Trisports

The participant changed their election in 2021 from 3% to 0% but the payroll continued to deduct 3%. The failure was discovered in 2023. The plan has no match and is subject to ADP testing. How should we correct. technically, these were impermissible deductions. Are we supposed to return the contributions + earnings/losses to participant and re-run the ADP testing?

We have an orphan plan (doctor died in 2014, he was the only participant in the profit sharing plan). He did not designate a beneficiary and according to the document, the assets are payable to his estate. Daughter is the executor of the estate (doctor's wife predeceased him) . The assets are with Morgan Stanley (approx. 1.1 mil) - MS will not take instructions from daughter, as executor of the estate, but instead requires a court order appointing a successor trustee of the plan The plan document has not been updated and no form 5500s have been filed so we want to terminate the plan via EPCRS and file the delinquent returns. Do we need to file a court proceeding to appoint a successor trustee? How do you do that for a profit sharing plan? I can't find any instructions on how to appoint a new trustee for a retirement plan.

I think my main issue is: will the IRS take the position that the plan was not a QACA safe harbor because the matching formula did not meet the 401(K)(13) requirements? Because the SH notice listed a match up to 5%, some participants could argue that they would have deferred 6%, in which case we would have a missed deferral opportunity for the deferral part (from 5% to 6%)?

The client thought they were a QACA Safe harbor for several years now – BUT they only matched up to 5% . The formula was 100% up to 3% and then 50% of elective deferrals on the next 2% of compensation. They put in a total of 4% (0.5% more than required for QACA safe harbor) but did not stretch the match up to the required 6%. The vesting was 100% after 2 years of service. Since the client matched more than the required 3.5%, do we need to do anything?

The plan document provides that the plan year end is the last Friday of the December. The plan runs from 12/28/2019 - 12/24/2020 so form 5500 and 8955 were filed on the 2019 Forms. For 12/25/2020 - 12/31/2021 the Form 5500 and 8955 will be filed on the 2020 Forms. My biggest concern is that 2021 form 5500 and 8955 would then be skipped because there is no plan year that starts in 2021. The next plan year is 1/1/2022-12/30/2022. Due to the fact that the plan year starts in 2022 then the form 5500 and 8955 should be filed on the 2022 forms not the 2021 year. Another issue is that the year after would also be reported on the 2022 form 5500 and 8955 because the plan year is from 12/31/2022 – 12/29/2023. Any suggestions on how to handle this situation?

We are filing an anonymous VCP. What should we use for plan sponsor, plan name, plan number and EIN on pay.gov? We will redact the plan information in the attachments but what do we use for the online 8950 Form?

Our client (ABC bank) is sponsoring a pension plan with 85 participants. ABC bank also holds the investments and some of the assets are invested in the ABC money market fund. The auditor stated that because the ABC bank holds the investments (they are the trustee and custodian), the plan is required to be audited. More than 95% of the assets are qualified assets and there are less than 100 participants so we think the audit waiver requirements are met. The fact that the plan sponsor is also the custodian might be a potential fiduciary issue (prudent rule) but that should not preclude the plan sponsor from waiving the audit requirement. Do you agree or is the client required to have an audit?

Thank you all. The plan is subject to ERISA. The plan sponsor (501c entity) made matching contributions contributions since inception. The plan was never formally adopted and no ACP testing was done. We are basically handling all the compliance issues since inception - VCP for plan doc & other issues and DFVC for late Form 5500s.

We took on a client - 403(b) plan - that never filed Form 5500. The plan was in existence since 2004. We are filing the late returns under the DFVC program. Since 5500-SF is not available for years prior to 2009, is it ok to file Form 5500 from 2004-2008 and Form 5500-SF for 2009-2019 or should we use the same Form for all open years? Thank you.

Our client is a controlled group who acquired a new entity last year. The client determined they can operate the new entity as a QSLOB. Who should be listed on the Form 5310-A as "the employer""? The parent company or the new entity?

We were asked to assist a client who had a 403(b) plan since 2004 but never formally adopted a plan document or filed a Form 5500. If the client adopts the plan document before the June 30 deadline, are we in compliance, or do we need to file a VCP for the plan document issue? Is the June 30 deadline only for defects to an existing plan document or can we use it for a plan that never had a plan document? For the late 5500, the client will filed under DFVCP. Thank you.

I believe the only way you can talk to the IRS is if you are an ERPA - enrolled agent with the IRS - unless, you are an attorney.

A new health and welfare plan was established in 2016 and had less than 100 participants in 2016 and 2017 so no Form 5500 was filed. For the 2018 plan year, we were incorrectly told by the client that the number of participants at the beginning of the year was 145 so we filed an extension before July 31 indicating this is the first extension for the plan. Upon additional review, the client confirmed there were only 20 participants at the beginning of 2018 , therefore a 5500 report is not required. Do we need to do anything to notify the IRS to disregard the extension? Will we get any inquiry from the DOL about a potential filing? Now that we filed an extension, do they expect to receive a 5500? Thanks.

Are you referring to the VCP User fee? If yes, you are correct, it cannot be paid from the plan assets. The Internal Revenue Manual section on EPCRS expressly provides that VCP user fees are not payable from plan assets. See below: IRM 7.2.2.7 (10-03-2017) VCP Submissions - Initial Review Verify that the user fee has not been paid with plan assets: Review the cover letter or narrative in the VCP case file to determine if there is an indication that the user fee was paid by the plan. Review the HQEP printout and copy of user fee check to see if the plan is the payor of the user fee. If the copy of the check is missing, secure a copy of the compliance fee check from the VCP Applicant. If there are indications that the plan paid the compliance fee, discuss the matter with the Group Manager or Group Coordinator. If the fee was paid by the plan, ensure that the plan is immediately reimbursed by the plan sponsor (or some other party) with interest for any amount of VCP compliance fees paid. The VCP submission cannot be processed any further until the plan has been reimbursed.

Traditional DB plan, several participants were supposed to be put in pay status at age 65 but the prior record-keeper failed to initiate the payments. We are now calculating retroactive annuity payments; however, the plan does not know the participant's marital status. Some participants cannot be located and some won't respond. On what basis should we calculate the annuity if we don't know their marital status? Single? Married? If married, what age should we use for spouse? The plan document is silent and I cannot find any guidance on whether there is a default method to use when calculating the annuity. Thank you.

The prior TPA filed an anonymous VCP for the client. The IRS blessed the correction and invited the client to file it as a regular submission. With respect to the actual filing process, do we just file a regular VCP submission and we include as an attachment the IRS approval of the anonymous filing?

It was discovered that the coverage testing has been done incorrectly for several years (more than 5). Plan fails coverage and there is no fail-safe language so we are proposing an 11(g) amendment and to file the correction under VCP. The TPA's suggestion is to allocate a QNEC contributions to the lowest paid participants sufficient to pass the AVB. While QNEC for ADP testing needs to be limited to no more than 5% or twice the representative rate, there doesn't appear to be any limitations for purposes of the QNEC for ABT. Tres Reg 1.401(a)(4)-11(g)(vii) states that the QNEC should be equal to the NHCE's compensation multiplied by the ADP and/or the ACP so I'm afraid that allocating a QNEC contribution to the lowest paid employees might be considered discriminatory by the IRS. It does not appear to me that they would pass the reasonable classification test. Is it permitted to target the QNEC allocation? Is there any guidance on how to allocate the QNEC?

The plan sponsor failed to file the final/short form 5500 for the plan year ending 5/31/2016. We recommended DFVC, filed the return in November 2017 and paid the $2,000 penalty (this is a large plan) . The DOL's online calculator correctly indicates that the penalty is $2,000 (based on 313 days late). The client received a letter from the DOL stating that they might have submitted an overpayment of $1,260 and included an ACH form for the plan sponsor to request the refund. We called the DFVC number on the letter but got voicemail and have yet to receive a call back from them. Any indications as to what might have triggered the letter? Anyone had any success in addressing this with the DOL? We don't want to overpay the penalty but we are pretty sure the penalty is $2,000 and not $740.

ESOP Guy, Is then my interpretation correct that basically all terminated participants with a balance below $5,000 will have to be rolled over, practically eliminating the lump sum option for involuntary cash-outs? Thanks.

The client received a letter from the their record-keeper letting them know that Millenium Trust will handle the automatic rollovers effective next year and inquiring whether they want to reduce the automatic cash out threshold from $1,000 to $0. If I understand correctly, this means that all terminated participants who did not make an election and have a balance below $5,000 will automatically be rolled over to Millenium, instead of processing a lump sum? If the account is $200 and the distribution is $50, $150 will be rolled over instead of issuing a check to the participant. Can that be done? Reduce the rollover threshold to $0?

It is a CP 403. The notice indicates that if the plan sponsor is eligible for DFVCP, to complete the date they applied, so I think they will be ok. Just wanted to double check. Thanks.

The plan was merged into another plan and the 2015 final (short plan year) Form 5500 was not filed. The plan sponsor received a notice from the IRS inquiring about the filing. We are proposing DFVCP. Will the IRS notice preclude them from filing under DFVCP? I'm reading that you can file under DFVCP as long as you don't receive a notice from the DOL but there is no reference to IRS.

The plan excludes partners from participation. One associate was promoted to partnership on Oct 1. The plan provides for a discretionary profit sharing contribution to all eligible participants who complete 1,000 hours during the year and are employed on the last day of the year. Can we allocate a PS contribution to the associate based on his earnings from Jan 1 through Sept 30 or is it the participant excluded because he is a partner as of December 31? Unfortunately the plan document is silent with respect to how to deal with EE's who are participants and then become part of an excluded class (it is in individually designed plan).

Hi, We have a plan that failed to put retirees in pay status for the past 3 years. The plan provides that the lump sum benefits will be calculated using the interest rate as of November preceding the plan year in which the distribution is made. Which interest rate do I use when calculating the missed payments? Do I use 2016 for all plan years (2014, 2015, 2016) since the payment will be made in 2017? or do I need to use the Nov 2013 interest for 2014 payment calculation, Nov 2014 for the 2015 payment and so forth? Thank you.

Company A bought Company B in 2014 so we are out of the transition period. They are both calendar year plans, both used current year testing and both are safe harbor. The only differences are company B has after-tax contributions and the compensation definitions are different. Can the plans still be aggregated for coverage? I think that those are 401(a) issues - that still need to pass nondiscrimination but must do so together if we aggregate for 410. Can anyone confirm? Also, does the ACP test for the after-tax must be done on an aggregated basis? Thanks in advance