Message Boards Digest

August 10, 2022

Here are the most recently added topics on the BenefitsLink Message Boards:

cathyw created a topic in Form 5500

First year Form 5500 with no assets

"A client established a profit sharing plan during 2021 (drafted and signed before 12/31/21) with every intention of making a first year contribution. The client also has a 401(k) plan that's been in existence for years, but they wanted the profit sharing plan to be a stand-alone program. It's intended to operate as a trustee-directed investment fund as opposed to the participant-directed 401(k) plan. Due to certain cash flow issues, they now decide to skip the contribution for 2021. There are well over 200 eligible participants. We (the TPA) plan on preparing Form 5500 reporting the accurate participant count and zero assets. The auditor says they've never had this problem before, and don't know how to proceed. Other than auditing the employee eligibility, they're stumped on what to do regarding the lack of assets and how to report. By the way, the client is aware that an audit is needed for this second plan (with whatever cost is involved). We suggested that if they don't plan on making a profit sharing contribution for the next few years that they terminate the plan and then re-establish to avoid these additional annual auditing fees. They declined. Has anyone faced this situation who can offer some guidance? Thanks."
3 replies so far   |    Click Here to Add a Reply


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Christine Roberts created a topic in Correction of Plan Defects

Increased TE/GE Enforcement

"Has anyone had any information as to the degree the IRS budget increase under the Inflation Reduction Act will flow down to TE/GE division and possibly impact plan audit activity? I read Chuck Rettig's letter about not focusing on small taxpayers but do we know anything about allocation of these funds and the degree to which it will impact plan enforcement? Any comments and surmises welcome."
3 replies so far   |    Click Here to Add a Reply

waid10 created a topic in Retirement Plans in General

Affiliated Service Group?

"I really struggle with Affiliated Service Groups. A client asked me about the following scenario: Hospital wants to engage physician practice ("PP"). Hospital offers to hire all of PP's employees. Doctor will be the sole person that will remain behind in his entity. Hospital will then engage Doc as Independent Contractor, where he will provide all of the same services, using his former staff (now employed by the Hospital). Hospital will handle all of the back office functions for doctor (billing, insurance, etc.). The question was whether Doc, in his own entity by himself, can maintain his own retirement plan that provides very rich benefits; and not get lumped into testing that plan with the Hospital retirement plan. It seems to me that this is exactly why the ASG rules were created and that this seems like an A Org situation. But again, I am terrible at ASGs. Any thoughts?"
3 replies so far   |    Click Here to Add a Reply

metsfan026 created a topic in 401(k) Plans

Insurance Premiums Paid Outside of Plan

"I'm taking over a client where there are two life insurance policies owned as Plan assets. Here is the issue, the premiums were paid outside of Plan assets. Normally we would use those payments as part of the contributions for the year, but the issue is that the premiums are actually in excess of the allowed contribution (plus the client also made an additional contribution in '22 for the '21 plan year). Would there be an issue in having the fund reimburse the owners who made the premium payments from outside the Plan? That way the premiums were paid by the Plan and the additional contribution could be made? I just wanted to make sure that this wouldn't create additional issues. Thanks in advance!"
3 replies so far   |    Click Here to Add a Reply

AmyETPA created a topic in 401(k) Plans

Mid-Year Safe Harbor Change to Eligibility

"Plan is SH Basic Match with 1 year wait and semi-annual entry. Wants to amend to immediate eligibility but exclude seasonal employees who have not met the eligibility requirements. Is that permitted to be done mid-year?"
2 replies so far   |    Click Here to Add a Reply

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