metsfan026

If a client failed to divulge that they own multiple companies (they are unrelated, but he is the 100% owner of all of the corporations) and it's not discovered that it should've been a controlled group. What are the ramifications? Is there any back correction that is needed?

So just to confirm, with that selected there's no true-up, correct? Just want to make sure there are no mistakes.

Ugh, painful! So if the document says it is funded on a payroll-by-payroll basis (which it does), we can just move on. Thanks!

Good morning! Just want to make sure there's no issues with another Plan we are taking over: 1) They fund their Safe Harbor Match on a payroll-by-payroll basis. If someone opts to start contributing in the middle of the year, can they simply match from that point forward (calculated on a payroll basis) or do they have to do the calculation on the full years salary and true the participant up? 2) The prior TPA allowed them to include commission compensation for the sales staff, but exclude it for everyone else. Is that something people have seen before, where the definition of compensation is different, based on the class of employee? Thanks in advance everyone!

In general, is there an issue with correcting the test by refunding one participant enough to get it to pass?

Have a potential new client that just came to me with a failed ADP Test. However, the previous TPA did not make any type of correction to the test. Now we are left trying to figure out how to proceed: 1) Is this correctable via the VCP program? 2) In order to correct the testing, can we refund one participant enough in order to pass the testing? 3) What liabilities, if any, are there to the company? 4) What penalties could the Plan face?

Perfect, so there's a limit on the highest but we can go lower. So if it's 3.75% interest rate, that's not going to be an issue?

Generally we use 5% when setting the interest rate for Cash Balance Plans, but we have a prospective client that is looking to have it at 4%. The question is, is there an acceptable rate to use as per the IRS? I tried to do a search, but couldn't find an answer. Thanks!

Adult Child #1 - Owns 50% of the company Adult Child #2 - Owns 50% of the company Mom & Dad both also work there, but make under $100k each. So, based on salary they wouldn't be considered HCE for testing purposes. I don't believe the attribution goes up, so they wouldn't be considered HCE for testing either, right? I know that's how it applies for ownership/controlled groups. I just wanted to confirm it's the same for the testing. Thanks everyone!

Sorry, that was a typo. It was supposed to read "participant count", meaning on the SF it had been showing only 1 participant

There isn't, the owner is the only employee on the books. So is it prudent just to switch to the EZ and move forward with it?

Technically it still can be filed on the SF (because we put the participant account). On the EFAST website it just gives the following warning: "Warning: If you have a one-participant (owners/partners and their spouses) retirement plan, file the Form 5500-EZ instead of the Form 5500-SF. Review 'Who Must File Form 5500-EZ' in the Form 5500-EZ instructions to determine whether you should file the Form 5500-EZ. Note that the Form 5500-SF generally is subject to public disclosure on DOL's website while the 5500-EZ is not." So I guess that gives the advice to change to the EZ? Does that sound right?

My thoughts are the SF actually provides more information than an EZ, so the incorrect filings shouldn't be an issue. At the same time, if there hasn't been an issue before should we just continue filing the SF for now and figure the status quo is the best way to go?

Taking on a new client where the forms have been filed as a Form 5500-SF. However, it's a one-person plan and really should have been filed as a Form 5500-EZ from inception. Is there any issues with just making the switch for the 2021 Plan Year or should we continue to file it as an SF? Just want to make sure we don't create any issues for the client.

Does anyone know what, if anything, is required to be covered in terms of mental health benefits for a self-insured, non-grandfathered plan?

1) No 2) No (they are in NY) So there's no attribution, which is what I thought. Thanks!

I just wanted to double-check if this would be considered a controlled group or not: Company A - Husband owns 100% Company B - Wife owns 100% The two business, while in the same industry, are completely unrelated and the spouses do not work or do business with each other. So would this be a controlled group through attribution or are they excluded?

Yes, it's a controlled group. Husband owns 100% of Company A and Wife owns 100% of Company B

This may be more of an accountant question, but I'm not sure the answer. We have one plan that was adopted by two employers (one employer is owned by the husband, the other by his wife). When it comes time to fund the contributions, do they need to be funded by each employer or can one employer fund the entire contribution (including the other employees)? In other words: Employer A - 5 eligible employees Employer B - 5 eligible employees Does Employer B have to fund the portion of the contributions for their employees or can Employer A contribute (and deduct) the entire amount?

I've already instructed them that moving forward all payments have to be made from Plan Assets. The issue I'm running into is for '21, where they paid the premiums outside of the Plan. Is it possible to chalk it up to an administrative error and have the Plan reimburse for these payments (and carry them as a liability for one year)? That way there is no deduction taken for the payments and it's as if the Plan had paid them? That's what would be simplest, if it's allowed.

Understood, so what is the fix since the premiums were paid outside of the plan. With the Cash Balance Plan also in place, the premiums are greater than the 6%. What's the way to correct the issue?

Thanks everyone! Do you happen to know what the cost is to file with Puerto Rico? The information I've found are all in Spanish. Thanks!

So this is a new situation for me. We have a client who terminated a long-time employee in '22 for embezzling money from the company. Technically the participant is eligible for a contribution in '21. My understanding is that, regardless of the reason for termination the participant is still required to make a contribution for them. I just wanted to confirm that's accurate? Also, is there anything that the employer can do in terms of withholding the Profit Sharing account to recoup the money that was stolen? I know that's more of a legal question, but I wasn't sure if anyone knew. Thanks everyone!

Sorry, that was a typo! If the mom is an owner, but draws no salary it doesn't matter correct? The child would still have to be considered an HCE based on mom's ownership, correct?

We have a potential new client where: Grandma owns 47% Mom owns 47% Third party owns the remaining 16% If they were to hire one of the grandkids, technically they wouldn't be considered an HCE based on attribution correct? My understanding was that ownership transfer from grandkid to grandparent, but not the other way. And since mom only owns 47% there isn't an issue. I just wanted to confirm I was correct. Thanks!