metsfan026

Quick question on the 70% coverage testing. If a client fails, is there any alternative correction method than a QNEC? I didn't believe so, I just wanted to be 100% sure. Thanks!

I was always told/taught that receivable profit sharing contributions are due the earlier of: 1) September 15 2) The date you file your tax return In researching something, I just found this on the IRS website: For example, if the due date of the employer's calendar-year 2022 Form 1040 or Form 1120 is April 18, 2023, with an extended due date of October 16, 2023 (after the automatic six-month extension), the employer has until October 16, 2023, to make a 2022 profit-sharing contribution and deduct it on their 2022 return. Have I always been taught the wrong thing? Or am I confusing two different things? Now I'm confused, but is this an instance that if the company is a C-Corp you do have until October 15 to fund the contribution? Thanks in advance!

One of our clients is running into an issue with the testing due to being an employee owned cooperative (we don't administer this plan, just their retirement plans). There are 17 employees and all are considered more than 5% owners due to the structure of the business. The people doing the testing are saying they fail “25% Key Employee Test, 55% Average Benefit Test and 25% Owners Test, since by definition everyone is considered an owner and Key Employee. Do these tests apply to a Plan under this type of structure? They are asking me for guidance, but this isn't my forte. Thanks!

We are in the process of getting new elections now. But yes, everyone has continuously been offered, everyone is eligible for the Match, and have opted not to. Thanks everyone!

There's no Profit Sharing currently being made. Everyone is being given the opportunity annually to participate, they are just legitimately choosing not to

I just want to make sure there's no issue here and I'm not overthinking it. There's a Plan with only owners + family members participating in the 401(k) portion of the Plan. They are doing a basic Safe Harbor Match (110% of the 1st 3% plus 50% of the next 2%). So obviously the Plan is Top Heavy and only the owners + family are getting the Match. My understanding is that this plan is exempt from Top Heavy Testing, since they are doing the match and are offering the 401(k) Plan to all employees each year (no one else wants it). Thanks in advance!

It doesn't bother me, I'm going off what an ERISA attorney had told me. That's why I'm asking the question!

There's no limit, though we are discussing it. I've always been told that the Plan can't be viewed like a bank account, and excessive in-service distributions could cause an issue.

We have a plan that allows for in-service distributions. A participant who is over 59.5, but under the age for an RMD, has already taken 3 smaller in-service distributions this year and is now inquiring about another. I've always been told that the Plan can't be used like a bank account, and these consistent in-service distributions could cause an issue. So, that leads to two questions: 1) How many in-service distributions are viewed as excessive and, if audited, could cause an issue? 2) What would the ramifications be if it was viewed as excessive? Thanks in advance everyone!

I know that if a Plan qualifies for a Form 5500-EZ, you don't have to file if the assets are less than $250,000. I believe you do have to file a Form 5500 or Form 5500-SF, even if the Plan is less than $250,000 but I just wanted to confirm. The Plan in question covers: 1) A 40% owner 2) The spouse of the 60% owner Reading the EZ directions, I do believe they fall under the 5500-EZ. I'm just trying to cover my bases Thanks in advance!

Thanks! Everyone is eligible to participate, so that shouldn't be an issue either.

It's a school Plan. So there's no ADP Test and there is no matching in the Plan so no discrimination in that regard (it's Employee money only), so is there anything else that would be needed?

Good morning! I just wanted to confirm what, if any, non-discrimination testing is necessary for a 403(b) Plan? Thanks in advance!

I'm getting push back from an employer who doesn't want to allow an in-service distribution for a participant with an outstanding loan, since the distribution will make it so the loan is more than 50% of the current account balance. Is there anything in the regs that would allow it? I know there isn't an issue, I just need something to show the client.

I know based on Secure an employer needs to allow long-term part-time employees to contribute into the 401(k) portion of the Plan. I also know they can keep them out of the discretionary employer contributions. The question that came up is if these participants are required to get the Safe Harbor Match? I believe the answer is yes, but I'm second guessing myself now.

For a Cash Balance Plan, which doesn't have the last day requirement, I know it's irrelevant. If someone went out on leave (whether it's maternity or not) and had already worked over 1,000 hours they are eligible for a contribution. How about a Profit Sharing Plan? We have a plan that has multiple people on Maternity Leave and someone else on Medical Leave. They are all getting paid disability, if it matters. Are they eligible for a contribution for the year?

If someone wanted to freeze a Cash Balance Plan, what is the deadline to do it? Like if they wanted to freeze the Plan for 2025, when do they have to make that decision by? Thanks in advance!

We have a client who terminated their DB Plan as of 12/31/22. The owners were not maxed out and capable of contributing more, if they had the Funds. They simply didn't anticipate the income to continue funding the Plan (it was just the husband & wife). Things have now changed, and they are looking to start a new Plan to begin contributing once again. Is there an issue with starting a new Plan for 2023? I know in total they can't fund more than the maximum between the two Plans. Someone else is telling them that they can't start a new Plan, so I wanted to check as I didn't see the issue as long as it's not over-funded for the lifetime between them. Thanks in advance!

We have a Plan that terminated in '23. There have been some residuals that came in that we are going to allocate to the participants who were paid out as part of the termination. There was a participant who terminated in '22 and had their distribution processed in early '23, prior to the Plan Termination. Would they get their piece of the residuals or no, since they were paid out prior to the termination? Just want to confirm. Thanks!

Sorry, I another question regarding the Form 5500 and filing late. If the client sponsors multiple plans (for instance of DB & DC Plan) and they are late on both plans are the fines separate? Or if it's under the same EIN do they just have to pay one fine for the late filing for all plans sponsored by their EIN? Thanks in advance!

Good afternoon, I hope everyone is well. I'm taking over a client that failed to file last year's Form 5500. What's the process for filing under the Delinquent Filer's program? Is it simply paying the fee and filing the forms through efast checking off "DFVC" program? I just want to make sure I'm not missing a step. Thanks!

We have a terminating Cash Balance Plan that has excess assets compared to the benefits owed. I just want to make sure I'm reading the Plan Document correctly. It is allowed to allocate the overage to the participants, in ratio to their balance at the time of termination? So instead of reverting the money back to the Employer (which would cause taxation), we can pay it all out as long as the document allows? I'm 95% sure, I just want to make sure I'm not crazy

Generally I know Profit Sharing Plans say that someone needs to be employed on the last day of the Plan Year + work 1,000 hours in order to be eligible. What happens if it's a combo plan tested together? 1) Still employed but works less than 1,000 hours - My understanding is that they don't get the Cash Balance Contribution (as per the Plan), but they still get the 7.5% gateway. 2) Worked over 1,000 hours but terminated employment - They still get the Cash Balance Plan, but I don't believe they get the Profit Sharing Am I correct on these two statements? I'm second guessing myself now. Thanks!

I had a client that made a mistake and never filed the 1099-R and 1096 to the IRS (they were sent to the participants timely). Does anyone know what the penalty is for filing them late? I just want to be able to let the client know. Thanks!

- Plan is already Top-Heavy - It's a combo Plan, so we are giving 7.5% to the Non-Highly - No on the Under 21 - There aren't currently not long-term part-timers - 401(k) is already in place with the 21 & 1