Basically

I'm sure the business owner will like that answer better. The nature of the business is such that depending on possible future jobs they will need skilled employees to perform the very specialized work. I think she was being nice allowing him to keep his plan balance in the plan. Now that I think of it, to keep a plan clean there really is no place for just being nice. You need to follow the doc and if they have to go , they have to go.

Terminated 2 years ago Balance is in excess of $5,000 (30K) So he needs to be 100% vested. Thanks

A client had an employee who was not paid out for a couple of years (she kept him in the plan thinking maybe some work would come up and he would be back in). Over the summer the employee died. The plan states that vesting does not count if someone dies or becomes disabled. The employee died and had a break in service prior to their death. Is the deceased terminated employee 100% vested? Or do I pay him out based on his vested % at the time he terminated? Thanks

A new client was not taken care of in the past. I went back a few years and discovered that in 2020 the 2 HCEs didn't receive the full 3% NEC. The 2 NHCEs did but not the 2 HCEs. During COVID the business didn't make a PS contribution but regardless of that the plan called for a 3% SH NEC so everyone needed to get it, right? I ask, there is no exception is there? Thanks

So I was confused, brain failure. The SEP-IRA only means that the money is invested in IRAs. It's not an IRA, It's a retirement plan which must comply with the 415 limits. I do understand how multiple plans have 1 limit. Sorry for the lack of consciousness.

Financial advisor asked if this client he has can sponsor a SEP IRA with one of his businesses and a 401(k) with the other? There are no employees.

I was paid 1/2 my fee and she parted ways with a snide email. She claimed that the "bigger" TPAs only charge a fee for the doc when the client is new and then every 5+/- ears when required by the IRS, not including an annual doc fee (duh). She is mistaking an interim IRS snap-on amendment for an amendment created due to her needing to change the plan as a result of hiring an employee and tweaking eligibility and vesting, which is charged in addition to the annual doc fee. She went on to say that they would allow her to file the form 5500 herself but if they did it that would only be $375. I'm guessing there is no testing performed or asset reconciliation. Bottom line is that she isn't comparing apples to apples with these fees. If I am mistaken then I am gouging my clients. The case is closed and her folder moved to the deleted clients folder. An eye opening situation that has prompted new agreements to all clients. A good way to clean out the book of business and maybe even slim down a little to better serve the clients who see value in my service. Thanks all for their insight. Always learning, always welcoming advice.

The initial sting has worn off, only a little. I am going to respond to her email today, thought it best to cool down and collect my thoughts, be professional. For future 5500 signatures I think I'll only include the signature page and not the bulk of the return. And updated service agreements will be prepared and sent out. All good advice. Lesson learned.

It is a lesson learned. She responded to my email (where I played like I didn't know the 5500 was filed) and told me that she did not authorize me to file an extension of time for her. I mean sheesh, I hear nothing and the deadline comes and goes. Any good TPA would file the extension, it's not difficult. Had I not filed one and she was relying on me then she would say the opposite. She further goes on that she has lost confidence in my service and had filed the 5500 herself, "it was easy" she said. I'm sure she copied my form and filed it. She went on to tell me that she has hired a new TPA. I'm wondering, while we did not have a signed contract between us, since she paid my fee last year would that be considered a hand shake agreement? And would it be binding year to year until one party terminates the agreement? I'm happy no longer working together, just would like to be compensated for the work performed. I get clients come and go. That's business. Just don't hide behind a lame excuse. I will inform her she can no longer rely upon my document. Just sucks Thanks for your thoughts

A client (husband and wife) that was a single member plan for many years in 2021 became a plan with a rank and file employee. Naturally due to this added employee they are required to have a full administration performed and a form 5500-SF filed electronically. For 2021 the relationship was peachy. Come the 2022 annual administration and the client balks at the price-tag of the annual admin work performed. A back and forth via email ensues where I explain everything. Old emails are used to show that she was accepting of the cost, even offered to pay me more for all the back and forth questions. Yet now she is being cheap. Her excuse? She thought the 2021 fee was only for that year due to the added work. Here is the kicker, my process is to email the client the form 5500 and efile authorization form along with my invoice. The client returns the form signed and upon payment in full I would file the return electronically and then forward on the complete bound report. I hear nothing from this client so I file an extension since the 7/31 filing deadline was approaching. Just now I looked at the DOL website and can see that the return was filed on 7/21. I am guessing she took my completed form and filed the return herself. I'm sorry, WTF! Here is my question, the DOL site says on the form 5500 that the return was "Filed with authorized/valid electronic signature" in the signature space. Is there a way to find out who exactly filed the return? Who's credentials? I'm so angry. You work your @ss off researching, helping someone, holding their hand to get everything the way they want it, you are more than fair to them and then you are taken advantage of. I need to be more cutthroat and business strong. And, to head off the inevitable question, no, a current contract was not executed (my bad). This unfortunate event is making a review of all client contracts a priority. But on that subject, it is in writing that she is ok with the cost quoted and she did pay the first year setting a precedent, right?

I understand that not all plans allow for in-service distributions. And I understand that you must die, become disabled, be terminated or reach retirement age. But all that aside, can a participant request and can a plan make an in-service distribution to an active participant that isn't considered a hardship in-service distribution? Of course the payout would be taxed and coded early. Is this possible?

That's great info. Appreciate the responses!

Showing my naivety - I get appetite for risk. What losses would be "covered"? This plan has individual brokerage accounts. Would the loss be if the financial advisor is incompetent and the participant loses a certain percentage of their account so decides to seek retribution?

This new client came to me and needs to update their ERISA bond coverage. The plan had $800K in 2022... probably less now due to the investment performance. I've attached a copy of the screenshot he sent to me. What do people recommend? Just a stand alone bond or a bond + Fiduciary Liability? or maybe a bond + Fiduciary Liability + Cyber liability. As you can see each option that he was given includes all 3 options. Thanks Bond Coverage Options - Copy.pdf

I get the premise that the IRS is thinking about here if the businesses have some kind of relationship. Like a car dealer with employees who is a single member tire wholesaler and purchases all new tires from himself for his dealership. He's making $ for himself and maybe has a plan for the tire business and not the dealership. But a single member insurance agent who sells ice cream on the side? If that client came to me and I told him he would need to include his ice cream employees in the plan he would say "huh? my ice cream business has nothing to do with my insurance business. Forget it, too many employees, will become too expensive". That's my common sense thinking. Am I naïve? But the rule is the rule. Thanks

So definite control group for the insurance and financial advisor businesses. And, to take it further, control group even if one business sells insurance and the other ice cream sundaes. Thanks!

I have an independent insurance agent who sponsors a single member plan. He tells me that effective 1/1/23 he now has another new business, a financial advisory business. These 2 businesses reek control group to me since they can feed off of each other so I am inclined to say "control group". Yes? But to further my knowledge, does it matter if the businesses benefit from each other? If he added an ice cream parlor to the businesses that he owns would that make the insurance business and the Ice cream business a control group? Thanks

I have been told it is similar to a car salesmen who is paid on a 1099. They get a draw and the draw is against commissions. The draw is I guess giving the salesman money in advance until the end of the month when whatever the salesman is owed is reduced by the draw. Easy enough to understand. I will clarify with the advisor his W2 comment. Thanks

My understanding is that each employee is given a draw each month. Then commissions and bonuses are paid to them on a 1099 basis. Ok, is that not allowed? Then (as I think this through) the commission is reduced each month buy the draw which reimburses the company. As for a plan design, can it work that the company excludes commissions and bonuses and only count W2 wages? THEN each employee could open up their own single member 401(k) (if they want) and make contributions based on their 1099 compensation as a sole proprietor? I guess these guys make real good $$.

I have read posts and tried to understand everyone's points. I thought I read somewhere recently that 1099 employees were going to have to be counted (or was it seasonal employees?). Anyway, I am working on a potential new client who has a business selling medical devices or pharmaceuticals. Each employee is paid commissions and bonuses on a 1099 but they also receive a draw which is paid on a W2. Add to this that the company is reimbursed the draw reported on the W2 from commissions and bonuses. Do these employees count? Do they count only on their W2 income or ALL of their income? Thankyou This is one post I was reading: Excluding 1099 Employees

Nope... most of the money was deposited in 2022. Looking at each employee starting with the NHCEs - EE1 deferred 4.62% EE2 deferred 8.5% EE3 deferred 5.1% Does it work like this : The SH Match is 6% so EE1 and EE3 would be matched - Done. EE2 would receive a 6% SH match + a 2.5% company match The 2 owners each deferred 40%. They could receive the 6% SH match + 19% company match which would mean that we would need to return $10,250. I'm sure I'm missing something. Would that work, fix the problem?

Here is the skinny - Plan is a 6% SH Match, company match, (and I always make the ER a pro rata discretionary NEC) Owner A - $67K Comp, $27K Def Owner B - $67K Comp, $27K Def EE1 - $39.5K Comp, $1,825 Def EE2 - $8,525 Comp, $725 Def (Term during year) EE3 - $39K Comp, $2,000 Def Owners are husband and wife. The plan only matches deferrals and they wanted to match everyone's deferrals 100%. Obviously the owner misunderstood the Safe Harbor design and how it worked. But is there a way to make it work?

OMG some clients just don't get it. This guy is generous. He wants to match everyone's deferral dollar for dollar. But I don't think it will work. He only earns $67,000. He deferred $27,000 so he wants a match for himself equal to that $27,000. That doesn't work... does it? I've got so many numbers bouncing around in my head. What is the max that he can get? Flat out 25% of 67,000 or $16,750? Total deposit for him would be $43,750? Is there any way to get him what he wants? Thansk

Thank you. I appreciate your responses.

Can someone point me to how ROTH payouts are taxed? I know the 5 year rule but here is where I am unclear: Situation: Susan has been making ROTH deferrals since 2015. She makes ROTH deferrals every year. The last 7 years she has amassed $100K+ (deferrals and earnings) Susan is over 59-1/2 and would like to take a distribution. Key Points: Susan opened the ROTH account over 5 years ago ... ✔️ Susan is older than 59-1/2... ✔️ So - Is the only rule that the ROTH begin date of the account be 5 years or older? Does it matter that some of her ROTH deferrals are less than 5 years old? Would Susan's distribution (which includes contributions and earnings) be tax free? As you know, a client comes to you telling you how it will be taxed. I just want to be sure. When she dies, with the Roth account non-zero, what is the taxation to her beneficiary? Thanks