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Hello all. I haven't been out here for years. My job of the last 9 years has made it difficult to stay in touch. As of March 31, I have been retired after being in the industry since 1970 . I was on a securities settlement desk when the DOW first hit 1000. I have thoroughly enjoyed my career and have seen many changes. I've been privileged to know all of you through these message boards and all of you have been extroardinarily help in my pursuit of knowledge. Stay healthy in this stressful time. May God bless you all.

I avoided even opening this thread because the title looked boring. Then it kept showing up with new posts so I just now opened and read through this. I'm actually quite stunned with some of the positions taken here. My votes, FWIW: 1. If $100k is deposited to a pooled account early in a plan year, it's not allocated as a contribution until the plan says it's allocated. Generally that's the last day of the year. 2. If the $100k earns $5k, that $5k is allocated as earnings and not as additional contributions. (Occasionally, we'll have clients park this $100k in a business account outside the plan. If the $100k earns $5k in that situation AND then $105k is contributed to the plan, THEN the $105k is allocated as contributions). 3. If the $100k loses $5k, the $100k still has to be allocated as a contribution, and the loss is allocated as a loss of earnings. This is generally considered a bad thing. WCP

I don't think that works. Even if you are doing daily testing, you still determine whether or not the employee is benefiting based on whether or not they satisfied the conditions to receive a contribution for the year. There is not a lot to go on, but here is what it says in 1.410(b)-8: (a) Testing methods—(1) In general. A plan must satisfy section 410(b) for a plan year using one of the testing options in paragraphs (a)(2) through (a)(4) of this section. Whichever testing option is used for the plan year must also be used for purposes of applying section 401(a)(4) to the plan for the plan year. The annual testing option in paragraph (a)(4) of this section must be used in applying section 410(b) to a section 401(k) plan or a section 401(m) plan, and in applying the average benefit percentage test of §1.410(b)-5. For purposes of this paragraph (a), the plan provisions and other relevant facts as of the last day of the plan year regarding which employees benefit under the plan for the plan year are applied to the employees taken into account under the testing option used for the plan year. For this purpose, amendments retroactively correcting a plan in accordance with §1.401(a)(4)-11(g) are taken into account as plan provisions in effect as of the last day of the plan year. (2) Daily testing option. A plan satisfies section 410(b) for a plan year if it satisfies §1.410(b)-2 on each day of the plan year, taking into account only those employees (or former employees) who are employees (or former employees) on that day. (3) Quarterly testing option. A plan is deemed to satisfy section 410(b) for a plan year if the plan satisfies §1.410(b)-2 on at least one day in each quarter of the plan year, taking into account for each of those days only those employees (or former employees) who are employees (or former employees) on that day. The preceding sentence does not apply if the plan's eligibility rules or benefit formula operate to cause the four quarterly testing days selected by the employer not to be reasonably representative of the coverage of the plan over the entire plan year. (4) Annual testing option. A plan satisfies section 410(b) for a plan year if it satisfies §1.410(b)-2 as of the last day of the plan year, taking into account all employees (or former employees) who were employees (or former employees) on any day during the plan year. (5) Example. The following example illustrates this paragraph (a). Example. Plan A is a defined contribution plan that is not a section 401(k) plan or a section 401(m) plan, and that conditions allocations on an employee's employment on the last day of the plan year. Plan A is being tested for the 1995 calendar plan year using the daily testing option in paragraph (a)(2) of this section. In testing the plan for compliance with section 410(b) on March 11, 1995, Employee X is taken into account because he was an employee on that day and was not an excludable employee with respect to Plan A on that day. Employee X was a participant in Plan A on March 11, 1995, was employed on December 31, 1995, and received an allocation under Plan A for the 1995 plan year. Under these facts, Employee X is treated as benefiting under Plan A on March 11, 1995, even though Employee X had not satisfied all of the conditions for receiving an allocation on that day, because Employee X satisfied all of those conditions as of the last day of the plan year.

In the official Interim Final Rules they told us how to calculate EXACTLY the amount to request, and for a sole prop they took the employer contribution off of the Schedule C (the whole amount). Do you need me to find that for you? I'm sure I can. And yes, it APPEARS that it is just that simple; we are advising clients to WAIT until they are six weeks into their 8 weeks with the hope that we will have more official guidance. And there is talk right now of making changes in the PPP, like making it 16 weeks, or making it some period of time AFTER the business is allowed to open up, or changing the percentage to 50/50 instead of 75/25, and a whole bunch of other ideas. No one knows for sure where it is going, but we are not seeing anything that would NOT count a BIG DB contribution toward the 75% rule ( in fact, all by itself, it very well could be 100% in the right circumstances).

To recap, this thread is discussing two different issues: 1) In a balance forward defined contribution plan where allocation of contributions takes place on the last day of the plan year amd where EOY employment is required to receive a portion of the contribution, is it prohibited for a plan sponsor to make a contribution before the last day of the year? 2) Whether a balance forward plan or an individually directed plan and assuming a deposit before the end of the year is not prohibited, do the earnings which accrue on those deposits attach to the contribution in some way? Given that the earnings in question do not constitute annual additions. My answer to (1) is a very strong NO. MoJo seems to be a very strong YES. My answer to (2) is a bit nuanced. In a pooled environment, strong NO. In an individually directed plan I can go either way.

Luke, I agree with the conclusions, but don't agree that there isn't guidance. There is. It's in the document. It says exactly what to allocate, how to allocate, and when to allocate.

I gave you a "like" - since that's what I've been saying from the beginning...

Ahhhh, reinforcements have arrived!

In this case, I think the $5k would be taxable gains, and the business would get a deduction when they contribute it to the plan.

Credit for the comic goes to Ryan North of Dinosaur Comics. Hope I can bring a little levity to everyone's Friday

Rather, I doubt if you are missing anything. Your two terminated employees may have been important factors in passing the 401(a)(4). Especially, if they are young aged. I've run into this scenario before. Usually an analysis of the rate groups will help determine why the change in one year to the next.

Yeah I didn't look until yesterday either for the same reason. Agree with the above, regardless of deposit date, a contribution isn't allocated until the plan says it's allocated. The earnings or loss mentioned in (2) [when deposited to the plan] and (3), are allocated as earnings to the entire plan, not just the recipients of that $100K contribution. Which I think agrees with Mike and Larry too.

In this example, the $100k is a corporate asset until contributed as $105k right?

I blush to think that I didn't bother googling it. That's usually the first thing I would do. I plead temporary insanity - I was working at home, and the town grader sliced off our waterline, so I was trying to deal with that while juggling e-mails from work. Anyway, thanks!

Did anyone try simply Googling "TPT License"? Amazing what comes up with just a little creativity! https://azdor.gov/transaction-privilege-tax/do-i-need-tpt-license https://azdor.gov/transaction-privilege-tax/tpt-license/applying-tpt-license Do you think your plan meets any of the descriptions on this list? I'm going to guess what you got is equivalent to a mass mailing where the AZ revenue people are just doing their due diligence to make sure all taxpayers know what they are supposed to do in Arizona. Best as I can tell, retirement plans don't pay taxes! Businesses that perform the following activities are subject to TPT and must be licensed. retail sales restaurants/bars hotel/motel (transient lodging) commercial lease amusements personal property rentals contracting severance (metal mining) transporting nonmetal mining job printing publishing utilities telecommunications private (rail) car

Yes, with proper notice as you indicate. All participants with an hour of service on or after the effective date will be 100% vested, For this purpose the effective date can be earlier than the adoption date.

The document absolutely says what you need to do but you may need to dig for it and tie a couple of different sections together. The important item to identify is the annuity starting date, which should also be defined in the plan. ASD can be different for annuity versus lump sum, but for a plan termination is likely the proposed distribution date. Follow the plan's provisions for death before or after the annuity starting date as applicable. Some plans (individually designed, as I haven't seen in pre-approved documents) may specify the particular situation where a valid election is made but the participant dies before the annuity starting date and may pay the benefit according to the election but I would not say that's an "automatic". Hopefully, if needed, you can get the surviving spouse/beneficiary to elect a lump sum now in place of the participant.

It is NOT a tough issue. It isn't even close to a tough issue. Other than arm waving nobody has provided anything that puts the above into any sort of prohibited activity. Here's a slightly different example. Take the case of a plan that defines employee grouping as "everybody in their own group". Putting aside the (red hering) as to whether it is individually directed or pooled, since the issue is the same in either case, the IRS is on record as saying that there must be a written instruction to the Trustee/Administrator from the Plan Sponsor that evidences who gets an allocation from the funds deposited. So, the question is when this written instruction must be made? I believe there is a direct reference in the IRM that makes it clear that this written instruction must be made no later than the due date of the tax return of the Plan Sponsor. Given the (obviously false) assertion that the actual allocation must be made when contributed there would be absolutely no reason to define such a deadline. None. This question came up towards the end of the Ask The Experts panel at the 2019 Los Angeles Advanced Actuarial conference. I initially answered that the deadline was well after the plan year end. But I was getting that tingly sensation when you know there is a better answer. A few minutes before the end of the session, as Kevin Donovan was approaching the microphone to provide the exact answer, I beat him to the punch by citing the correct deadline for the writing in question. Since he was already at the microphone he stuck around long enough to say "agreed" if I recall correctly the sequence of events. So, to those who know him, my citation is "Kevin Donovan".

I'd like to agree to disagree but I can't fathom what you are saying. If a pooled account has $1 deposited in January, you can tell me the allocation the minute it goes in?