Search the Community

We have a client XX that was acquired by YY in 2021, but they opted to merge the YY 401k plan into the XX plan rather than the other way around (usually the seller’s plan transfers into the buyer’s plan). The assets transferred in June 2022. As part of the merger, they changed the plan name and the plan EIN of the XX plan to the YY plan name and EIN effective 6/30/22 The issue is a final 5500 was filed for the legacy YY plan for PY 2022 (after assets transferred to XX). But that same EIN is still being used for the current merged plan. I, along with the plan auditor, suggested amending the plan number of the current merged plan to 002. The recordkeeper, however, is saying that in order to change the plan's three digit number from 001 to 002, a final 5500 needs to be filed for 001 showing assets going to zero. The "transfer out" from the XX plan and into the YY plan would be captured in Schedule H showing a "transfer" to YY-002. I understand that if a plan terminates or transfers/mergers, then a final 5500 should be prepared. But the plan did not terminate in this case. The seller's plan name and EIN were amended to match the buying company's name and EIN. I'm thinking there should be a retro amendment changing the 3 digit plan number of the current merged plan to 002. Amend the 2022 XX filing to reflect the changes of Plan Name, EIN, and plan number in line 4 of Part II. Then the Final 5500 for the legacy YY plan should be amended to have plan 002 in the 5(b)(3) box of Part IV of Compliance questions. I feel like this would be the most logical and easiest for the DOL to follow. But I've been receiving conflicting information, from ERISA counsel, on whether it's required to file a Final 5500 if you're changing a three digit plan number. But I feel like those who view it as required is just because it almost always correlates with a termination or merger. Any and all feedback is appreciated. I wasn't involved in the plans back in 2022 so trying to clean up now.

Hi! Company A is selling Division Z to Company B with the close date being mid-month. Company A will stop providing health coverage to Division Z employees mid-month at close. Company B will start providing health coverage to these employees at close (no time without coverage). However, since Division Z employees were not offered health coverage for each day of the month at Company A, there will be a reporting gap for 1094 and 1095 purposes. Likewise, for Company B. Has anyone dealt with this before? Is there a workaround here to eliminate the coverage gap, other than requesting company A keep benefits turned on through the end of the month?

What is the best source for state and local compliance calendar for health welfare plans? Has anyone seed a comprehensive calendar that includes multiple state/localities?

Client has 26 pay periods per year, resulting in two months (Mar & Aug) having three pay dates. The clients payroll system is unable to process voluntary benefits, including 401(k) deferrals on a 26 pay period basis (not sure why, just what I've been told). As such, although there are 26 pay periods per year, deferrals for the retirement plan are pulled from only 24. This fact has been widely communicated and is standard knowledge to employees. Question: has anyone seen anything in the code that would prohibit this arrangement? I'm slightly concerned for those employees who elect a % deferral, as their total deferrals for the year will be slightly less than the % they've selected due to the two additional pay periods not receiving any deferral withholding. Thanks in advance for the assistance.

congress introduced a few bipartisan bills that could have an impact on NDT- anyone had a look yet- specifically S3221 Retirement Felexibility act this one specifically is designed to incentivize the using ACA and auto escalation and provide some flexibility on SH contributions - anyone have thoughts on this? i was curious as to the flexibility of SH contributions to satisfy testing- it appears to look similar to QACA - see below EC. 2. ADDITIONAL NONDISCRIMINATION SAFE HARBOR FOR AUTOMATIC CONTRIBUTION ARRANGEMENTS. (a) In General.—Subsection (k) of section 401 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: “(14) SPECIAL NONELECTIVE AND MATCHING CONTRIBUTION RULES FOR SMALL EMPLOYERS.— “(A) IN GENERAL.—In the case of a cash or deferred arrangement maintained by an eligible employer (as defined in section 408(p)(2)(C)(i)), for purposes of paragraph (13), the arrangement shall be treated as meeting the requirements of subparagraph (D) thereof if under the arrangement, the total elective deferrals (as defined in section 402(g)(3)(A)) with respect to any employee do not exceed an amount equal to the applicable percentage of the limitation otherwise applicable under section 402(g). “(B) APPLICABLE PERCENTAGE.—For purposes of subparagraph (A), the applicable percentage with respect to an arrangement is— “(i) 40 percent in the case of an arrangement which does not meet the requirements of paragraph (13)(D) and is not described in clause (ii) or (iii), “(ii) 60 percent in the case of an arrangement which is not described in clause (iii) and which would meet the requirements of paragraph (13)(D) if— “(I) ‘equal to at least’ were substituted for ‘equal to’ in clause (i)(I) thereof, “(II) ‘2 percent of compensation, and such matching contributions meet the requirement of subsection (m)(11)(B)’ were substituted for ‘6 percent of compensation’ in clause (i)(I) thereof, and “(III) ‘1 percent’ were substituted for ‘3 percent’ in clause (i)(II) thereof, and “(iii) 80 percent in the case of an arrangement which would meet the requirements of paragraph (13)(D) if— “(I) ‘equal to at least’ were substituted for ‘equal to’ in clause (i)(I) thereof,

I have a governmental plan that is individually designed and has not been restated since 2001. If it is a cycle C (I realize that remedial amendment cycles are no longer around), what years should the plan have been restated? In other words, what years did the plan miss a required restatement?