RatherBeGolfing

Merry Christmas Tom and all my fellow benefitslinkers!

All I wanted for Christmas was a technical corrections bill 😟

For Federal tax purposes, the terms "marriage" and "spouse" do not include registered domestic partnerships or civil unions under state law unless denominated as marriage under that state's law. Many Cycle 2 DC documents included language regarding these other formal relationships, but IRS made providers remove the language for Cycle 3. See Rev Rul 2013-17 and Notice 2014-19 n-14-19.pdf rr-13-17.pdf

You answered your own question. They are domestic partners, not spouses. It is not a one-participant plan. File on 5500-SF, and yes they need a bond.

Sounds like all you have is a draft DRO, not a QDRO.

Depends on the provider. We do, and I have seen other providers that offer this service for a minor fee. I have also seen providers that say "not my problem".

This is the answer.

@Carol V. Calhoun So Company A uses Provider X for documents (FTW, FIS, ASC, etc). Rather than having an opinion letter in X's name, A pays $300 and gets an opinion letter in A's name for the document provided by X. ($300 fee to IRS per document type). Company B is now purchasing the assets of Company A, and would like an Opinion letter in B's name. Is that the basics of what is happening here? If so, I believe that is exactly what @EBP described in answer a).

I had a client do this years ago. They paid the penalty, then contacted us a week or two later. IRS said no in that instance. Short version was something like: 1. you filed late 2. we issued a penalty 3. you had two options, pay the penalty or pay user fee for correction program 4. You paid the penalty. You cant correct via program because there is no longer anything to correct. We will not issue a refund because the penalty was legit. In my client's case there was only a small difference in penalty and DFVCP user fee (less than $1,000), so the client dropped it after the IRS said no.

That's quite the statement without knowing anything about the plan or the participant.

HA! We may need an inflation adjustment on that 8 dollars... Happy Friday!

Thanks @Belgarath!

So the new participant count methodology for purposes of the audit waiver is participants with a balance at the beginning of the year, with an exception for new plans which use participants with a balance at the end of the year. I'm looking at a 5500 for a PEP with the following facts: Plan was effective 9/1/22 Plan filed a first return for the PY ending 12/31/22. Plan had 9 Participants with a balance at 1/1/23 A new employer became an adopter of the PEP 1/1/23 The new employer ends up with 160 participants with a balance at 12/31/23 This seems pretty straightforward to me. Its not a new plan and there were only 9 participants with a balance as at the beginning of the year, no audit is required for 2023. With 160+ participants with a balance as of 1/1/24, the plan will need an audit in 2024. I'm getting disagreeing opinions on the audit requirement for 2023. The argument is that because the new adopting employer ended had 160 participants with a balance as of 12/31/23, they also count towards the beginning participants with a balance count, which then is over the audit threshold. Anyone disagree with me that the plan does NOT need an audit for 2023? The fact that its a PEP shouldn't change things here since its one plan and one 5500... Thanks!

I have never seen this, can you give us an example of when an individual's taxable year is not calendar year?

I suspect that this would have to be manual adjustments which makes a hard no for me

Thanks @CuseFan! Yes that's what I'm concerned about as well, it appears that the employer involvement here is more than it should be for a deferral only non-ERISA plan... Ive requested additional documents so hopefully I'll know more soon.

Thanks @QDROphile! The employer is a 501c3, so I believe they are eligible if the plan meets certain requirements like deferrals only, limited employer involvement, etc. My first thought was that it was one plan but two "accounts" at the vendor, but the Form 5500 for plan 001 only reports deferrals up to the 4% that's matched, so that's the main reason I'm leaning towards two plans.

403b Guru's of benefitslink, please help me out with this one. Client is a 501c3 and Im looking at what I was told was a pretty simple 403b (plan 001). Nothing exceptional stands out in the plan document, participants get a 3% non-elective on top of a 50% match up to 4% of comp. The plan files a Form 5500 every year. After speaking to the accountant, what happens in practice is throwing me off a bit. Elective deferrals in excess of 4% of comp are actually deposited to a second 403b plan (lets call it plan 002). I havent seen a plan document for this plan, and no 5500s have been filed. It sounds like its a deferral only non-ERISA 403b. Both plans are with the same provider Plan 001 does not mention anything about deferrals in excess of 4% of comp being funded to a different plan This doesn't seem right to me, I would expect that plan 001 would have to spell out that it will only accept elective deferrals up to 4%. Am I missing something? What is the point of splitting elective deferrals into two plans? any insight would be greatly appreciated.

Was writing something similar to @Paul I but he said it much better!

Yes.

Sounds like a plan merger to me. (Im assuming they are not leaving a MEP or PEP with you which would add some complexity) Yes, because you have to let the IRS/DOL know to not expect another 5500-SF for this EIN+PN. Yes. Depends on service agreement with the client. Our default is that prior provider will file the final 5500 since they have the data, but we will do it for them if the client/provider relationship has soured to the point where the prior provider says "not my problem" or if the client asks us to do it.

Makes sense. IRS had to release the 2024 comp limit for 2025 because that's what the law requires. The IRS delay doesn't change that legal requirement, and as I recall, people questioned whether the IRS even had the authority to delay implementation until 2026.

The 2025 comp limit for 2026 would have to be released in Oct/Nov of 2025 when we know what 2025 inflation looks right? So they cant tell you today what the limit will be at the end of 2025.

or start at 10% and no escalation

Yea I agree. If the Participant magically discovers a reason that does qualify for hardship, it would be a good idea to document that.