RatherBeGolfing

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.

I am 100% sure. You are reporting for the plan year, not the life of the plan. If the distribution took place in a previous year, you are no longer covering that participant, and cannot report them on the current return. I would reference the instructions to the SF and EZ, they are quite clear. A one participant plan is not eligible to file a 5500-SF, it must file on a 5500-EZ. The DOL will likely reach out when you don't file the 5500-SF because they cant tell that you filed an EZ with the IRS. When they reach out, you just tell them that the plan became a one participant plan and was no longer eligible to file an SF. They will tell you to have a good day and that is the end of it.

Yes. Financial information is only one part of the return.

Yes. To be clear, you file the form that is required for the reporting period. For a calendar year plan, if the plan only covered the owner during 1/1/22-12/31/22 it is a one participant plan and you are required to file on an EZ.

I'd go a step further than "EZ is ok to file" and say that you are required to file an EZ.

The question is whether you can file DFVCP after the IRS has assessed penalties, correct Eligibility for DFVCP https://www.federalregister.gov/documents/2013/01/29/2013-01616/delinquent-filer-voluntary-compliance-program an IRS notification or penalty assessment does not make you ineligible for DFVCP, that is limited to a DOL failure to file notification. The IRS will not impose penalties if you take the plan through DFVCP. Notice 2002-23 Relief From Internal Revenue Code Late Filer Penalties

Its in the rev proc that established the permanent administrative relief program Rev. Proc. 2015–32

Q&A-4 is indeed limited to EZ filers. You can file DFVCP for 5500s filed for plans other than one participant plans and foreign plans after you receive a CP283 notice. You cannot use the IRS penalty relief program after CP283 (penalty was assessed after notice and follow ups), but you can still request penalty abatement (with no guarantee of approval). If you request abatement and get denied, you are no longer eligible for the penalty relief program. You cannot file DFVCP after the DOL has notified you in writing of a failure to file. I belive that DOL procedure says this has to be certified mail, but they also say they can change this at any time without notice. The DOL is now sending emails letting you know that they did not receive a 5500 they expected, and they have stated this does not prevent you from filing DFVCP.

Excuse me, I believe you have my stapler....

Yep, same here. If I had it my way I would default everyone to $7000 with all force-outs being rollover IRAs to avoid stale checks...