LMK TPA

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!

oops! Yes, 2023. Thank you!

Thank you! If 401k accounts are not distributed by 12/31/2024 but the plan officially terminated, can the SIMPLE still start on 1/1/2024?

My client has a non-safe harbor 401k plan. They want to terminate it and start a SIMPLE IRA. I know SECURE 2.0 allows a SIMPLE to be terminated mid year and start a 401k plan, but is the reverse true? Can a non-safe harbor plan be terminated mid year and start a SIMPLE mid year? Is a 60 day notice of termination required? I have a Q&A from TAG saying that an advance notice of plan termination is not required (even if the plan is a safe harbor 401k plan.) Is that true? I know TAG isn't official legal advice but they're a pretty decent source of information.

Thank you! Wow, so if we've been giving top heavy minimum contributions to the participants that met the plan's 90 day eligibility requirement, we no longer have to give them a top heavy minimum starting in 2024 (for those under 1 year of svc, age 21)?

Employees who will be eligible in 2024 because of the LTPT rules are excluded from the top heavy minimum requirement. If a plan's eligibility is something less than 1 year of service, age 21, are those employees now also excluded for top heavy minimum purposes? For example, a plan has a 30 day employment requirement for participation. The LTPT rule isn't going to affect this plan because essentially all employees are going to meet the 30 day requirement. Are you saying that the employees who wouldn't have met a year of service don't need a top heavy minimum?

As to why it's a safe harbor plan in the first place, my thought is that it's laying the groundwork for a future employee. I wrote a plan recently as a 3% non-elective safe harbor plan with HCEs only (at the moment.) The document allows me to exclude HCEs from the safe harbor allocation so no HCE is obligated to contribute. If a NHCE is ever hired and eligible, the plan is automatically protected from failing ADP. If anyone sees this design is a problem, please let me know - I appreciate the feedback and your expertise!

My TPA firm is very small and 99% of our clients have less than 100 participants. Most have less than 40. I'm concerned that as time goes on, PEPs become more popular and my business is threatened. Is there an option for a small TPA firm to market PEPs? Can I join forces with a company that sponsors a PEP while I maintain TPA and consulting services for my clients? Thankfully, my market values local service but I'm not going to fool myself into thinking that clients won't jump ship if a PEP makes more sense for them and the popularity grows.

Does a statement need to be sent before 6/30/22? That's what I'm concerned about - not getting the info from the client in time to send a statement by 6/30.

If a Safe Harbor Plan terminates mid-year, the plan will retain its safe harbor status and top-heavy exemption for the plan year of termination as long as the termination is due to a substantial business hardship or there is an acquisition or disposition. I would assume that businesses will cite a substantial hardship for terminating the plan. I'm not sure what the definition of substantial hardship is. If the business terminates the plan and the substantial hardship isn't the reason or it cannot be proved, I believe the plan will be subject to the top-heavy rules. Any comments on this are appreciated.