Tom

Dentist A owns his practice 100%; Dentist B owns his practice 100%. They do no work for each other. Dentists A and B are purchasing practice C and will be 50/50 owners. Practice C hires a dentist who will be doing 75% of the work. Dentists A and B will work there to fill the other 25% of work. There is no referral of patients from A or B to practice C, or minimal. Practice A has a 401(k) with PS. Practice B has no plan. So the question was posed to me - does practice A need to cover practice C in the A plan? I believe the answer is no. Thoughts? Thank you, Tom

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

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

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!

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

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

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

I see that now CB. Thank you. That looks clear to me and makes sense.

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

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.

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!

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!

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?

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.

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

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!

Plan provides for immediate entry for deferrals and Safe harbor non-elective. Profit Sharing requires 12 months of service. Plan is not top heavy. In 2023 an owner's son got hired and deferred and is getting the safe harbor along with 6 other NHCEs. They all are getting the 3% safe harbor. I am testing the plan using cross testing. This passes non-discrim testing for the >12-month group but fails for the <12-month group. I'll have to allocate profit sharing to the <12-month group to pass testing. Or does it need to be allocated as QNEC? In hindsight, the plan should have excluded HCEs from the safe harbor non-elective. But that is obviously too late. Thank you in advance for any comments. Tom

Client plan excludes those "scheduled to work <1000 hours" which we know has to change. They amended their plan effective 1/1/2021 for this change so they stopped enrolling that part-time class since 2021. The plan's normal eligibility is 3-month wait with quarterly entry dates. If a part-time person was hired say March 1 2021, their 3-year anniversary would be 3/1/2024. I assume they would enter the plan for deferrals assuming they completed 500 hours in each of their 3 anniversary years. (There is no plan year shift since there is not a Year of Service eligibility requirement.) I think they should amend and eliminate the part-time class exclusion now to avoid missed eligibility. They can still exclude LTPT from the match. They included the part0teim exclusion back for 2021 to avoid the match for these people and to try to stay under 100 lives (They have been subject to audit since they so this is a non issue now.) Does that make sense to eliminate the class exclusion? One last thing - I believe I read that this part-time exclusion needed to be amended out of plans by Jan 1, 2024 yet the SECURE amendments are not due until end of 2025. Did I see that correctly? Maybe the writer meant in practice, but not in document. Thank you in advance for any comments! Tom

We have a plan that is terminating with Transamerica. Several participants will not return their distribution forms. This is an FIS/PPD DC document. I know most will say - what does the plan document say? It is very ambiguous in my opinion. These are participants with more than $5,000 and they are not "lost." The plan is not subject to QJSA. We want to simply roll them to a default IRA with Millennium Trust if they continue to ignore the distribution forms. The assets are enough where I don't want to take chances - in total about $25,000 for 3 people. Thank you in advance for your comments. Tom

Good points - thanks. I can see perhaps doing them one by one electronically could be time consuming as opposed to printing a batch and mailing. But I was never comfortable with the mailing even though we did certified with return receipt both from the post office and the IRS. It's worked.

This is certainly a very welcome change. I assume "Beginning on Jan. 1, 2024" means ANY form for any plan year calendar 2023 or fiscal year ending in late 2023. Thank you

Dentists are know for having "prn" employees. These people fill in vacations, etc. Often they've worked in the past but left. So on one hand they terminated some time in the past but they are still getting paid now and then and getting a plan contribution since they were previously eligible. So if the person is 73, I supposed best to do an RMD to be safe. Tom

Owner-only plan value exceeds $250,000 for the first time as of 12/31/2022. We were asked to do the 5500 in late September. The plan sponsor ( a sole proprietor) had his 1040 extended to 10-16-2023. So we marked the 5500-EZ "Automatic Extension." There was no 5558 filed before July 31, 2023. It seems dubious the IRS would just trust that this 5500 is properly extended since there is no 5558 filed and I'd expect a notice. If there is any question about this, the sponsor could just file under delinquent EZ procedure and pay $500 before the IRS notifies. We've never filed a 5500 under the automatic extension option. I'm probably concerned for no reason right?

So some advise eliminating a waiting period or making it very short for part-time deferral-only employees. In the past if the plan was top-heavy they had to get 3%. 90% of our plans are top-heavy. And I know SECURE 2.0 eliminates top-heavy for those otherwise excludable. So if a plan allows all participants entry into the plan say after 12-month wait and entry date, those with a Year of Service (1000 hours) will get a full employer contribution and those without will not - they can defer only. This will satisfy the LTPT requirement. There is no testing on the deferral-only group, and no top-heavy required contribution. This seems pretty easy except it's more enrollment for a plan sponsor. I believe our clients generally will still want the 12-month waiting period. Does this sound reasonable? Also, if it is a DC/DB combo, are there any consequences? I would think not.

We have a client (individual medical practice) that is bringing in a group of 6 employees (5 employees plus 1 doctor) from a hospital. Of course the doctor would like to immediately participate in the medical group plan. We've used the predecessor service plan feature when a practice has been acquired. But I believe I read to use that feature there needs to be some business continuity relating to the group coming over. I always appreciate your comments. Tom