Our wonderful Participant Success Manager informed us all that tomorrow, the Friday after Labor Day, is known in the industry as "401(k) Day" - does that make today 401(k) Eve? Just wondering.

Simple enough, an individual who does significant work for herself but does not have a separate business name/EIN.  She wants to start a 401k with her SS#.   Is this permitted?

Thanks

Lump sum distribution is taken, then rolled over.

Just curious about the 1099-R for the distribution. I'm thinking that it is marked as nontaxable (ie nontaxable amount = zero). Or alternatively is there a second 1099-R issued where it is rolled over (doesn't make sense to me but just trying to cover all bases)?

Got a plan that has always been a closed MEP due to common ownership.  For some reason, it was thought by a previous provider that this MEP was open and needed the two employers to file separate 5500s going back to 2018.  My question is how do you amend a 5500 that should never have existed?  The only option I can really think of is to just amend last year's returns and show it as a transfer of assets to the "main" plan and as a final 5500.  

So today one of our very few clients not on our document, tells me he just now is seeing my communication regarding the restatement deadline.  I reminded these clients to contact their document provider to make sure this was done.  It's possible the doctor just doesn't remember signing it.  It is an owner-only plan.  

If it hasn't been updated, what is the fix step?

Thank you

Client wants to amend the plan to 6 months and 1000 hours for eligibility. Currently the plan has 1 year and 1000 hours. Can this be done? If so, are there any ramifications to having this? I have had 6 month eligibility before but not with an hours requirement.

Thank you!

A 401(k) is TH and has SHMAC and prevailing wage. No discretionary match or discretionary non-elective.  Is 3% TH required?

Realtor is 50% owner in a real estate business with a 50% partner (not related).  Realtor's spouse owns a business 100% - a salon.  No services are performed for each other's businesses.  The Realtor and his spouse have minor children so they are deemed to own the interest in each others' business.  But to be a controlled group they need GREATER than 50% common ownership to EFFECTIVE control I believe from what I'm reading.  Would you agree?

Thank you!

Wondering what other practitioners' thoughts or experiences are on how expenses of the adoption of an embryo could apply under an Adoption Assistance program under Code Section 137?

We have a situation in which a company is acquiring a new subsidiary in a stock transaction.  The acquiring company has a 401(k) plan. The acquired company had a 401(k) plan before the transaction, but it was terminated immediately before the transaction to avoid the rule that you can't terminate a 401(k) plan if the employer maintains another 401(k) plan.

Acquiring company would like to provide that an individual's election regarding deferrals in the acquired company's plan would carry over to the acquiring company's plan.  (Obviously, employees can change their elections at any time, but that would at least be the starting point.) That seems to me like a perfectly reasonable thing to do, so that you don't have to get new elections from all the employees at once (and risk having some of them offended that they have to make new elections when in their mind they already made elections).  But everything I can see refers to employees making elections under a plan--not employees making elections under one plan and having them carry over to a different plan.

Has anyone experienced this situation?  And has the IRS ever approved or disapproved of it that you know of?

Strange one here:  SAFE HARBOR Match Plan

Plan excludes a number of items from their definition of compensation for deferral purposes (including several types of special bonuses).  For the SH match, they exclude the same things as deferral, but have an additional "bonus" exclusion.    414s testing would be required for both the deferral and the SH match definitions of compensation.  My understanding is that the  plan must pass 414s testing.   The plan does not pass 414s for deferral, but does for the  SH match.   In a Non-SH plan, I would run the ADP testing on total compensation and be done.   What are my options for a SH plan?  If the SH match compensation failed, I would amend the plan and recalculate the match. 

Thoughts?

A $1,000,000 contribution was made to a db plan on 7/1/2022. Are there any problems assigning a portion of this contribution to the 2021 plan year, i.e. $700,000 will be shown on the 2021 Schedule SB, and the remaining $300,000 will be shown on the 2022 Schedule SB? 

I am a trustee of my company’s ESOP and historically we have always issued distributions from the plan in the form of a check. However every year or two we will have a check get lost either in the mail, by the participant, or by an investment brokerage.  When this happens we will put a stop payment on the check and renew the stop payment one or two times while efforts are made to locate the check, but eventually if the check isn’t found we end up closing the checking account which is a hassle. 

We would like to move to an electronic form of payment so we don’t have this problem, but ACH payments won’t work because there’s no way to indicate who’s account it should go to when you route it to an investment brokerage’s bank (there’s no memo field as with electronic wires). Electronic wires are expensive because there are fees at both ends of every transaction.  And the daily check writing limit is prohibitive for using our bank’s Bill Pay system.

What method of payment do other ESOP companies use?  Is there a good way to make distributions electronically?

Thanks!

Hi all

MD office, less than 10 employees

Owner also owns 2 pizza restaurants with a few employees.

If a DB plan is set up just for the MD office, is it covered by PBGC?

If a DB plan is set up with the pizza restaurants as additional employers but the MD office being the plan sponsor, is this DB plan covered by PBGC?

Thank you

I have never dismissed a client  - I am lost as to how to commit this to writing.  I took over a DB plan I never should have, I should have known from my conversations with, and then an in-person meeting, this guy was totally clueless as to what plans he had - but always expected someone else to do the job.

I'm sure a few TPAs have fired clients - any "sample" wording?  The only thing I can think of would be totally unprofessional unprofessional, but ha been a total waste of my time.

TX.

 A participant meets all the requirements for a hardship withdrawal and the plan allows hardship withdrawals in the amount of the participants elective deferral account. However, there is an outstanding loan on the participants account and the hardship withdrawal will wipe out the amount in the account securing half of the loan. The plan does not have a provision prohibiting hardship withdrawals given outstanding loans but my conclusion  is to deny the hardship withdrawal given loan security issues unless the participant can prove the loan is secured by other than plan assets. Any comments. 

Wishing you all a safe, happy, relaxing and enjoyable Labor Day holiday weekend, however you choose to celebrate! 

So this is a new situation for me.  We have a client who terminated a long-time employee in '22 for embezzling money from the company.  Technically the participant is eligible for a contribution in '21.

My understanding is that, regardless of the reason for termination the participant is still required to make a contribution for them.  I just wanted to confirm that's accurate?

Also, is there anything that the employer can do in terms of withholding the Profit Sharing account to recoup the money that was stolen?  I know that's more of a legal question, but I wasn't sure if anyone knew.

Thanks everyone!

2 questions, unrelated to each other, but related to use of Automatic Extension:

1. I understand the plan year has to match employer's tax year.  How about just the plan year end? ie a short plan year was declared from 7/1-12/31 and the ER's tax year is 12/31.
2. Plan sponsor insists they never use Form 5558 but always rely on their own Automatic Extension of their business tax returns. Do other TPA's have plans that rely on this?  We have always taken the approach to file 5558 no matter what, if it needs to be extended.

Participant indicates spouse is primary beneficiary and the contingent beneficiary is his nephew.

participant then gets divorced so spouse is no longer primary beneficiary.  Does the nephew now become the primary beneficiary until he (the participant) remarries?

The bene form says the spouse is primary and if not living at the time of participants death, the the named contingent benes will get the benefit.

But the ex-spouse is still living...

Does the whole thing get blown up due to divorce, and new paperwork would need to be filled out or the plan's hierarchy will take over?