirement to use forfeitures no later than 12 months following the close of the plan year in which the forfeitures were incurred. There is also a transition period for forfeitures incurred during plan years beginning before 1/1/24. These forfeitures will be treated as having been incurred in the first plan year that begins on or after 1/1/24, and have to be used no later than 12 months following the close of the PY. Proposed applicability date of 1/1/24, no final rule yet, but plan sponsors can rely on the regulation now. How are you handling this? Fire drill to use up forfeitures from past years to get in compliance? Plan document/amendment issues? Absent clarification, would you consider the use of forfeiture for the 2025 PY but allocated in 2026 as being used no later than 12 months following close of the PY? Curious what other think.

This is correct, you cannot do retroactive SH if you did not meet the requirements for SH inthe first place.

As a follow up on this, is anyone aware of instances where this has been denied by IRS? On the IRS website, they state that the IRS will generally waive penalties for filers who satisfy DFVCP (and also file form 8955-SSA and meet the requirements of Notice 2014-35). In the DFVCP FAQ, DOL states that the IRS may provide relief and that PBGC has agreed to provide relief where conditions of DFVCP have been satsfied. You have to love the certainty...

We could just stipulate no rehires in the service agreement...

That used to be the case for me, but at this point most prefer that we file for them anyway.

Just to clarify, if you file a 5500-EZ, you are NEVER eligible for the DFVCP. You are eligible for the IRS Penalty Relief program under Rev Proc 2015-32 (different from DVFCP which is DOL) unless you have received CP283 which is the penalty assessment. The IRS logic is that you ignored the previous notices before the assessment, so you are not eligible for the relief program. You can still request an abatement (which is not guaranteed like the relief program). If you are not familiar with the abatement process and the penalty is substantial, I would recommend the assistance of a professional in this practice area.

It shouldn't have an impact on testing. You already include receivables in testing. If you report on a cash basis, your reporting just wont line up 1:1 with testing if you have receivables.

Which also goes away starting with the first plan year after 12/31/2023

You are correct. They have now backed down and accepted that their position was incorrect.

And not for 2023

Thanks all! I thought I was losing it this morning. I have requested that they provide support for their position so it will be interesting to see...

Top Heavy SH 401k plan with basic match and cross tested PS (everyone in their own group) 2 HCE/Key 3 NHCEs (only 2/3 NHCEs have met PS eligibility of 1YOS+A21) Eligibility for 401k/SH is 3 months, all EEs have met this eligibility. Plan Sponsor wants to provide PS to just one participant, a NHCE. The way I'm looking at this is that PS to the NHCE means the plan no longer consists solely of deferral and SH, so TH minimums would apply if the plan is TH. The 401k and SH for the HCE/Key is around 20% of compensation. One NHCE received a SH match of roughly 1.9% I think that NHCE needs a TH minimum to get to 3% of comp. I'm getting some pushback because the Key's only received an allocation of 401(k) and SH, and the only participant with a non elective contribution was a non-key. I cannot find a reference to TH exemption when there is an allocation other than 401k/SH, but the allocation is only to non-Key EEs... Does anyone agree that TH minimum is not required because the key did not share in the PS allocation, and can you provide a citation or reference to this point? I'm also open to arguments for TH minimum of course

EZ. Both are 2% S Corp shareholders so you treat them as partners.

Larry, in your example, a 2022 5500 would not be required, it could file its first return on the 2023 from 5500. I take your point that a 5500 is still required, but the timing requirements would change with the addition of a retroactive adoption.

I'll also add that there are long articles and whitepapers out there on this issue, which goes back to the 1930s. These usually include situations far more complicated than we normally see in our practice, which are usually a pretty easy to decipher. For those of us with a taste for the finer things in life like the Code, ambiguous court rulings, and guidance that prompts more questions than it answers, its a gold mine!

I'm a bit split on this one, but I tend to disagree. Opportunity is a key part of this correction. If you have a missed deferral but the employee still maximized their contributions, you don't have to correct. Why? Because the participant took full advantage of the opportunity to contribute, even with the failure. The timely notice makes sure that the participant knows that a reduced QNEC will be provided, so if the participant wants to maximize contributions or reach a pre-established goal, they will need to increase contributions. If we delay the notice, the participant has less time to make up for the missed opportunity, making it more difficult to reach the intended amount. I know we often find out when its too late to provide notice, but should the participant pay for that? Just my two cents. Like I said, I'm split on the issue but this how I try to make sense of it.

100% agree, but I think its a terminology issue. In this case I believe it means that the bookstore entity is a sole prop rather than the Janice performing "operational services". The example was probably better explained during the webcast than how it is written. The normal functions of a small business owner are usually needed to pay the bills, which is certainly a material income producing factor...

If its a partnership or taxed as a partnership and the the former spouse is awarded an interest, I agree, it could make the former spouse a partner. If its a C-Corp, you have to file the 5500 or 5500-SF. If its an S-Corp, you would still be required to file a 5500-EZ if the interest makes both former spouses 2% S-Corp shareholders...

Yep.