Message Boards Digest

September 25, 2023

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

Griswold created a topic in Form 5500

Unnecessary H&W 5500s

"Company has always been under 100 participants but has been filing 5500s for its H&W plan. Now saying that its broker filed those in error and doesn't have a wrap plan in place. Should they correct the 5500s even though they didn't have to file in the first place?"

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legort69 created a topic in 401(k) Plans

LTPT Entry Date

"Our plan eligibility computation period is anniversary/plan year. Assumptions:

  • Calendar plan year
  • Normal entry is 1000/12: Monthly entry
  • Over age 21

For LTPT entry with 500-999 hours / 12 months over 2 or 3 consecutive years. When will the plan entry date not be January 1 of the following year that the employee met the requirements?"

2 replies so far   |    Click Here to Add a Reply

Rai123 created a topic in Form 5500

Retroactive Defined Benefit Plan and 5500 Filing

"We're a bit confused on how the 5500 filings work for a retroactive plan. Background: We created a Defined Benefit Plan for 2021 by the clients corp due date in 2022. We're now working on the 5500 Tax Forms for the plan for 2021 and 2022. ... Question 1: Our understanding is we will need to do two separate forms using the 2022 5500 SF. One for 2021 and check off the retroactive option on the SF. However do we enter 1/1/2021-12/31/2021 as the plan year for this form? (this is what we do when we're using a prior year form to complete a final tax form so it makes sense). Question 2: the instructions are a bit confusing because they state that the prior year SB (2021) must be attached as an external attachment as well as the 2022 SB. Does this mean we should only complete one tax form and carry forward to the ending balance as of 12/31/2022? In other words does one tax form for 2022 mark off the retroactive box attach the 2021 SB as an external attachment and the 2022 SB? However, the 5500 SF would have a zero beginning balance and include all contributions for both years and ending balance as of 12/31/2022."

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TPApril created a topic in 401(k) Plans

Startup Tax Savers Credit for Small Plans: Which Year?

"401k Safe Harbor Plan is effective 1/1/22. Plan deposits 2022 Safe Harbor in 2023. Plan pays fee for 2022 in 2023. Understanding that the 2022 contribution applies to 2022 taxes, I think the fee paid in 2023 applies to the 2023 taxes, but wasn't sure. I'm even more confused about which year the Contribution credit for the safe harbor would apply to -- 2022 or 2023 taxes?"

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ill created a topic in 401(k) Plans

401(k) Contributions Guidance for Two-Member LLC

"We established an LLC at the beginning of this year, with just two members -- my spouse and myself. We reside in a community property state and file our taxes jointly as a married couple. Throughout this year, we've utilized our LLC to carry out business activities. My spouse has been working on a separate project, having earned about $1k, while I undertook contract work in the IT field, earning roughly $200k. Both of us were actively involved in the LLC's operations, each contributing more than 500 hours of work (met material participation test). However, we've encountered conflicting information regarding the tax filing status for our LLC and contributions to our 401k plans. Can we both contribute to the maximum allowable amount for our 401k plans, which is $66k each, or is my spouse only allowed to contribute $1k, reflecting their earned income?"

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Jakyasar created a topic in Retirement Plans in General

Is the Salary Included for 6% Limit?

"DB/DC plan combo, covering 2 owners only (no PBGC). Each has 100k of salary DC plan has 401k and PS provisions only -- no SH match. Owner Joe has deferral and PS Owner Mary has only deferral and no PS. What salaries are included to determine the maximum 6% PS deduction? Assume DB contribution is 500k so will never satisfy 31% rule."

7 replies so far   |    Click Here to Add a Reply

Belgarath created a topic in 401(k) Plans

Auto-Enrollment Grandfathering

"I've seen no formal guidance on this question. Grandfathering for the SECURE 2.0 auto-enrollment for plans established prior to 12/29/2022. If a plan with a plan year of 11/1/2022 to 10/31/2023 is signed prior to the end of the plan year, (i.e. prior 10 10/31/2023) is it considered 'established' for purposes of the grandfathering, or must the document have been SIGNED prior to 12/29/2022? Any formal guidance that I've missed? Otherwise, I've seen differing opinions...."

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Peter Gulia created a topic in 401(k) Plans

Will the IRS Delay SECURE 2022's Automatic-Contribution Condition?

"The tax-qualification condition for some nongovernmental and nonchurch Section 401(k) or Section 403(b) elective-deferral arrangements to include an automatic-contribution arrangement if the elective-deferral arrangement was not established before December 29, 2022 begins with a plan year that begins on or after January 1, 2025. Perhaps in the last few months of 2024 the [IRS] might announce a nonenforcement delay of Internal Revenue Code Section 414A? If PredictIt [] were to offer a yes-or-no future on whether the IRS announces a nonenforcement by December 31, 2024, how much would you pay for each $1.00 yes future?"

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