Hi

Here is a new one for me.

Fiscal DB Plan - 7/31 year end. Overfunded 500k. This is a husband and wife plan only. They got paid out max 415 limits (compensation not dollar)

Plan terminated 7/31/2020. Benefits rolled into respective IRAs March 2021 and the excess was transferred to the QRP (profit sharing plan) by 7/31/2021 with a small remaining residue in October of 2021.

The DB account is still open with $0 balance.

The idea was to eat up the excess within 7 years as much as possible.

They now have opportunity for large salaries for 2021/2022 and wanted to see if a new DB plan can be set up and the excess can be transferred back into the new DB for satisfying the contributions?

Can this be done? If yes, I will have follow up questions.

Thank you

hello! Can anyone point me in the direction of where the Lifetime Income Disclosure calculations are explained in detail. I have found the DOL calculator but I'm not great at finance and need to see all of the steps. Thank you!

401k participant has appreciated company stock
Separated from service in 2021
He took (in 2021) a distribution of dividends (from employer stock)-  It's not clear whether he took the distributions while employer or after severing service. 

My understanding is (one of the many NUA requirements) is to make lump sump distribution in the a single year.  Does him taking a distribution (of dividends) nullify NUA?  If so, would he be required to wait under the next "triggering event" to NUA qualify?

All help is appreciated. 

Just to check how they designed? or database stores all the individually designed plan documents?

I didn't think this was an issue, but the client was told something by a friend so I wanted to be clear:

Company 1 - Owned 100% by husband (wife not on the books)
Company 2 - Owned 100% by wife (sole employee)

She was told that since they have minor children, this would be a controlled group and needed to be tested together.  I didn't think so, but I just wanted to be clear.

The only complication is that Company 2 is a law firm that does do work for Company 1.  I'm not sure that it's the sole work that they do, but while that could create issues it shouldn't be a controlled group issue.

Thanks in advance!

Accountant asking for advice, told him to consult an attorney.  

Apparently an old  client sponsored a profit sharing plan, back in the 70's.  Original plan doc, nothing since then, no 5500s, owners died about 5 years ago, no successor trustee, spouse of one owner still around.  All employees paid out in the past.

Funds with bank, they want to pay the account and get rid of it.  Less than $100k, to one of the owners, so he says, wife is beneficiary, not a trustee. The bank looking for corp resolution naming the trustee so they can pay out the account.

Not getting involved, just asking if anyone has ever had such a situation.

I don't even know what an attorney would advise.

I've never had reason to look closely, and the enactment of the 457(b) trust requirement predates my time in practice, but is there a particular reason why many governmental 457(b) plans seem to use custodial accounts (that meet the trust requirements under 457(g)(3) and 401(f)) instead of trusts?

Can a plan charge a participant for shipping/handling as part of its direct-to-consumer COVID-19 shipping option and stay within the safe harbor so that it can limit reimbursement to $12 for at-home tests purchased out-of-network?

One of the large (largest?) PBMs is currently stating that is the case.  To me, that doesn't seem to be within the spirit if not the letter of the current FAQs.  I haven't seen any guidance on that, either in the at-home test realm or even in the pre-COVID-19 general preventative care arena.

Regardless of the answer to the above, can a plan charge (e.g., not reimburse) a participant for the cost of expedited shipping, if the participant requests it?  That seems more defensible but I haven't seen any guidance on this either.

Thanks!

Good Morning!

Need clarity on handling distribution for a successor plan.  There was a stock acquisition and seller plan did not terminate a day prior to the sale date since the termination date and the sale date happened to be the same date this lead to a successor plan situation.  The terminating plan has about 26 participants with balance out of which 3 are terminated part and 2 retired the rest are Active participants.  There are 2 participants who have active loan as well ( Active part), the acquiring company counsel has advised the 5 participants funds can be distribution however the rest of the 21 part should be transferred to the successor plan ( acquiring company 401k plan). I have couple of questions. 

1. Since this is a successor plan situation will this be a Transfer or Rollover ? 
2. How will the tax record be handled? 
3. Again should we simply be transferring the loan to the successor plan or will it be a rollover to the successor? 
4. I believe a final 5500 will be required correct? 

Thanks

Hello,

I am terminating a one-participant DC plan.  The plan document requires declaring an effective date of termination in writing with the company holding the trust, then disbursing assets from the trust within a year.

If I declare effective date of termination in February, then the assets are disbursed in, say, April, do I owe two "final" 5500ezs (one for partial year jan-feb to the effective date of termination, one final for partial year jan-April declaring zero assets) or just one final 5500ez for short year Jan through April showing zero assets at the end?  i.e. does "effective date of termination" per the plan doc have any effect on the 5500ez filings?

Thank you!

Hi, 

One of the participant is on a Military leave and when he returns do the plan sponsor needs to pay for the safe harbor portion? The plan is Terminating. 

Ugh - just reviewing a 457(b) plan where there was an operational error a couple of years ago. Long story short, a participant who terminated employment was required, under the terms of the plan, to start receiving distributions within 60 days. Instead, participant was allowed to make an election to delay distributions to start at age 70-1/2.

Under the excellent reference book by Peter Gulia, Garry Lesser, and David Powell (the 457 Answer book) it doesn't sound hopeful as to possibly correcting - limited at best even for governmental plans, and worse yet for non-profits. So my question relates to what is done in real life - aside from the obvious of seeking legal counsel. Seems like it could be ignored, and hope no one notices, or attempt to correct as best they can (start distributions now, and hope no one notices) or treat it as an ineligible plan, subject to 457(f) as of a couple of years ago?

It looks like during the period of Sept 2019 to Aug 2020, IRS opened the determination letter program for individually designed Cash Balance Plans. Is the program closed now? Does it mean it is not allowed for individual designed defined benefit plan to amend to an individual-designed cash balance plan anymore?

A 'friend' was traveling with her family last week, after the effective date of reimbursements for home covid tests, and found her family in need of purchasing multiple covid tests.  In the process of taking these tests, the test materials and packaging themselves were discarded.

Upon arriving home, this 'friend' contacted her insurance who has informed her that they will need both receipts and the UPC symbols in order to get reimbursement.  Is this excessive and even allowed?

I am a TPA for a profit sharing plan that is sponsored by a 3-entity controlled group. On 1/1/21, one of the members ceased to be part of the controlled group due to a change in ownership. Sec 410(b)(c) provides a transition period of the last day of the plan year following the year of the change for coverage testing purposes, does this transition period also apply to the plan documentation. When would the plan document have to be amended to remove one of the members as a participating employer? Can all 3 entities share in a profit sharing contribution for the 2021 plan year under the current plan document?

Grrr - this seems sticky. Employer contributions to the HSA are a "qualified benefit" under the Section 125 proposed regs. (See 1.125-1(3)(J)). And under the W-2 instructions, excerpt below, they would need to be included in Box 12 with a code W. Assuming for the moment that the contributions, when made, are "reasonably" excluded from the employee's income, is this considered a Section 125 "deferral" which is added back in as compensation under the terms of the plan? I'm having trouble coming up with a definitive answer on this. Does the fact that 1.125-1(3) contains the language that the term "qualified benefit" means ..."any benefit attributable to employer contributions"... mean that it is treated as a deferral that is added back in? Anyone gotten a CPA decision on this question before? Thanks. 

Health savings account (HSA).

An employer's contribution (including an employee's contributions through a cafeteria plan) to an employee's HSA is not subject to federal income tax withholding or social security, Medicare, or railroad retirement taxes (or FUTA tax) if it is reasonable to believe at the time of the payment that the contribution will be excludable from the employee's income. However, if it is not reasonable to believe at the time of payment that the contribution will be excludable from the employee's income, employer contributions are subject to federal income tax withholding, social security and Medicare taxes (or railroad retirement taxes, if applicable), and FUTA tax, and must be reported in boxes 1, 3, and 5 (use box 14 if railroad retirement taxes apply); and on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return.

You must report all employer contributions (including an employee's contributions through a cafeteria plan) to an HSA in box 12 of Form W-2 with code W. Employer contributions to an HSA that are not excludable from the income of the employee must also be reported in boxes 1, 3, and 5. (Use box 14 if railroad retirement taxes apply.)

An employee's contributions to an HSA (unless made through a cafeteria plan) are includible in income as wages and are subject to federal income tax withholding and social security and Medicare taxes (or railroad retirement taxes, if applicable). Employee contributions are deductible, within limits, on the employee's Form 1040 or 1040-SR. For more information about HSAs, see Notice 2004-2, Notice 2004-50, and Notice 2008-52. Notice 2004-2, 2004-2 I.R.B. 269, is available at IRS.gov/irb/2004-02_IRB#NOT-2004-2. Notice 2004-50, 2004-33 I.R.B. 196, is available at IRS.gov/irb/2004-33_IRB#NOT-2004-50. Notice 2008-52, 2008-25 I.R.B. 1166, is available at IRS.gov/irb/2008-25_IRB#NOT-2008-52. Also see Form 8889, Health Savings Accounts (HSAs), and Pub. 969.

https://www.irs.gov/instructions/iw2w3#en_US_2021_publink1000308298

Not sure this is the right forum, but I'm curious how this situation would be addressed.

A privately held employer issues restricted stock to an employee on December 20, 2021. It is subject to a five-year cliff vest. The employee's last 2021 paycheck is December 31, 2021. There is no other procedure imposed during 2021 for income tax withholding or FICA, because nothing has vested and the employee has not made an 83(b) election so nothing is taxable. The employee files an 83(b) election on January 10, 2022. The employee's next paycheck is paid on January 15, 2022. 

Regardless of whether the employer withholds income tax and FICA from the January 15, 2022, paycheck or the employee writes the company a check for withholding on January 10, 2022, how would the employee's W-2 and the employer's 941s (4Q21 and 1Q22) look? 

On the W-2, the income can still be reported in box 1, 3, and 5 for 2021, but what would be reported for income tax and FICA withholding?

On the 941, would the wages and FICA be reported all in 4Q21 (the quarter in which the income was received), all in 1Q22 (the quarter in which the election was made), or some of both (the income reported in 4Q21 and withholding reported in 1Q22)?

Would appreciate any help.

Hi

First time for everything.

CB/DC (401k+SH+PS) combo. Both plans require 1000 hours for accruals/allocations. PS requires last day rule as well.

One owner/HCE got very sick and only worked 100 hours however employed on last day.

The other partners want him to get CB accrual as well as PS allocation.

All non-HCEs are covered under both plans and get the minimum required gateway - no exclusions.

Some non-owner HCE's are excluded from CB plan but participate in DC plan - just getting 3% non-elective SH.

Can an 11-g amendment be made just for this HCE and have him accrue benefits for 2021? If yes and gets benefits, should these benefits be included in the 2021 410b and 401a4testing? No issue with 401a26 as comfortable passing.

With him benefitting for 2021, all my testing will still pass so issues there (checked it already)

Any other suggestions I cannot think of?

Thank you

Good evening all!  I just got a new lead where the income from the LLC comes solely from their investments in crypto currency.

Is this an issue when starting a plan for the LLC?  Or as long as they are reporting the income on a K-1 through the LLC, it shouldn't matter?  I just wanted to make sure before writing the Plan Document.

Thanks!

Client received a 2020 w2 with wages from services performed as a minister.  His housing allowance was included in his gross wages for social security and medicare.  He retired and began receiving distributions from the rabbi trust.  Per the plan, 25% of the annual distribution from the rabbi trust is designated to a housing allowance.  Should the client have received (2) w2s?  The client only received one and the $25k received from the rabbi trust was not included in box 1, but only reported in box 11.