Tom

Almost all of our clients hand sign the 5500 and a signing authorization. Over the early years of EFAST, clients just stopped wanting use/recover their PINs. One client just now did an electronic signature on the 5500 copy that we will attach to the filing before I e-sign. I'm sure ths has been discussed many times but appreciate comments on this. There is still time to get a hand signature but not much time.

Bagwell - I hear that about employment. I'd like them to find another TPA but it's our accounting firm's biggest client (dozens of doctors)and so we have to do whatever they ask. Out TPA service is a small part of our firm and so we can't wag the dog. They have a DB plan as well and PS has no allocation conditions. So if someone terminates and they have already received some PS, that is what they get allocated, subject anything more that might be needed for testing. generally yes it is a pain of a client. (Did I mention they allow for brokerage accounts?)

Bri what about the K plan - I believe no 2021 5500 for that plan either?

We have a client who provides health through a community plan. Employers pay into it, there is insurance and a trust with assets. Each participating employer has had to file their own 5500 under their EIN. The health plan has provided information for Schedules A and I in the past. I requested the information for 2021 and was told by our client - the health plan is filing the 5500 on behalf of the plan and participating employers no longer need to file a 5500. I have to think our client will need to file a 5500 marked "Final" as the IRS/DOL will be looking for one since there was a 2020 filing and since we filed an extension 2021. I am attempting to clarify this with the health plan people but still waiting for a response. If they don't provide any direction, we will prepare a 5500 for our client to sign and file. The 5500 program doesn't like a welfare benefit plan with no Sch A or I but I suppose I can ignore that validation warning. Better to get one filed and possibly amend later if needed. We only file a handful of welfare benefit plans and have never had to file a final.

We have a large client that funds safe harbor non-elective and profit sharing quarterly. So we make YTD calculations in Relius with pre-determined PS contribution rates for a couple classes and have the net cost determined by reducing for prior quarterly allocations. Getting it then into Ascensus format is a feat for 250 participants. Data entry routine I suppose could possibly work or just hand key, or cut and paste. It will be trued-up for the last quarter after the end of the year since the HCE PS rate is estimated on the low side during the year for discrimination testing purposes. As an alternative we will attempt to have the client code employees in Paycor for SH % and PS% for those eligible and have a file created by Paycor that can be uploaded to Ascensus automatically each pay period. Sounds idealistic and likely to take an act of God for the plan sponsor and Paycor to get done. The plan sponsor wants to automate the contribution process and wants contributions to go in dollar cost averaging each pay period. (Did I say it is a large group of doctors?) Anyone doing anything remotely like this? Thanks for any comments

Good point. Thank you

Can someone shed light on the difference between IRR and IRT? Our BPD Cycle 3 says IRR involves an amount "permitted to be distributed in an eligible rollover distribution" and IRT involves an amount "not otherwise distributable." An IRR I believe allows in-plan conversion of pretax deferrals at any age. Beyond that, I'm not 100% and can't seem to find sources that explain this well. We were to amend a plan to allow in-plan conversion - presumably both IRR and IRT. Amercan Funds RKD says on their website they do not support IRTs. Thank you for your comments.

True CuseFan. We followed up on Cycle 3 signature pages but there are always those special few where you can ask and ask and after that ...it's on them.

Never mind. The document was restated. He didn't remember remember signing it back in April.

So today one of our very few clients not on our document, tells me he just now is seeing my communication regarding the restatement deadline. I reminded these clients to contact their document provider to make sure this was done. It's possible the doctor just doesn't remember signing it. It is an owner-only plan. If it hasn't been updated, what is the fix step? Thank you

Oh you're right - I was overly focused on the effective interest part of the test.

Realtor is 50% owner in a real estate business with a 50% partner (not related). Realtor's spouse owns a business 100% - a salon. No services are performed for each other's businesses. The Realtor and his spouse have minor children so they are deemed to own the interest in each others' business. But to be a controlled group they need GREATER than 50% common ownership to EFFECTIVE control I believe from what I'm reading. Would you agree? Thank you!

We restated the Principal plan onto our document for Cycle 3 and it was executed timely. Principal continues to hold the plan under its Trust agreement but that will change. This one just made me a bit nervous since it is the only plan of ours whereby the plan document was signed but no trust agreement yet.

As we know the deadline for signing Cycle 3 Adoption Agreements has passed. What if a plan sponsor has not signed the now separate Trust Agreement timely - by July 31? The Trustees are the same before and after Cycle 3.

Is the Lifetime Income Disclosure needed for an owner-only 401(k) plan? I would think (hope) not. These often involve one broker account and thus the disclosure will not generate from an institutional record keeper. Tom

We don't work with these but a referring advisor is asking - they have a client who started a simple IRA July 1. The payroll company says compensation for the full year is counted. So that if the person contributes 6% from July through Dec they will end up at 3% deferral for the full year and get 3% match on their full year pay rather than 3% on their pay from July through Dec. I figured the reason the IRS imposed the Oct 1 set-up deadline was to make sure employees got the 3% match for at least 3 months since the owner could make the max deferral within those three months. The payroll company disagrees with that apparently. Comments? Thank you.

That happens often - clients want to pay the match through the payroll service provided as the year goes along and the the TPA does a true-up because plan says it's an annual match. I dont' think it's possible to have provided too much match on a payroll basis. The result is always to give more to some - who reach 402g limit early, make changes during the year, etc.

Can someone confirm the 408b2 is required initially for plans providing TPA compensation and then only if there is a change in that compensation (not annually?)

We were asked to step into a plan where the 5500 was late and had an IRS notice "where is your 5500." We quickly filed under DFVCP, client paid the $750 and never hear anything further. It was very small, just a couple participants.

That is an issue for us specially with dental clients. They have former employees who cover for vacations and may go a year without working and so there is no termination date in the census and thus show up in testing.

For the very few we have remaining, we wrote into the document for the plans to be quarterly valued. So they get earnings through the end of last quarter AND Trustee/Administrator has the option to request a special valuation which which we charge of course. I don't think the regular employee would think this way - oh I can get my March 2022 value out since that was the last quarter so I will request distribution now and avoid loss allocation. If it's an immaterial balance prior quarter is fine. But a large balance then if Trustee doesn't elect special valuation we may reach out and advise that they do request one. Most of out plans are 3% nonelective safe harbor and so the final contribution for the year of termination plus potential gateway and PS, means another distribution process a year later!

This may be a good year to consider an in-plan Roth conversion within one's 401(k), provided the plan document allows. If someone converts now and the market drops a lot further, can they reverse their conversion before the end of the year? I recall this was possible a few years ago. If it is allowable, it may also depend on the record keeper. Thank you, Tom

6 doctors each had their own tax entity and shared employees who were all on the payroll of a separate tax entity. One of the doctors (Doctor A) maintained a 401(k) plan in 2021 and covered employees for the portion of pay allocated to her based on their time worked for her and all hours worked for all doctors were counted in meeting eligibility. I'm told none of the other doctors funded any type of plan, no Simple, nor SEP. They were convinced to form a group in which they are all equal shareholders and want to have one 401(k) plan covering all doctors and all eligible employees. It will provide only a safe harbor match. The plan has not yet started for 2022 and so there has been no plan funded by any of the doctors yet for 2022. The goal is to have it set up by July 1, 2022. The thought is the group would assume sponsorship of Dr. A's frozen plan. I wouldn't think there'd be any issue with safe harbor treatment for 2022 being adoption by a newly formed entity. I'm also wondering about the new plan tax credit available for each of 3 years. Seems that would require the start up of a new plan and closure of the old. Yet for one of the 6 doctors, the plan is not new under her tax entity. I may just not mention the tax credit if it is questionable and leave that to their tax advisor, if he even has that on his radar. Comments as to safe harbor treatment for 2022, the tax credit? Thank you for your comments.

Thankyou for the comments. Yes there is a corporation, which is wholely owned by the ESOP. I had asked their corp tax advisor as to officers and was provided Board of Trustee names. Likely they are one and the same. Someone is in charge of decision making for the corporation as you say. However, I also see none of these Directors(Officers) earn more than the key employee threshold amount. And so it appears there are no key employees for top heavy purposes. Seems illogical and against what the top heavy rule is trying to accomplish.

A plan sponsor was sold 100% to an ESOP for its employees. So the plan sponsor is now the ESOP. I'm told there are no corporate officers but I am checking with their CPA firm. The ESOP has a Board of Directors who are also plan participants. I'd think of them as officers. But if none of them have wages over the key employee limit, then it seems there are no key employees. I thought I read at one time there had to be a minimum number of officers, or at least one. All I can find now is there is a defined maximum number but I don't see anything about minimum number. Thank you in advance for comments.