I have a client who is bundled with a daily vendor and the company is being sold as part of a stock purchase.  The daily vendor is saying it will take 6-8 weeks before they can even look at preparing an amendment to terminate the 401k plan.  We need to get the plan terminated ASAP because the buyer is requiring the plan to be terminated prior to the transaction.

I have read the BPD for the vendor and there is no specificity on how the termination must be accomplished (board resolution or amendment), just typical language about all accounts being 100% vested, no future contributions, etc.

If the client's attorney types up a Board Resolution to terminate the plan with an effective date prior to the acquisition, will this be sufficient to legally terminate the plan?  Then if the vendor wants to prepare some sort of amendment they can follow up with that later?

Thank you!!

Hi

Does SB still needs to be physically signed or docusign or another method is ok?

Thank you

Husband and Wife own 50% each of Company A, B, and C, all of which are S-Corporations.  Company A has 6 employees, Company B has 37 employees, and Company C has only the Husband & Wife.  All of these are a no-brainer Control Group.  Wife is just an Owner of each and is not on payroll and has a separate job.

Company A & B has two separate SIMPLE IRA's, but they're operating them the same. Not really that big of an issue, since they're treating them the same.

A bank trust company talked the husband and wife into setting up a Solo(k) for Company C.  In 2021, the Husband put in a $10k deferral into that.

In 2023, they'd like to set up a Safe Harbor 401(k) for Company A, B, and C.

Is there an easy way to unwind this and get rid of the Solo(k).  The "Mistake of Fact" won't work.  Could they just remove the $10k plus earnings as an excess deferral?

An employee eligible 1/1/2022 was discovered to have not been given opportunity to defer until 6/1/2022.  If they elect to not defer at all, Is the only correction for the Missed Deferral Opportunity the greater of 3% of comp or the maximum deferral percentage for the safe harbor match that is 100% or more?  

For example, if SH match is 100% of 1st 3%, and 50%, would they just contribute a 3% of comp QNEC?

We had a good discussion going on whether the addition of abortion-related travel coverage to the health plan would qualify as a Section 125 cafeteria plan permitted election change event.  Now it seems to have dropped from the forum.  Any idea why?

don't try this at home....

so, while I'm not collecting Soc Sec yet, June 1 I was within 3 months of my 65th calendar year birthday. And as such, that is the earliest date to start the application for Medicare. Supposedly, if you have set up an account on the soc sec website, you can apply there. tried that, the only thing that shows up asked for my medicare number which I don't have so that was no good.

So I called Medicare and they set up an appointment, but that call would be late July. I then went to the Medicare site to try to apply on line, and...it gives a link to go through soc sec. When I clicked on that I was back to my soc sec acct, but this time there were a bunch of questions about filling out on line for Medicare. go and figure.

A few days letter I received indicating the phone appointment was cancelled.

then I received another letter indicating the medicare card would be sent in  2 weeks.

And another letter checking to see if I was eligible for supplemental drug coverage.

and today, my card arrived at my brothers address...My brother called them and they have no idea why the card was sent there. Seeing how I already received 3 pieces of mail from them, this is a great puzzle.

well, at least I do have a number. Now I can get signed up with a health insurance company for supplemental coverage. At the rate I am going, I might just have everything in place by my 65th birthday.

I guess word to the wise, start your application at the earliest possible date. good grief.

I have a client that wants to introduce significant design changes effective August 1, 2022.  This is one day after the deadline to "adopt" Cycle 3 (Post PPA) restatements.  If the document is signed prior to 8/1/22, but effective one day after the adoption deadline, would you have any concern that the restatement is not timely?  I think not, but I will appreciate your thoughts, and hopefully, citations.

The question of Restatement effective dates comes up all the time.  For example, most of us are drafting Cycle 3 restatements with effective dates that are later than the earliest effective date of changes made in the document. For example, a lot of documents are being drafted with 1/1/22 effective dates for laws that took effect in 2018 and earlier.  

Clearly, there is a deadline to sign the document on or before 7/31/22, but does anyone know of a requirement that documents specify earlier effective dates?  It seems the only requirement is to sign  before the end of the Remedial Amendment Period, on 7/31/22.

Thank you very much.

I have a client I have been working with for many years.  He started with a Keogh opened at Paine Webber.  In 2007 I restated the plan into my independent doc (ftWilliam).  Back when he adopted the plan typically the account was opened using the sponsor's EIN.  I have advocated forever that a plan needs it's own EIN.  I obtained one (sadly I can not find the paperwork that assigned an EIN for the plan).

Now, the client is switching financial advisors.  The funds are going to be transferred "trustee-to-trustee" to the new financial institution.  I provided the EIN I had in my records only to find out that the existing financial institution has a different EIN and so the funds would not transfer because the EINs are different.  I understand that.  

Here's my question... the existing financial institution produced an EIN assignment (a copy of the SS-4). It goes  back to 2006.  The client has never taken a distribution and as you know the EIN on the 5500 is the sponsor's EIN.  
- Is this original EIN defunct at this point ? I mean, after so long with no activity don't they die?
- or, should we use it for the transfer because his existing accounts are registered with it?

I think that's enough info.

ER filed 2020 5500 in Feb 2022.  No DFVC (still looking into why).

Got a letter from IRS looking for $22,000.

Any options other than pleading for a reduction?

Group:
Client's esop has been under audit for 2018-2020 by irs TEGE.

The IRS recently issued its notice of deficiency stating the plan was ineligible. (much of which related to a former esop advisor and much longer story) 

The TPA has calculated that there are 2 participants who left the company in 2020 and have not received any distributions for their vested shares. 
The distribution amount would be approximately $20k each.

We are assessing what steps to take for plan participants shares, if any. 

Q:Is trustee/plan administrator still obligated to pay distributions for a plan year that has resulted in being disqualified? 

Q: Wouldn't any share value be zero? $0. So partipcants even if fully vested, would have no value. 

Client plans on filing in tax court to challenge. 

Q: Does trustee have ability to freeze plan until a court has resolved the issues? 

Thoughts and comments appreciated. 

Thank you 

Reviewing my client's W-2s, I noticed box 12, Code "C".  Not seen this before.  Looking at the instructions, this is the cost of employee portion over $50K of coverage?  Would this be considered a "fringe" benefit, to be added back to    W-2, similarly to employee contribution to 40(k)??

Say a plan that used calendar year for its plan year chooses to restate its plan as of a different date, also within the current year. Would this create a short plan year, or any other adverse affect?

Reason being is they want to reflect a certain change as of that date.

Our firm uses ftwilliam and as far as I know it can’t do restructured testing (breaking the plan into component plans and testing separately). I was wondering how other people were doing this testing? Do other software programs do it? Do you have to do the testing outside of a software program like in excel? 

Hi, I had HSA with my previous employer and had contributed total ~$2500 in year 2022 until I changed job in 06/2022. Can I sign up FSA with my new employer and contribute to FSA limit (which is ~$2800 for year 2022)?  I wanna ensure it is allowed per IRS rules. Thanks!

Hi

Existing DC plan with NRA 65 only. Plan effective 1/1/2018.

Participant DOB 1/1/1946, DOH 1/1/2011, DOP 1/1/2018 thus NRA attained on 1/1/2018.

Looking to add a CB with NRA 65 and 5 YOP

Participant attainted age at val date (EOY) 75 with NRA 79. This is for the CB plan.

When testing for combo plans, the system used 75 as the testing age.

Is this correct under 401a4-12?

Thanks

SH plan.  ER wants to remove Roth feature effective 7/1/22.  Calendar year plan.

Can they do that?

Spouses in CA own separate sole prop businesses without employees and each has a solo 401(k) plan document. 

May I file a 5500-EZ for each separately or must I file a 5500- SF for each due to control group status after the $250k ceiling is reached.   I recall that used to be the case in 2008 but I believe that has since changed.

Looking for validation or direction on where to look further.

Thanks,

Bob

Prove me wrong....

A CPA I work with prepares his own 5500-EZ.  He is telling me that he must file the EZ electronically because he files more than 250 returns.  Per the EZ instructions he is reading this:

Mandatory electronic filing. A filer must file the Form 5500-EZ electronically using the EFAST2 Filing System instead of filing a paper Form 5500-EZ with the IRS if the filer is required to file at least 250 returns of any type with the IRS, including information returns (for example, Forms W-2 and Forms 1099), income tax returns, employment tax returns, and excise tax returns, during the calendar year that includes the first day of the applicable plan year.

While he may file in excess of 250 returns on behalf of his clients, it is my contention that what is written he is interpreting incorrectly.  Is what the IRS is saying  the following... that if the plan sponsor files in excess of 250 returns on behalf of them self then sure, they must file the EZ electronically.  But because he files on behalf of his clients that is not the case, don't need to file his EZ electronically.  

I am happy to file the EZ electronically to sooth his anxiety.  I just don't think it's necessary.  

Client has not yet restated DC plan for Cycle 3. Client is willing to sign interim amendment for a plan terminating in 2022. What are the issues if he terminates the plan prior to 7/31/2022, the Cycle 3 restatement deadline, without actually restating the plan for Cycle 3?

Company with multiple doctors, set up so each doctor has their own corporation with its own plan, and then there is one plan for employees. All plans are combined for testing (they also mirror each other).

One of the doctors is exiting the firm toward the end of the year and going independent. As such she will exceed 1000 hours while within the Controlled Group, but not after she departs.  I think hours are only relevant for Controlled Group testing since she will definitely work 1000+ hours for her own Corp.

Since employer contribution requires last day worked, I believe the contribution itself will not be included in the combined testing which will reflect a $0 for her.

Just curious if there are any differing thoughts?