RatherBeGolfing

Im not sure what the question is here. What employees/participants are you questioning? How many participants were eligible on the first day of the first plan year (5a)? For the first year, I would expect 5d(1) to equal 5(a) since you probably don't have any former employees who are participants on the first day of the first plan year.

You know you haven't been to an in-person conference in a while when you read this as a @S Derrin Watson song....

I say yes, you have to limit the correction to the 402(g) limit. If the participant has contributed the maximum for the year, how can there be a missed deferral or missed opportunity?

We are talking about eligibility requirements, not allocation requirements. If I have no eligibility requirements with immediate entry, and I amend to require age 21 + 1 YOS, anyone who has not attained age 21 or had 1 YOS has not met the eligibility requirements. Whether you are still eligible depends on the current requirements, not what the requirements were when you first entered the plan (unless the amendment or document itself makes an exception for current participants).

The employee became a participant because there was no service requirement. If the plan is amended to require 1,000 hours, and the employee has never had 1,000 hours, the employee is no longer able to actively participate unless there is an exception to grandfather current participants. Like BG said, participation is not a protected benefit.

More Florida representation on the boards 😎

100 % this. Do not create an accidental benchmark or standard of care where one isnt required. Especially when the regulatory agencies dont know/havent decided what that standard is. "I was trying to be helpful..." will doom you in court when someone relied on it and got hurt.

It is usually the IRS, and they are usually at least a year after the filing deadline. The DOL letters I mentioned were sent out to the plan sponsors mid-January 2021 indicating that their review of the database for PY 2019 indicate no return has been filed, and that the 2018 return was not a "final return". The letters were mailed UPS - next day and gives the sponsor 15 days to review and respond. You can respond via phone or email (email preferred by DOL), and the letter says to consider filing through DFVCP if the return has not been filed. It took us much less time to respond to DOL (email yay!) than a similar response to an IRS notice (you also do not have to sacrifice your firstborn in order to have the rep talk to you...)

We had some DOL inquiries on 5500's that were not filed by 10/15/20. They were filed by the 1/15/21 hurricane extension. In these cases, they were all 5 minutes or less on the phone. EZ vs SF should be similar I think.

It shouldn't, but it is possible that you will get a "reminder". That said, the DOL is usually easy to deal with in this type of situation. A quick phone call or even email will clear it up.

Great advice!

The hardship wasn't two years ago, it is still ongoing. Under safe harbor rules, its expenses for or necessary to obtain medial care. The expense still exists. 5 or so years ago, we took this a step further and asked a IRS panel the following: If a participant financed the medical care via credit card or medical loan service, is there still an eligible hardship (since they were able pay for it through other means)? Panel said yes, it was the expense of the medical care that triggered the hardship. Taking a hardship distribution to pay a credit card used to pay for medical care was still a hardship within the safe harbor rules.

I'm not sure if you have just misunderstood the question here or if there is more to it on your end. If you think that not speaking or understanding english is going to prevent people from finding employment, you need to seriously reconsider. As Bill points out above, the plan is required to post notices in other languages if there are enough employees who need it in order to understand the notice. You cant just say "sorry, you need to learn english!" Maybe it's a product of where you live and work. I'm in the Southeast, and non-English speaking employees are just not uncommon here. In my immediate practice are, we have large communities of Spanish, Creole, and Tagalog speakers. Also consider the employees who are studying to learn English but still only have limited understanding of the language. It may be your clients responsibility to put things in a language that they do understand.

I have been outlining this for a bit, and I think that your plan is an example of a plan that will file a Form 5500-EZ but is subject to both bonding and PBGC requirements (unless it is exempt as a small professional service plan) . Remember, PPA 1103 simply modified the filing requirements, it did not amend the definition of an employee benefit plan (§2510.3-3). It is still an employee benefit plan covered under Title I (the children are only treated as partners for filing purposes). §2510.3-3(c) For PBGC coverage, a plan would be exempt if it is established and maintained exclusively for substantial owners of the plan sponsor. A participant is a substantial owner if, at any time during the last 60 months, the participant: Owns the entire interest in an unincorporated trade or business, or In the case of a partnership, is a partner who owns, directly or indirectly, more than ten percent of either the capital interest or the profits interest in such partnership, or In the case of a corporation, owns directly or indirectly more than ten percent in value of either the voting stock of that corporation or all the stock of that corporation For substantial ownership purposes, we have to apply attribution under §1563 (not 318 that we applied for filing purposes above). Under §1563, an individual who owns more than 50% directly or indirectly through other attribution is considered as owning the stock owned, directly or indirectly, by or for his parents, grandparents, grandchildren, and children who have attained the age of 21 years. The adult children are not attributed the ownership of the 100% S-Corp owner. The adult children are not substantial owners. No PBGC exemption for covering only substantial owners. I think I have worked out the differences between filing purposes, bonding requirements, and PBGC coverage correctly, but I would appreciate any input or corrections if I'm wrong.

I think it should be pointed out that it is a little more involved than just filling out the form. You need to put procedures in place to prevent it from happening again. It is entirely voluntary to correct using VFCP. Just be aware that they will probably start an investigation if you do not. When an earlier round of these letters came out 4-5 years ago (maybe more), ASPPA GAC protested the threatening tone of this "invitation to voluntarily participate". I believe the DOLs answer was that it would change some of the wording, but the message was that they were aware of a possible PT and an investigation may follow. @Stash026 would you be comfortable sharing some more detail? Like date of the letter and what regional office it came from?

That is my understanding as well. The reasoning behind making up the difference in a subsequent payroll is that the election and calculation is still valid based on the eligible comp. In theory ,contributing the remainder of the 1/1/XX 401k contribution on 1/15/XX is ok because 1/15/XX is when the cash is first available to be deferred (for the remainder). It isn't a late deferral issue since it was separated from employer assets as soon as reasonably possible. It was also contributed before it was received by the participant. Again, this is how it was described to me, I think at a seminar or session of some sort. The only restaurant plans I have either collect tips and pay them out with the wages or the establishment does not allow cash tips at all (members only club where everything is billed to the member at month end).

Here is a workaround I have heard before: wages and tips are comp for plan purposes deferrals are calculated on wages and tips the actual contribution can only come from the wages portion if the deferral exceeds available wages in any payperiod, the difference is contributed with the following payroll

It happens more than you would think. It does create an issue when you have benefits like 125/401 and you come up short. You cant just ignore a health insurance premium.

austin3515, personally I think the answer should be the same in both cases. The employer just couldn't fund the contribution by asking the server to pay over one of the $100 bills. I agree with you that the answer should be the same for both scenarios. Id like to throw in another twist though. Suppose that the wages portion is closer to a 50/50 split or maybe even less than the tip income. Also, suppose that the employee pays for health insurance and other optional benefits from the wages portion of the paycheck. When there are not enough wages to cover benefit premiums and elective deferrals its an even more complicated issue than the math of $80 vs $100.

I haven't seen this...yet. I don't think you are overreacting though. If they want to be PITAs, there are plenty of places to go.

I agree its a dicey issue, and you should have an employment law attorney draw clear lines of what you can and cannot do to make sure you stay inside the lines. That said, I think it is possible. The bigger question is is it worth the effort and risk?

Good on ya Dave! I know you guys put in a lot of work on this site, and advertising/job postings are usually the only ways to get compensated. That's a great goodwill gesture!

If you give them a schedule and assignments to perform, yea I agree. If the person can decide what assignment to accept and when to do them as long as done by the due date, it sounds more like a contractor.

I'll take a stab at it, and I could be wrong... If its a plan expense account, it is a plan asset because it is for the benefit of that plan rather than revenue sharing deposited into a service providers operating account. As a plan asset, it is subject to the qualification requirement that all funds are allocated to participants based on definite plan formula. This requirement then means that funds cannot carryover unallocated from year to year (same reasoning as the plan forfeitures). So it goes back to the Code.

Full accounting of what? What are they questioning and for what period? contributions? earnings? fees? Between SPD (or plan doc if necessary) and SAR/5500, they should be able determine whether contributions and gain/losses are correct.