Lauren0507

I appreciate your comments and agree the was an operational failure and as such, not the participant's fault or responsibility to correct. When I said he bears some responsibility, I did not mean that legally he has any obligation to find or fix the failure. The TPA is refusing to reinstate the loan, so I'm going to review the citations you provided and push back on reinstating/reamortizing the loan. Thank you, Artie!

Thanks so much for your input. I like the idea of suggesting pre-tax contributions to the employee to restore his balance. The plan is currently under IRS audit, so audit cap may be an option, although I don't want to open up years not currently under review. I am considering suggesting the employer assist with the employee's tax liability outside of the Plan. I agree the employee bears some responsibility. I'm not sure he speaks English (which could be a hindrance on his end). I see no way to correct this in a way to put him in the position he would have been in had the error not occurred.

A Plan participant was mistakenly terminated in the TPA’s system on 9-30-2025, which stopped his loan payments. In November 2025, a 1099-R was issued using Code M (plan loan offset). The error was not discovered until May 2026 after the maximum cure period expired. Since his employment did not terminate, I believe he should have been issued a 2026 Form 1099-R using Code L (deemed distribution). Normally, we would advise the loan be reinstated. However, since the error was not discovered until after the maximum cure period had expired, the TPA is unable to reinstate the loan. The employee was harmed by the error since his loan became taxable. Does anyone have any suggestions as to how this can be remedied under the Plan?

Our client's plan terminated and all accounts have been distributed except one. Upon employment, the participant provided an incorrect SSN. The participant has been unable to provide a valid SSN and is not expected to do so. Unfortunately, the employer is a small business and failed to obtain I-9 verification. The account balance is approx. $2500 and is all attributable to employer safe harbor contributions. He satisfied the eligibility requirements and the funds belong to him, but a distribution cannot be processed using the invalid number, nor can an IRA be established. I am looking for suggestions on how to handle the remaining funds.

Hello YBL, I sent you a message.

Thanks, Paul!

No, sorry Reluctant_Lawyer, they put them in the employee's IRA instead of a plan account.

For 2022-2025, an employer has contributed an employee's 401(k) deferrals into her personal IRA. I'm curious if anyone has seen this situation and how it was corrected and/or suggestions on how to correct.

We received two audit requests for profit sharing plans. Both auditors were probationary employees and were let go, so the IRS canceled. These were pretty simple plans with no obvious issues, so I think they were targeted for training purposes.

We have a client that would like to provide “concierge medical benefits” to all of its employees that have elected any level of medical plan coverage, which is provided under a fully-insured high deductible plan. There are no actual medical benefits being provided via the concierge program. Instead, the client has contracted with two geographically convenient general practitioners that will give “high” or “immediate” scheduling priority to participants, as well as much quicker response to requests for refills, etc. Actual medical expenses associated with the services will be run through the group medical plan as usual (e.g., cost of the visit, medical tests, etc.). From the client’s description, it seems like the concierge service is merely a program to provide priority scheduling and refills. The projected cost for each employee is $2,000/year. I am not sure if there is a different cost if the employee has elected family coverage, but in any event, it will all be employer paid. Our practice is primarily focused on qualified and nonqualified plans, so this is out of the box for us. At first blush, this program does not seem to be a welfare benefit plan, and I am thinking that the cost would be includable in the employee’s income. Hoping someone has some experience with this type of program and can point us in the right direction.

Hi John. Assuming the amounts were withheld from pay and not contributed to the Plan timely, I would recommend correction under the DOL's VFCP. The contributions, and appropriate earnings (I recommend using the VFCP earnings calculator), should be deposited now (or as soon as possible). Once the correction is made, a VFCP application would be submitted to the DOL along with proof of deposits, reconciliation to payroll records, etc. In addition, Form(s) 5330 and the appropriate excise tax must be filed with the IRS.

Thank you, Jill!

Jill R. Can you please give me the name of the one provider set up to file? Thank you!

Hello All, As you know, effective 1/1/2024 most employers are required to file Form 5330 electronically using the IRS Modernized e-File (MeF) System through an Authorized e-file Provider (AEP). The IRS has a listing of AEPs on its website (even though the link says individuals, it’s for individuals and businesses): https://www.irs.gov/e-file-providers/authorized-irs-e-file-providers-for-individuals I've contacted some of those listed and they actually are NOT registered to file Form 5330. I've also contacted some mid-size and large accounting firms and TPA firms we work with as well as Empower and have found that while they are set up to file as an AEP, they are NOT registered for Form 5330. According to Empower, they are ultimately going to be able to file, but there is no ETA at this time. I’m struggling to advise clients how to file electronically other than contacting one of these random providers. I can’t find anything online addressing the practicalities of this or whether the IRS is even really ready to accept these electronically. However, per the 5330 instructions, if a paper return is filed when electronic is required, the return will be considered as not filed by IRS. Right now, I have two clients who need to file, one of which is a $1.7B plan. I can't tell them to go to the nearest H&R Block listed on the IRS website (which probably is not even registered for 5330). What am I missing here? What is everybody else doing? Any help is appreciated!

Leopurrd-401k - Did you ever figure this out. I'm having a tough time. We also use FtWilliam.