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Tom

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  1. We became aware of a non-client plan sponsor who needs a 5500 audit for 2022. This is not our TPA client. The plan is bundled with ADP. The plan sponsor contacted us for a plan audit. The plan was small for 2021 but went well over 120 as of 01/01/2022. The 5500 for 202 has not been filed. ADP prepared the 5500 and I'm guessing takes the position - we posted it on our website and sent an email to the plan sponsor. I've seen that before with another bundled provider. And I realize plan sponsors need to be alert to deadlines as they are ultimately responsible. My question is (and I've seen this before at webinars and didn't pay close attention because I didn't think it would ever apply to us) - should the 5500 be filed now without the audit report? I'm told the audit will not be completed for a month. I'd like to get the DFVC penalty paid before the IRS catches the late filing. I'm surprised it hasn't already. What do you think about filing the 5500 now without the audit report and amending a month later with the report? Thank you, Tom
  2. So 2024 has already begun and a plan has a pay-period safe harbor match. A client advisor is asking if they can amend the plan to an annual match to eliminate the requirement to pay the match quarterly. (This is not our client and apparently the plan sponsor has been paying the full match after the end of the year.) I told the advisor, I believe this is a prohibited amendment at this point for 2024 and that they need to begin paying no later than the end of the following qtr. I expect everyone will say it's a prohibited amendment for 2024 now even though an annual/true up match could effectively increase the match for some. Tom
  3. Our software for minimum gateway purposes uses 414(s) comp for the 1/3 test and 415(c)(3) comp for the 5% test. Example: employee became eligible 7/1/2023 -total wages for the year $50,000 of which $25,000 was earned after the plan entry date. The person terminated so top heavy does not apply. The plan defines compensation as W-2 wages. But the person has to get the minimum gateway as the plan is cross-tested. The Question: Is $25,000 compensation used for both the 1/3 test and the 5% test or must $50,000 be used for the 5% test. The software seems to indicate $25,000 is used for the 1/3 test and $50,000 is used for the 5% test. This could be an input error. I didn't check the system comp fields, only the output report. Thank you for any help in clarifying this!
  4. Tom

    Line 12

    I assume this is required on 5500s - not optional?
  5. Tom

    Line 12

    Just to be 100% on this so 5500s are not rejected. I know our plan letter serial number. I assume the date of the letter is as below 6/30/2020, NOT the date of submission which was in 2018. Thanks
  6. Does anyone file IRS form 945 electronically? If so, what do you use. We are filing paper again for 2023 since the deadline is approaching. We e-file our 1099-Rs. Thank you
  7. I see that now CB. Thank you. That looks clear to me and makes sense.
  8. The 1099-R instructions aren't clear to me for my situation below. for this don't seem clear to me. Maybe it's simpler than I think it should be. We have a client with some employees rolling small DB distributions a Roth IRA. Code H does not apply since the instructions say that is for Roth source to Roth IRA. I'm wondering if that is just a G code with boxes 1 and 2 completed with the rollover amount. am I missing something? Thank you in advance! Tom
  9. The problem I'm having is things I'm reading say a key employee - is a >5% owner, >1% owner or officer with high comp "at any time during the plan year CONTAINING THE DETERMINATION DATE." The person I mention above was none of those things at any time during the plan year (2022) which contains the determination date (12/31/2022) for the 2023 plan year. So the person is not key for 2022 and first meets the requirements for key in 2023 but was not key as of 12/31/2022 which is the determination date for 2023. This is what's making me think the person is not key for 2023 even though he is an officer in 2023 and makes $250,000.
  10. I'm checking the admin software on this which says the person is not key for 2023. 99% of our plans are small with owners/officers being the same and always >5%. But now the top-heavy issue comes into question for a client with a non-owner officer. Question: For PYE 12/31/2023 the top-heavy determination date is 12/31/2022 and the plan is top heavy as of that date. The employee in question is not an owner or officer in 2022 but became an officer 1/1/2023 (no ownership) and has $250,000 in comp for 2023. I believe this person is non-key for 2023 and needs a top heavy contribution for 2023. This is what our software indicates. Likewise if someone buys into a company in 2023 at over 5% (is not an officer) they would not be key for the year of their buy-in since the determination date of their status is the last day of the prior year. They would be non-key for 2023 and key for 2024. (They would be HCE for 2023 however.) Comments? Thank you!
  11. Sorry one last question on this. I want to be sure since I'm sort of tricking the system. So I will test the >12 month group on an accrual/cross-tested bass and provide gateway to NHCEs in that group and enough PS to pass nondiscrimination testing. I will test the <12 month excludable group on an allocation basis which passes easily since they are all just getting the 3% safe harbor, no profit sharing. There is 1 HCE (an owner son ) in this group. My last question - must the the NHCEs in the <12 month excludable group meet minimum gateway? If so they would need to get 2% profit sharing. Thank you!
  12. Wow - that is quite a good solution. I can do that. Perhaps Relius can do that without merging reports but in the testing screen you choose statutory exclusion and then test either allocation basis or accrual basis. Any Relius users know anything different?
  13. John - last question. So I can pass the >12 month group testing on a benefits basis. I can give the <12 months people the 5% gateway. This <12 month group would pass on an allocation basis (there is one HCE in this group) but I can't test this group on an allocation basis and the >12 month group on an accrual basis right? I see no way to do this in the admin system.
  14. Ok that makes sense as the program was telling me that. I'm actually testing it now on al allocation basis which is working fairly well. Thank you
  15. Ah I was going to ask that! The under 1-year group participants are all getting the 3% non-elective safe harbor, nothing more. So it would pass testing on an allocation basis. I was not aware the plan could test both groups differently. (Does anyone know how to get Relius reports to show that?) I did get cross-testing to work by including the excludable group with some profit sharing. But since the plan says they are not eligible for profit sharing, if they go this route, does the plan have to be amended retroactively for 2023 to expand PS eligibility or can allocating profit sharing simply be done to satisfy testing? Thank you!
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