AmyETPA

We're being asked to takeover and merge 3 separate plans. Entity A purchased entities B&C during 2023. Entity A participates in a PEO 401k Plan. Entities B & C each maintain their own safe harbor 401k, with different safe harbor formulas. Entity A's plan is also SH. We are told it was a stock purchase (B&C are LLCs) and nothing has been done with these plans until now to bring them together. They have been maintained and each have separate TPAs. Since they are all owned by the same owner now we intend to merge the plans effective 1/1/26 sponsored by Entity A and with entities B&C as participating sponsors. Am i missing anything? Any reason this can't be done? We're waiting until 2026 because of the issues that would be involved with a mid-year change to safe harbor plans.

on the new question line 14b of the 5500-SF are you marking N/A if the plan isn't a 401k or leaving it blank? Instructions seem to indicate to mark N/A if testing wouldn't be used such as only HCEs or No HCEs. Our thought was if it's a PS only plan that you would leave that questions blank. With the question worded: 14b If this is a Code section 401(k) plan, check all boxes that apply to indicate how the plan is intended to satisfy the nondiscrimination requirements for employee deferrals and employer matching contributions (as applicable) under Code sections 401(k)(3) and 401(m)(2).

Plan switched investment platforms and during the switch, the way fees were paid got changed. The client usually pays the fees directly from the company not the participant accounts, but when it moved it got set up to pay from participant accounts. This has been going on for about 4-5 months. Client realizes this and wants to fix but platform says you signed the form, it's not a mistake so we can't reverse this. Client wants to find a way to rectify this mistake. Any suggestions? It involves about $3000, averages about $50-$100 per person. my thought it to do a small profit-sharing contribution for that amount to each participant assuming it passes testing, which i think it would.

I guess I'm asking this more in a manner of how your particular valuation software works. It doesn't happen that often for our clients, usually they fund during the year or they don't but if it's split where they prefund a portion before the end of the plan year and have a receivable, do you do two transactions for your PS? Pro Rata the portion of the contribution that isn't funded during the year?

When calculating the Top Heavy account balance determination, and there is a profit sharing contribution that is partially deposited before the end of the plan year and partially deposited as a receivable, how do you handle that in your testing?

FWIW FTW recommended doing a negative corrected 1099R negating the first two and then a corrected one with the correct amount. We'll see if that works...

Original 1099R completed and filed and then corrected one filed, only issue is that corrected box didn't get marked. Any idea how to fix this? Now both are showing as income for him. This was a complicated in kind rollover and the original amount rolled over was overstated.

As TPA, are you having clients respond to the notice or are we hoping the IRS will fix their own mistake without wasting our time? Already making us look like we filed something late....again!

We long used Relius for everything and have since migrated to FTW for 5500 and Compliance though still use the PPD VS doc from Relius (FIS or whatever you want to call them). We've also subscribed to the Pension Library from Relius but the forms have not been updated in quite some time. Wondering what alternatives there are to this. We use it for sample forms to use for distributions, notices etc. Thanks for your input.

client terminated plan this year. There was never any turnover in this small plan so the only thing the Trust EIN has been used for was to establish their trust accounts with various brokerage firms. 1099Rs completed using Trust EIN are being rejected from filing electronically saying EIN isn't correct. My guess is actually IRS deactivated the Trust EIN. What is the solution for this issue?

Client rolled over accounts due to plan termination. Rollovers processed 1/9/23 but client is saying that Schwab says they can designate which year the rollover is attributed to, 2022 or 2023. Would that affect what year we do the 1099R? My thought is the 1099R will reflect the actual year of distribution. Agree?

plan reporting is done on an accrual basis. We are at 121 participants at beginning of plan year in part due to several participants who received a profit sharing contribution who had previously terminated and been paid out but now had this showing as in their account at the end of the plan year. Any chance we could exclude them from the count. I believe the answer is no but thought I'd get other opinions.

sorry should have added they have different fiscal year ends. I could set the second plan up with the same plan year end as the current plan even though it doesn't match up with their fiscal year end so then I could aggregate for testing, right? But I assume this also still leaves them open to issues with Top Heavy.

Company B does not sponsor it's own plan but we are considering either adding them to current plan or setting up their own. I don't think they would pass non discrimination separately so I think setting up 2 separate may not be the way to go.

Co. A sponsors SHNEC plan with a profit sharing contribution as well. Plan is TH. Owner of Co. A also owns Co B and Co. B is NOT a participating sponsor of the plan. Pass RPT without issue. Are these employees required to receive a Top Heavy contribution? I love it when they tell me about new businesses the week before their PYE and they want their contribution before the PYE on Monday.

That was my assessment too but wanted to be sure I wasn't missing something.

Plan is SH Basic Match with 1 year wait and semi-annual entry. Wants to amend to immediate eligibility but exclude seasonal employees who have not met the eligibility requirements. Is that permitted to be done mid-year?

PSP only pooled account. Client is considering amending plan from distributions as soon as administratively feasible in plan year following termination to as soon as administratively feasible in year of termination. We never do that and have our reasons but just trying to think through if I'm missing anything. Who allows this? What kind of issues do you encounter? Plan has a right to an interim valuation if warranted and will be doing that this year if they make this amendment.

New 401k plan. Effective Date of plan is 1/1/21, adopted in Aug 2021 so deferrals began in August. Is it permissible to calculate the ADR using the full year wages?

Thanks @Lou S. that's why we were thinking of using the describe line. So, leaving the 59 1/2 in-service for everyone and age 45 + 10 YOS for anyone wanting to take it out before 59 1/2. That makes a good point that I would need to make that very clear in my description. We use the PPD VS document and I don't see a similar box as the "participant must meet all conditions"

Client wants to amend to allow in-service distributions at age 45 + 10 years of participation from reg match and ps. The document is PPD VS 401k document, and while I could do those two options separately, I would need to use the describe line to actually get the combo of those two. Would you have any concerns about adding this type of provision? Other than it being a bad idea in general to take your retirement funds at age 45.

Insurance company has agents that are 1099 contract employees.. These 1099Agents are not covered by the Insurance Agency's 401k plan nor other benefits of the insurance company and want to start their own 401k plans. The 1099agents also lease employees from the Insurance Agency that are licensed employees. The agent has control over these employees daily activities but ultimately the right to fire or hire the actual employees is really up to the larger insurance company. Trying to determine if the employees that are leased to the agents should or should not be included in the plan and what questions I'm forgetting to ask!

Pooled 401k plan, client deposited the match true up as instructed in Feb 2021 (Jan YE) then forgets he's done that when reporting is finished in November and deposits the full true up again. I think this could be considered a mistake in fact and returned to the client or held to utilize for the following plan year. Thoughts? He's also deposited more than he needs for the 1/31/22 PY deposits though room for PS and I'm thinking he can take out the $11475.67 that was the duplicate 1/31/21 match true up but has to allocate $8300 additional deposited during the year as PS. Agree?

3 person plan, H/W owners and one NHCE. Owners retiring and business and plan closing. Client doesn't want to liquidate investments to transfer to IRA so are planning on doing in-kind rollover. NHCE is taking a rollover of cash to IRA. H/W owners only doing in-kind withdrawal. Want to know does it have to be done as a percentage of each asset for each person. So, do H/W both have to get their percentage of each investment or can they calculate the amount needed and move specific assets to one person. I'm inclined to say it needs to be a proportion of each investment but then I thought what does it matter as long as the correct amount is distributed to each as it's not the plan's concern what they invest in their IRA.

We had ALL of our December 2020 extensions denied. We sent via Fed Ex and had the delivery information. Though it took them longer than it should have to get one set delivered they were all sent before the deadline, which should have made them timely. Spoke to IRS they basically acknowledged there was an issue on their end and we were told to send the mailing confirmation information in along with all of our 5558s and they would review and notify our clients of the mistake. This was in October. A couple of weeks ago all of these clients received a notice from the IRS saying they needed more time to review. Agree, not sure why they can't figure out a way for electronic filing of the 5558 when everything else is submitted electronically