Leaderboard

In 1985 and 1986, I worked in lobbying on what became the 1986 Act. After enactment, even skimming the enrolled bill to find the retirement plans’ provisions I’d explain in my book, I glanced over many provisions that stated narrow conditions to avoid using a name. Some were mentioned in 1987’s Showdown at Gucci Gulch. https://www.penguinrandomhouse.com/books/118994/showdown-at-gucci-gulch-by-jeffrey-birnbaum/ And a 1988 article about the practice won a Pulitzer Prize. Donald L. Bartlett & James B. Steele, How the Influential Win Billions in Special Tax Breaks, Philadelphia Inquirer, Apr. 10, 1988. That article counted “at least 650 exemptions—preferences, really, for the rich and powerful—through the legislation, most written in cryptic legal and tax jargon that conceals the identity of the beneficiaries.”

Yesterday evening, Roll Call reports this is about the St. Louis Carpenters’ Pension Plan. https://www.rollcall.com/2020/12/21/midwestern-carpenters-would-get-relief-in-year-end-tax-package/

I agree with Bri, that one may add an in-plan Roth rollover or conversion feature in the middle of a plan year for a 401(k) safe harbor plan. Not that I make a habit of correcting typos, but that's Notice 2016-16 in Bri's post. Footnote 1 of Notice 2016-16 references an earlier notice that provides for only temporary relief to add an in-plan Roth rollover feature to a 401(k) safe harbor plan in the middle of the year. It is superseded by Notice 2016-16.

Notice 2006-16 lists what mid-year changes you CAN'T do do a safe harbor plan. Roth Rollovers aren't specifically prohibited.

I'm dating myself here, but this reminds me of the Tax Reform Act of 1986 when Congress imposed an excise tax on DB plan termination reversions and then exempted "certain taxpayers", defined as follows: (i) a corporation incorporated on June 13, 1917 and which has a principal place of business in Bartlesville, Oklahoma, (ii) a corporation incorporated on January 17, 1917 and which has a principal place of business in Coatesville, Pennslyvania, etc. Like the old saying goes, "you don't really want to see how sausage is made".

If it's a controlled group, then the group can't sponsor a plan other than the SIMPLE (edited to say SIMPLE instead of 401(k)). https://www.irs.gov/retirement-plans/fixing-common-plan-mistakes-simple-ira-sponsor-with-a-related-business And if it's a controlled group and the spouses are the only employees in their businesses, it would be silly to not have them covered by a single 401(k).

I have fond memories of Schedule P

Let me answer your question this way. An attorney doing the VCP filing who knows that the past-employees should be addressed in the VCP, but purposefully omits them anyway, is committing fraud in front of the IRS. That, and the possibility of severe sanctions from the applicable state bar. If a client asked me to file a VCP to exclude the past employees after I had explained to them why they should be included in the application, I would simply resign.

Your new fact pattern presents very important facts. While each spouse owns 100% of his/her respective business and "has nothing to do with each other", you would want to make sure that neither spouse has any sort of participation in the other company's affairs (e.g., sign off on certain situations). Because if they do, husband and wife's company would be deemed to be one company as a result of spousal attribution under the "controlled group rules."

If the employer restores to each Health Savings Account the money not paid over to the HSA custodian (with an investment adjustment), might a 2019 W-2 become correct? Each investment adjustment should be the greater of (i) the investment returns the HSA would have obtained by promptly investing the missing amounts and (ii) the investment return the employer obtained using the money the employer wrongfully had or the interest value of that money, whichever is greater.

Today’s Consolidated Appropriations Act, 2021 treats a situation in 2020 as not a partial termination “if the number of active participants covered by the plan on March 31, 2021 is at least 80 percent of the number of active participants covered by the plan on March 13, 2020.” Temporary rule preventing partial plan termination.pdf

I do think this will be most useful for the 2020 plan year, but was struck by the potential implication of the 2021 plan year. Say a calendar-year plan on March 13, 2020, has 100 participants. On April 1, 2020, the employer lays off 50 participants due to COVID. On December 31, 2020, the 50 participants are still laid off, but on March 1, 2021, 40 of them are rehired. On March 31, 2021, the plan covers 90 participants -- 90% of the number of participants that it covered on March 13, 2020. In that case, no partial termination would occur for the 1/1/20 - 12/31/20 plan year. That seems entirely logical to me. But say the employer then sells one of its two locations on June 1, 2021, and 50 participants terminate employment and are hired by the buyer. On December 31, 2021, the plan covers only the 40 remaining participants. The statutory language seems to say the 2021 plan year also would get partial termination relief based solely on the number of covered participants on March 31, 2021, as compared to March 13, 2020. This seems less logical.

The Consolidated Appropriations Act, 2021 (if enacted) amends, retroactively, the CARES Act to allow a § 401(a)-qualified money-purchase plan to provide a coronavirus-related distribution. Coronavirus-related distribution from money-purchase plan.pdf

Correct - ALWAYS use Employer's EIN on 5500. ONLY use Trust EIN (plan's do not get EINs but trusts do) on 1099-R and Sched R. And Bird is showing his/her age by mentioning Schedule P!