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

Good point Ilene - thank you. Yes if LTPT get in earlier due to the shift in plan year, so what really. There is no detriment to the employer plan such as required contribution (possible audit but that would be rather unusual I believe.) And the eligibility determination would be much easier as you say. And an employer does not want to miss eligibility notification and the consequences of that.

Our plans all switch to plan year after first anniversary year. Everything you read talks about 500 hours worked in 2021, 2022 and 2023 implying the hours are counted on a calendar year basis. Example: DOH 8/1/2021 and completes 500 hours in first anniversary year. Since plan eligibility switches to plan year after that, the person is eligible if worked 500 hours in calendar year 2022 and also 500 in 2023, then is eligible 1/1/2024 since worked 500 hours in 3 determination years. Seem right? Example 2: DOH 8-1-2020 and completes 500 hours in first anniversary year and also 500 hours in calendar year 2021 and 2022 but not in 2023. Does this person have 3 years since the first employment year started in 2020? I read "pre-2021" service is excluded. Does that meant the hours in the first anniversary year worked in 202 are excluded? Maybe I'm overthinking. The more I try to provide specific advice the more questions I have. Almost all our plans are calendar year. Seems we should just be able to count calendar year hours - not anniversary year hours. Does anyone know if FIS will provide a good-faith amendment soon so we can provide clients with a document and SMM? Tom

My primary question is who is a 5% owner? We all know the definition means >5%. Ownership attribution applies. I believe that means the RMD only applies to a non-direct 5% owner who is 73+. (Example - child is 100% owner and elderly dad works in the business - dad must take RMD if 73.) I believe the same logic applies to spouse - attribute ownership but RMD only applies to the non-owner spouse only if the spouse is 73+. And then there is the former >5% owner. I believe without researching this again, I recall if someone was a >5% owner at the time of their RBD then they must continue the RMD even after they become <5% owner. But if sell ownership prior to 73, continue to work, then no RMD. And fortunately penalties are greatly reduced! Thank you, Tom

A doctor called requesting a loan, without saying how much. I sent a blank application. I mentioned in the email to complete, return, we would review, get Trustee authorization and direct Merrill to issue a check (the doctor has a plan brokerage account.) This doctor is one of many doctors and only those on the Executive Committee serve as trustee and he is not one. He completed the application and just gave it to Merrill who issued a check for $20,000 which is $16,000 over his borrowing limit due to the 12-month lookback rule. I emailed him today and the Practice Administrator saying he must pay back the excess right away. If he refuses to pay, the plan provides for hardship distribution and he could self-certify hardship eligibility. In-service distributions are not available at his age. But if he will not complete the hardship form, then we have an uncorrected prohibited transaction. I'm guessing just issuing a 1099 as taxable for 2023 will not solve this problem. I thought about the group withholding $16,000 from an upcoming bonus but I doubt that is legal to withhold from pay without consent. The doctor seems very reasonable from past dealings so my hope is he will quickly pay it back but I question his ability despite a high income as he borrowed $50,000 not long ago and I suspect something is going on like a divorce. This just happened within the last 2 weeks. So maybe not yet spent. Comments are appreciated as always.

We have tax client (not a TPA client) who we just discovered had plan assets exceeding $250,000 as of 12/31/2022 for the first time and it is an owner-only plan. This is a Sch C client who has his 1040 extended and so taxes are due Oct 15. We didn't know about this in July so we did not file an extension (nor were we engaged on the plan.) We've never filed 5500s under the extended tax return rule. I'm reading that as long as the plan year and tax year are the same and as long as the 5500 is filed by the tax return due date including extension, it is not late. I want to be 100% on this since I don't want to risk missing the $500 penalty opportunity and risk a much larger late filing penalty which will then be blamed on us. Thank you

We have a plan with immediate eligibility for elective deferrals and delayed eligibility for the safe harbor match (I believe the standard 12-month with entry date). I know the ADP test is required for the <1 year group and the exclusion rule can be used, so the ADP test is not an issue. Someone in this group mentioned in the past though that top-heavy could be an issue. So when only safe harbor match is funded, no profit sharing, this plan is not deemed to meet top heavy rules because of the differing eligibility? And not only that, all participants would be eligible for the top heavy contribution if the plan were top heavy. Fortunately it is not but climbing and getting into the danger zone - approaching 50%. We always applied top heavy 3% to plans with different eligibility when profit sharing was funded. 90% of our plans are top heavy and have same eligibility for all sources. But this plan with only delayed safe harbor is a unique plan for us. Thank you for your comments.

We have a plan sponsor who failed to start deferrals at 3% (plan has immediate participation) and has auto-increase (1% per year.) I don't know how long or how many employees this involves. We have a conference call Thursday at 10:00 am. Of course the HR person involved is gone. I'm thinking the correction is to fund 50% of the missed deferral and/or deferral increase and 100% of the match plus earnings on both. I almost think I saw someone post on here one time to propose a one-time bonus grossed up for the tax liability. Thank you in advance for your comments. Tom

I contacted FIS - they are fixing it - hopefully soon.

Never mind - all is well now

Is anyone else having trouble with the program not responding when trying to e-sign or print? It's spinning and spinning. I was able to work with it this morning as it was slow and this afternoon I can't print a long form for an auditor not can I e-sign a couple returns. Just curious. This has not been a problem in the past.

Imagine a group of about 15 radiologists (no non-physician participants) who each have their own brokerage account a places such as TD Ameritrade(now Schwab), Fidelity, Edward Jones, etc. Some have financial advisors which is very helpful, others are self-service accounts. And then one of the doctors says we are replacing a trustee - please go to all the custodians and get the Trustee added and or one removed on all accounts. It can be a nightmare.

Does anyone know how to get the 5500 participant count out of reports on Amer funds Plan Premier? If so what is the report name? My client has a census of 5000 rows+ which includes a couple hundred duplicate rows because employees start and stop at different divisions (McDonalds franchises.) We can't reasonably combine wages, deferrals, hours and pick earliest DOH and latest DOT etc to get it to load correctly into Relius. If we could, Relius would provide the participant count. I phoned Amer Funds who really can't help. I asked them what would they do if this were bundled and they had to do the 5500? I know they have the data as the plan sponsor provide a full census file every pay period combined for all divisions. Just struggling with this. I think I can get close by sorting data exports by who has a balance and is not terminated, etc. Not sure I can get everything though. Fortunately it is safe harbor match, no profit sharing. I will probably ask the advisor to take it bundled for 2024 -thinking ahead about LTPT.

Everyone is right the DOT was 8/25/2021 not 2020 -sorry about that!

Calendar year plan - Plan requires Year of Services defined as 12-month period in which at least 1000 hours is worked with entry on following 1/1 or 7/1. Eligibility determination year switches to plan year after first anniversary year if not eligible Original Date of Hire 10/21/2020 Date of Termination 8/25/2020 (>1000 worked from DOH to DOT)) So not eligible for 2020 Date of Rehire 11/1/2021 250 hours worked in 2021 Date of Termination 4/25/2022 I wonder if this person should have been made eligible on date or rehire although she never worked a consecutive 12-month period. I believe FIS told me at one time it was just a passage of time in cases like this and doesn't have to be 12 months of continued employment. I know - tell clients not to re-hire!

And the permitted disparity level for a plain vanilla integrated with social security profit sharing is the amount for the calendar year that contains the first day of the plan year I believe. So for a year ending 9/30/2023 it is $147,000 (assuming based on 100%).

I just like to be 100% because RMDs are critical as you know given the potential penalty. Participant has pretax and Roth in a 401(k) plan and is required to take RMD now in 2023. The RMD is based on the account value in total - but I think the participant may allocate the RMD between pretax and Roth as they choose? Thank you

Yes I'm aware that Life insurance companies such as Jon Hancock wrap a mutual fund with their fee and it is no longer the true mutual fund. We have done schedule Ds on those types of plans all along. I just noticed our couple Ascensus/Vanguard record-kept plans do not have a schedule D. I believe their fund choices are the true mutual funds. Thanks Bri - that makes sense.