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.

Sch D is needed only when plans invest in MTIAs (master trust investment accounts), GIAs (group insurance arrangements - I assume referring only to welfare benefit plan), CCTs (common or collective trusts), PSAs (pooled separate accounts) and 103-12 investment entities (whatever they are). which along is extremely puzzling. The Wolters Kluwer 5500 Preparer's Manual indicates under the Who Must File Schedule D outlines when Sch D must be filed for investments in the above and indicates their related asset reporting lines on Sch H - 1c(9) through (12). So I assume when those lines have no value, then Schedule D is not needed. Our plans generally have almost all assets reported under (13) for mutual funds. So it seems for plans on Ascensus, Hancock, Empower, Principal, American Funds, etc., generally Schedule D is not needed if the plan assets are held in mutual funds and have no reporting on the Sch H lines mentioned above. Comments are appreciated. And yes I've ready the instructions to Schedule D - still seems clear as mud to me. We only have a handful of long form 5500s fortunately which I'd love to transfer out! Thank you!

Bill we we do that and get it filed immediately. But Lou I will check on that.

We filed From 5558 for a plan sponsor using the EIN it had been using in past years. The sponsor elected S corp status for 2022 and wrongly assumed the EIN would not change. the plan sponsor said the EIN (old one) on the 5500 now to sign is wrong. But if we use the new one - it wil not link with the 5558. I was thinking of filing under the old EIN. That will not raise any red flags. At this point any late filing penalty is small - 10 days which we can eat but I'd rather not go there. It is an EZ by the way. Any suggestions?

Plan has 3-month wait for deferrals and 12-month for safe harbor match plus semi-annual entry-dates. I realize the <1 year deferrals would need to be ADP tested but that is not an issue since can use the statutory exclusion, plus there are never any HCEs in that group. No other employer contribution is made - no regular match nor profit sharing. This plan is not top heavy thankfully but I thought I read something that if this plan were top heavy, the funding-safe-harbor-only top heavy exemption would not apply to those not eligible for the safe harbor match. Does that sound right? Thanks in advance for your comments.

Typically, if the plan allows, deferrals and Roth plus earnings are available for hardship distribution. We have someone asking if they can do a Roth conversion of profit sharing for example. I don't think that then qualifies as a "safe harbor" hardship source - does it? I realize they could amend the plan for in-service on profit sharing at 60 months or 2 years aged deposit.

I met with a new client this week. It is a trustee-directed pooled plan. They are moving to a daily platform with us as TPA. It is a Sept 30 plan year end. They've used an insurance company as record keeper/administrator for many years who did testing, 5500 and an annual statement. The plan sponsor mentioned she wanted a long separated participant out but they had a loan. I ask are they making payments - answer no. I said oh the insurance company did a 1099-R then? She said no they don't do that, she does 1099-Rs. So there is a long delinquent loan. Our engagement letter says we are not responsible for anything prior to our engagement which is Oct 1, 2023. I want to wash my hands of this. Once it transfers to the new record keeper the loan will be on the books unless they can convince this person to take distribution before Oct 1 of which I am hopeful. I'm not that in tune with error corrections. Our clients are generally small and clean. I don't want this loan correction process with the IRS to fall on me. How can you go back years and default a loan with 1099-R? I will ask how long ago has this been going on. I know it is not good to say - pay it off fast and forget the whole thing. Payoff is questionable anyway as it is about $15,000. I is a very successful company with high earning owners - the responsibility for not defaulting falls on them so they could owe the penalty but I'm surprised this insurance company did not say something - they have the record keeping, issued the loan, do the testing, admin and 5500. Comments? Tom

We have a takeover client that has 90-day wait for deferrals and 1 year wait for non-safe harbor match and PS with entry on the first day of the plan year. That is fine. But they want to change to a 1 year of service for deferrals too. I will tell them they have to change to semi-annual entry dates for deferrals. I want to tell them semi-annual for all contributions which is very standard with our clients. I suppose they could still have only one entry date, first day of plan year, for match and PS only since they could require 2 years to enter for those sources, right? I will strongly recommend against one entry date since I believe they or their payroll company will mess up the pay-period match. Comments are appreciated. Tom

We have a plan with 15 +doctors all with broker accounts such as Schwab , TD, Fidelity and other brokerage firms. The self-service ones - TD Ameritrade (now becoming Schwab) and Fidelity were the worst. One of the 2 doctor-trustees was leaving and they asked me to get the Trustee changed on all the accounts. The accounts with financial advisors went well. Honestly with Fidelity, I just had to hunt and peck and get transferred several times. Of course you won't get any specific information relevant to those accounts since you are not the account holder. At some point I was able to get a name and phone number to call back when the doctor was available to tie in on a conference call and we got it worked out. And their office manager asked what the extra time charge was for the following month.