LMK TPA

Thank you!

I need someone to explain it to me like I'm 5... Is the Roth Catch Up provision no longer required in 2026 and it's now delayed until 2027? After sending out letters of explanation and next steps to my clients not too long ago it sounds like I'm now going to tell them "just kidding - don't have to do it until 2027".

12/31/2023 was first plan year for an owner only 401k Plan. No 5500-EZ filing needed due to assets under $250k. In 2024, there's now an employee. I will be filing a 5500-SF and indicate it's the first year to file. There will be a 1/1/2024 beginning balance of $50,000. Will the IRS look at a first year 5500-SF filer with a $50,000 beginning balance and send a notice to the employer wondering why a 5500-SF wasn't filed in 2023? Thank you!

Thank you, I appreciate your responses! If there are employees though and the document says the match is calculated on a per pay period basis, would you say that's an issue?

And can make a 401k contribution and match every 2 weeks even if the owner doesn't take w-2 compensation until the end of the year? Maybe what I'm missing is that at that an owner pays himself however much he wants to, whenever, and at the end of the year the w-2 is whatever it needs to be to be reasonable.

The sole owner of an S-Corp is depositing 401k and safe harbor match every 2 weeks. His W-2 for 2024 supports his contributions. I'm fuzzy on this part... I was told that the payroll company processed a one-off payroll for $75,000 on 12/27/2024 in order to support his 2024 contributions. His W-2 showed $75,000 in total compensation and a $30,500 401k contribution. The CPA tells me it's ok because the IRS just wants to see that a W-2 at the end of the year supports the contributions. Is an S-Corp owner not issued an official paycheck each pay period with the various payroll taxes deducted for that pay period? The CPA said it's better from a tax perspective to run one payroll at the end of the year so that the W-2 supports the owner's contributions and the W-2 reports reasonable taxable compensation. Maybe this is semantics but I don't understand how a paycheck isn't process for an S-Corp owner throughout a year and one can be run at the end of the year to report W-2 compensation for the prior 12 months. Is this ok?

Just an issue for 1 participant. Payroll deposited a flat $400 per month as a safe harbor match based on his 2023 year pay and did not adjust the deposit for 2024 compensation.

A participant's safe harbor match for 2024 should be $3,000. Payroll company deposited $4,800. The account had positive earnings for 2024 (1) I assume we calculate attributable earnings on the excess deposit and move $1800 plus earnings to the cash account. Is this correct? (2) What are the options to use the $1,800? Can it be used to fund 2025 safe harbor match deposits? Should it be allocated as a discretionary match for 2024? Could it be used to pay our fees? (3) I feel like the attributable earnings shouldn't be used to fund a contribution. Can it be used to pay our fees? Thank you!

They don't in the literal sense but as ESOP Guy said, they have an interest in each asset.

Nope, not all. I said there are 2 real estate parcels - one valued at $1.4M and another at $750K. The decedent's balance is $1.5M. The proposal was to roll one of the parcels to an IRA and the difference between the value of the real estate and the decedent's balance would be paid in cash.

I felt dirty just submitting the question. 😜

Profit Sharing Plan has pooled investments. There are 2 real estate parcels - one valued at $1.4M and another at $750K. The parcels are valued each year by an appraiser. The remaining plan assets, $4.2M, are in a brokerage account. The owner died - his balance is $1.5M. There are 58 participants in this plan. I've advised the client for years that having 1/3 of total plan assets in real estate is an issue and they should consult an ERISA attorney. They haven't, and now here we are. The beneficiary is his wife. The 2 kids of the deceased owner now own the company. Their first request was to allow the beneficiary to roll the real estate to an IRA and roll the remaining balance in cash. Because this is a pooled account, each participant owns 1/58 of the real estate. Allowing the beneficiary to roll the real estate to an IRA seems out of the question. The new owners were talking to an investment banker friend who said he had a client with a similar situation. The employer sent a form to each participant asking for their permission to forgo their ownership in the asset and allow the beneficiary to take the real estate. This doesn't seem right. Does anyone have any experience with this? (The client contacted the ERISA attorney I referred them to. It might take awhile for the attorney to weigh in on this so I thought I'd put this out there to the TPAs in the trenches.) Thanks!

Is there a grace period before an employer has to start withholding from an eligible employee's paycheck? For example, employee is eligible on 1/1/2025. The employee was given the required notices 30 days prior to 1/1/2025. If the employee does not make an election to contribute (or not contribute) is the employer required to start withholding from the 1st paycheck after 1/1/2025? Or can the employer say that they'll start automatically withholding with the first paycheck 30 days after 1/1/2025?

1) Is there a problem with filing a 5500-SF even tho the plan is an owner only plan and could file an EZ? This is a new plan in 2023. The employer will have a non-owner participant in 2024 and will need to file an SF for 2024 so I'm thinking we could go ahead and start with the SF. 2) If a plan has been filing an EZ for a couple of years and needs to change to SF because he brought on an employee, is the switch from EZ filing to SF filing as simple as just starting to file the SF? I want to make sure I'm not missing a question on the SF or 5558 that asks if an EZ was filed in a prior year. 3) If a plan consists of only owners, an ERISA bond is not needed - is that correct?

DOL initiated audit of a 401k plan. We have a resolution letter from the DOL. The DOL calculated the lost earnings on the delinquent deposits and determined that the plan still needs to deposit $2,500 in unpaid contributions. The delinquencies span several years. The employer (a non-profit) will make the deposits by the end of this week. (1) The IRS hasn't knocked on the door yet. Can the plan go through VCP? The plan is not under IRS investigation but just completed the DOL investigation (2) Can one VCP filing cover multiple years or do you have to file an application for each year? (3) Failure to file 5330 - is this eligible for VCP? (4) Late deposits - is this eligible for VCP? (5) There is an option on Form 8950 to request a Pre-submission conference request. Is this more trouble than it's worth? Should a VCP application and proposed correction be submitted along with the fee and skip the conference? Could the IRS decline a conference and come after the client? Thank you!

Is 2% shareholder S-Corp medical included in the definition of compensation for Cash Balance plan purposes? I include it for 401k plan purposes but does a CB plan exclude it? I'm getting some conflicting information from some TPAs. Thank you!

Thank you!

This is exactly the scenario I'm wondering about. I'm going to file the 5558 timely and mark the 5558 box on the software's 5500-SF. I file using the local sign option so I attach the client's signed 5500 to the filing. I'm proposing to manually fill in the 'Form 5558' box on the client signed, page 1 of the 5500-SF and attach this signed page to the efiled 5500-SF. Another question... if I file the 5558 but the client returns the signed 5500-SF in time for me to file by 7/31 (1) is there a problem with filing the 5500-SF by 7/31 if I submitted the 5558 and (2) if it's ok to file it by 7/31 but I submitted a 5558, should I mark the box "Form 5558" even if an extension was not needed? Thank you!

I sent a 5500-SF to a client for signature. I suspect the client will sign and send it back to me after 7/31 even though I instructed otherwise. I plan on filing an extension. If the client signs the 5500SF that doesn't have the 5558 box X'd in by the software, can I manually fill in the 5558 box on the 5500-SF that he signed? Or do I need to go back to him and have him sign a new 5500-SF with an X in the 5588 box generated by the software? Thanks!

I'm applying for a 401k Plan TIN. One of the questions asks "is the plan liable for non-payroll tax withholding?" Is this asking if the plan will be responsible for transmitting withholding in the future or is it asking if there's withholding for a prior transaction that needs to be dealt with?

Thank you everyone! I called the 1-800 number and they passed me around to literally 5 different departments. Not a single person could answer my question or direct me to the right department. I'll send a letter. Thanks again!

I just applied for a TIN for a 401k plan than with an effective date of 1/1/2020. The plan did not previously have a TIN. There was one participant, the owner, with a brokerage account. They plan will have 2 more owner participants in 2024. I took over the plan from a prior TPA and applied for the TIN online. The confirmation letter says "Based on the information received from you, you must file the following forms by the dates shown: Form 945, 3/19/2024. After our review of your information, we have determined that you have not filed tax returns for the above mentioned tax period(s) dating as far back as 2021. Please file your returns(s) by 4/3/2024." WHAT?!?! This plan has never had a distribution and no withholding required. What did I do wrong? Did I get this guy in trouble? His personal and business taxes are all ok. Help please!!!

Thank you!

Non-safe harbor 401k plan (discretionary match) for non-profit is under DOL investigation because of a whistleblower report to DOL. Deservedly so, they have late deposits going back to 2017. They didn't have a TPA after the intial 2017 plan year. Hard to believe, but it was unbeknownst to the board members - lots of turnover in board members and bookkeepers. In any event, the employer is very cooperative and the DOL has been great to work with (so far). I'm reporting the late deposits to the DOL and the investigator is going to calculate the lost earnings. Facts: I filed the 2017, 2018, 2019 & 2020 with the DFVC program. 2021 and 2022 filed on time. Each year the form said that the employer did NOT fail to transmit participant contributions. At the time, they thought only matching contributions were late. Once full records were found (in a box in storage), we found that there were late employee contribution deposits. Now we know that every year from 2017-2022 has late employee deposits and never filed a 5330. DOL is going to calculate lost earnings after I report the amounts and pay periods to him The DOL investigator said the match is discretionary and that late or non existent matching contributions for a pay period are not an operational failure as long as each employee's match in that particular payroll is using the same formula. I'll have to true up the match for a few of the payrolls. QUESTIONS: Do they need to go through VCP with the IRS? T Are late deposits a reason to do VCP? After the first TPA disappeared in 2018, they didn't have a document in place until i drafted one in July 2022. Is that a VCP issue? Should I amend the 5500s to say there were late employer contribution deposits in each of those years? Form 5330 - I assume I need to file 5330s for those years. I see there's possibly an additional 5% penalty for failing to file. My problem is in looking at the 5330 I don't see that there's a category for failure to file for a LONG time. The Sections all seem to refer to 'tax that is reported by the last day of the X month following Y year..."etc. My situation doesn't seem to fit the categories. What do I file? I need lots of advice here. This is the first time I've ever encountered a cluster like this. Thank you for your help!

Under SECURE 2.0, plan administrators do not have to furnish certain disclosures, notices, or plan documents to unenrolled participants if they provide the unenrolled participant with an annual reminder notice about the participant's eligibility to participate in the plan and any election deadlines. The unenrolled participant must have received the SPD when initially eligible. From what I've read about the unenrolled participant notice, the required content seems to mirror the safe harbor notice. Would you agree? With the SECURE 2.0 notice relief, is the 404a5 fee disclosure distributed to only (a) participants with an account balance and (b) newly eligible employees? Does an unenrolled participant need the 404a5 fee disclosure? What are your TPA firms doing? What documents are you telling your clients that they need to distribute by December 1st? For a non-safe harbor plan, what needs to be distributed to ongoing participants prior to 1/1 in a non-safe harbor plan? Just the QDIA (when needed) and fee disclosure? If the plan doesn't need to give a fee disclosure to an unenrolled participant, does than now create the need to draft a notice to unenrolled participants? Thank you!