Hi, 

I've not come across 1099-NEC form, can anyone provide me little detail on this and how this is applicable for a 401k plan ( Plan Termination). 

Thanks

Hi, 

One of the plan is terminating since the company is closing.  The balance in the forfeiture is $843,650.03 this is a huge balance and as per the plan sponsor they discussed with their counsel and the counsel has advised to return the funds to the company ( employer).  The owner and was never involved with the administration of the plan and the person who was handling it is no longer with the company, the owner is the only one left and wants to close the plan since the company is closing. 

The huge amount is because there were participants who had forfeited the funds since 2014, however no part forfeited the unvested amount during the plan termination since the plan was made 100% vested as of the term date 01/31/2022.  The funds seemed to have just accumulated which is a operation defect. 

• There are no forfeited checks 
• No outstanding checks 
• The forfeiture in the forfeiture in only the employer match

The plan sponsor and they counsel have advised to return the funds to the company, I've never seen just huge amount in a forfeiture and since they are asking to return the funds is it something doable? is there any exceptional clause (IRS) since they have submitted the letter from counsel is there anything that we will need to look into/consider from compliance perspective?

 Thanks

Can someone please direct me to the regulations that state what the maximum pay credit per year can be in a Cash Balance/Profit Sharing combo Plan?

Taking over another case where they added the owners spouse onto the Plan, and the 401(k) + Profit Sharing + Cash Balance credit exceeds the salary they are giving her.   Just wanted to make sure what they were doing was alright (they are the only two participants, so there aren't as many testing issues).

Group:

Early 2020 (after 3 yr irs audit of ESOP and related entities) irs issues NOD (Notice of Deficiency) with language stating the IRS position is that the retirement plan is not qualified. 

Plan years under audit covers 2011-2018.

Due to Covid and a number of other factors US Tax Court case is still pending. 

One of our arguments is that the plan was disqualified per the IRS NOD and that the IRS erred for a variety of reasons. 

Fast forward to this past week, Govt counsel calls and states that it's now the Gov'ts position that the plan was never disqualified. 

Q: If the Plan was never disqualified for the 2011-2018 tax years, and the 2017 5500 return was filed July 2018, is there any argument that a 3 yr SOL has run out for 2011-2017 tax years? The 3 year sol would have run out in all tax years except 2018. 

It's been my understanding that for the IRS to use the 6 yr SOL the burden of proof would then shift to them. 

Or does the IRS have carte blanche until they finish their audit even after 6 years? 

Thoughts and comments appreciated. 

Thank you 

If we do not file a 2021 Form 5500 for a plan adopted after year-end, is the Plan still required to distribute an AFN or SAR (whichever applies) to Participants ? It wouldn't make sense to distribute a summary of a 5500 that isn't being filed, but I haven't seen this addressed specifically.

Having a senior moment.  Participant hired 1/20/20, EC Period 1/20/20-1/19/21 - 1,000 hours credit.

Overlap is 1/1/21-12/31/21, worked 870 hours.

Plan defines eligibility for contribution as 1,000 hours OR last day.

I think she is eligible 1/1/21, and since employed on ast day of the year, must receive a contribution?

Hi

I own Company A 100%. No employees and I am not on payroll.

Company A owns Company B 100%.

Company B employs me and my spouse. We both get salaries.

Company B sets up a DB plan sponsored by Company B only.

Is the DB plan covered by PBGC?

None of the companies are professional entities.

Thank you

We have a smaller plan where the owners (only HCEs in the plan) decided not to put in the regular match for themselves but did fund for all of the NHCEs. Per the plan document, everyone is eligible for the match and the formula is discretionary each year.  Since the plan document does not specifically exclude the HCEs from the match, aren't they required to receive it even though they are HCEs?

One of the Partners in the 401k plan has negative self employment income (line 14a).  Of course, the Partner deferred to the plan.... 12,000.

I bring this up to the CPA and he is saying that while the Partnership lost money, the PPP forgiveness is creating a positive situation for the Partner.

Do I care about the PPP forgiveness and just go with the line 14a?  In this situation I could leave 6,500 catch up in the plan and 415 refund the 5,500?

Need some insight on this situation on what to do.

Thanks

Employer needs to make a SEP-IRA contribution, and an employee is unable to open an account to receive her contribution because she could be undocumented, and that's blocking custodians from opening an account for her. Any idea what the employer should do if a custodian won't open an account to receive the contribution?

A parent company plan sponsor has affiliates that are part of an affiliated group as defined by the Code. The plan document states that employees of the affiliates can participate in the parent company plan as long as the affiliated companies adopt the parent's plan. Unfortunately, employees of the affiliates participate in the parent's plan, but the affiliates never adopted the plan, and the plan is now under investigation by the IRS. My proposed solution is that SCP allows for self correction of insignificant operational errors even if the plan is under investigation. I can make a good argument that this is an operational error since the plan document was not followed, and that its insignificant since it only involves a handful of employees and the dollar amounts involved are very small. Thus, I propose having the affiliates adopt the parent plan and such adoption would be dated and signed currently by the affiliates, but it would be drafted to have retroactive effect back to the date the affiliated employees started to participate in the plan. Any comments or concerns with this approach using SCP?  

Have a new client where they have both a Cash Balance and Profit Sharing Plan:

• Profit Sharing is immediate entry
• Cash Balance is 21 & 1 (1/1 & 7/1 entry dates)

So we have people eligible for the Profit Sharing and not the Cash Balance.  When we do the testing for both plans (like the Rate Groups), do we include the people who are in just the Profit Sharing Plan?  I just wanted to confirm, because those profit sharing contributions significantly help the testing.

Thanks in advance!

I'm trying to assess what services a benefits manager needs from their benefits broker.  For instance, do you have them provide employee manual help, vendor evaluations and compliance updates?  Of course, help with health insurance design, claims assistance and renewals is requisite but what other services are important to you that your benefits broker provides?  I would welcome a call to discuss your thoughts.  

I have a stubborn married person who wants to retroactively rescind his election of a J&S annuity to get a lump sum.  Obviously the answer is no, no, a thousand times no, but I am having trouble getting through to him.  Any suggestions?

We recently took over  CB/DC plans and discovered that they have a large number of leased employees.  In looking at the history of these leased employees - they work substantially full-time and have been there over a year.  The plans currently exclude leased employees - but as we all know they need to be counted in our coverage testing.  The DC document has fail safe language - so question number one - are we then precluded from performing the Average Benefits Test to satisfy 410(b) - my initial thought is yes (however I'm not sure how it works with the CB plan also failing).  Does the corrective measure then mean we need to begin to bring in the leased employees based on the fail safe criteria until such time we pass the ratio percentage test?  IF we are able to go to the ABT to pass coverage - it looks like we need to really ramp up the level of contributions people are getting - to the point where some NHCE (non-leased) are getting almost 40% of their compensation in an allocation.  The other thought is we could do a corrective amendment to bring in the people (leased) needed to pass the ABT.  

Sadly, it appears that the prior TPA did not do anything with respect to the leased employees.  Population is roughly 18 employees - of which 4 are highly - 5 haven't met the eligibility requirements and they have 13 leased employees that must be counted in the testing as not benefiting.  

Any thoughts?  I feel terrible for the client as they have had this relationship with the leased employees for years - and it's now just being addressed. 

A school with 300 FTEs hires 90 summer counsellors each year. The Plan for the 300 FTEs does not require a waiting period, or minimum hours, or last day of the year employment. Fully vested contributions are made with each payroll period. 

Counsellors are excluded as a job class. They work no more than 400 hours a year and are terminated at the end of each season. 

Am I correct the counsellors are excludible employees simply because they are terminated in the year with less than 500 hours?

I don't believe it matters that the Plan for the FTEs does not require hours or last day of the year employment. 

Thoughts?

Accountant has a client who is not a resident of the US, but has income paid to her LLC.  She is in this country more than 90 days each year.

Can she set up a qualified plan for the LLC income.

Here is a question that I have regarding a plan document.

I took over a couple of plans as the TPA from a partner who retired back in 2016 from our firm. When the partner retired, they provided me the documents for the plans. They are all EGTRRA documents, with dates in 2009. The partner utilized the Relius volume submitter document for the restatement. They were filed as individually designed plans, and have a determination letter from the IRS, under the company name. I also have executed 415 and PPA amendments. One of the companies is in the process of being sold, and the purchasing company is looking for a copy of the PPA restatement for the plan. I have searched our company archives and can find no mention of a PPA restatement. 

I have reached out to Relius to see if there is a PPA restatement completed before the 4/30/2016 deadline. My question is was a PPA restatement necessary, as the plan was submitted as individually designed? I only work with Prototype plans, and have never utilized a volume submitter plan that was submitted to the IRS as an individually designed plan. Sorry for this really dumb question, but I truly have no idea.

Thanks for any replies.

Are options counted for purposes of determining key employees under the 1% owners prong?

The regulation says a 1% owner is any employee who owns “more than 1 percent of the value of the outstanding stock of the corporation or stock possessing more than 1 percent of the total combined voting power of all stock of the corporation.” Treas. Reg. §1.416-1 T-16.  Assuming the options don't have voting rights, to me this says you don't count options as they're not outstanding stock. Is there any authority that says otherwise?  Perhaps if the options are fully vested the employee might own 1 percent of the value?

Hi

Friday late, fried brain, cannot think straight. Checking a design for someone.

401k+SH match+PS are the provisions. Plan is top heavy.

401k+SH has age 21 and no service for eligibility.

PS has 21/1. The sponsor will be making a PS contribution (all in their own group). All satisfying the eligibility get the gateway (a little over 3%).

I have 2 participants employed in 2021 (both worked over 1000 hours in 2021) and entered the plan in 2021 and also deferred (I have 5 others employed late 2020 or in 2021 but did not defer). So, they got the SH match. But they do not get PS/gateway as they are otherwise excludable employees. The other 5 who did not defer got no match and no PS/gateway.

Am I correct?

Thank you