"A client of mine just received a letter from the IRS about their 2018 Form 5500. Apparently the trigger for the letter was a "significant reduction in plan participants" and also showing more than zero participants who terminated with unvested benefits on the 5500. For the year in question, the total number of participants at the beginning of the year was 15, and the total at the end of the year was 10, which is a 33% reduction. However the reduction was all terminated participants who took their distributions. The 20% number for a presumed partial termination is in regards to turnover, which means active employees, right? You can't have turnover of people who left in prior years. The number of active participants at the beginning of the year was 7 and at the end of the year it was 6. Only one person actually terminated during the year and that person was less than 100% vested under the plan's vesting schedule. What is the IRS doing sending letters and scaring sponsors over non-issues like this? Has anyone else seen a letter like this recently?"

"Hi, The 401k plan that is terminating, there are few participants who have balance from prior ESOP deferral, Match. Will I need to follow the normal plan termination ( 401k plan) or since they is balance from the prior ESOP plan I need to consider anything else? Thanks"

"Sponsor had excess DB assets and moved to a QRP in a suspense account. We have been transferring roughly $50k a year (whatever the 415 max is per year). 2019 was the 7th year. There is still about $180,000 left in the account. What happens to those funds?"

"I'm dealing with an issue that has occurred over the past nine years. The TPA of our NQDC plan, a bank, issued 1099-Rs to report distributions made to our ex company President (not an owner). Last year it was realized that the company should have been issuing W2s to the ex employee once his distributions began back in 2011. We worked with our tax accountant to rectify the situation for the previous three years. We submitted W2s and paid FICA taxes on the distributions but did not report federal income withholding taxes. The problem is that the ex employee has received a letter from the IRS stating that he underreported income. The reason is because his total distribution was reported twice - a W2 from the employer and a 1099-R from the bank (TPA). I'm trying to convince the bank to void the 1099-R. Their argument is that they withheld income taxes and it needs to be reported. Has anyone dealt with this issue? Can anyone provide a good argument to provide to the bank?"

"Company A has a 401k plan (A Plan) with no safe harbor feature. Company B has a Safe Harbor 401k plan (B Plan). Company A purchases (stock purchase) Company B on July 15th, 2021. Company A wishes to get rid of Plan B either through merger or termination. Termination: 1. If they terminate Plan B are the actively employed participants of Plan B required to roll the money into Plan A? 2. Would the rollover have to be accounted for as the original sources (401k, SH, etc.) or would all the money be considered related rollover? 3. Is Company A required to make Safe Harbor contributions based on compensation earned until July 15, or the date of plan termination? Merger: 1. Would the rollover have to be accounted for as the original sources (401k, SH, etc.) or would all the money be considered related rollover? 2. Is Company A required to make Safe Harbor contributions based on compensation earned until July 15, or the date of plan termination? Is there a benefit or requirement that Plan B be terminated or merged?"

"We have a client that is a state political subdivision. Client (a nonprofit) wants to create a for-profit subsidiary for the purpose of leasing employees from the for-profit to the non-profit. The reasoning behind this is because the client wants to be able to offer certain employees 401(k) benefits instead of being required to have employees enroll in the state pension system (employees in the past have complained about high mandatory contribution rates). A few questions off the top of my head as I look into this: (1) Would the state be able to sue the client for this type of arrangement? If any one knows of any cases in which a state has sued a political subdivision for this type of "avoidance" of the pension system, it would be appreciated. (2) Could our client give either existing or future employees (or both) the option to choose whether to be emplopyed by the non-profit (and contribute to the state pension plan) or be employed by the for-profit subsidiary (and participate in the 401(k) plan? (4) Could the structure be organized such that the for-profit would only hire certain "lower paid" employees and the non-profit hire certain higher paid employees? Would this create any type of discrimination issues? (3) Can a non-profit lease employees from a for-profit?"

"We took over administration of a small defined benefit plan. The Plan covers Husband and Wife who each own 50% of an S Corp. The Plan also covers a son and his wife, both well over age 21. All four individuals have been in the Plan since it was effective. The prior administration firm indicated in both the Plan Document and Form 5500 that this was not covered by the PBGC. The Plan Sponsor is not a professional service corp. I believe that this plan was covered by the PBGC from its inception in 1998. We would like to know in advance what sort of penalties might be applied to the Plan for not filing PBGC Forms since 1998. I am assuming that we will receive an inquiry from the PBGC when we file a 2021 PBGC form for a plan that has been in existence for over 21 years. Any comments would be appreciated."

"What is the process to get 401k/ cash balance plans in Puerto Rico "dual qualified" in the US?"