Hi,

Was the bill that was going to mandate all employers to offer a 401k Plan to their employees finalized? Thank you very much.

An employer filed his September 30, 2021 1120S tax return a few weeks ago. This return did not include any employer contributions. Subsequent to filing the return, which was on extension until June 15, 2022, he has decided he would like to fund an employer contribution.

Because the contribution will be funded before the extended due date of the return, I cannot think of any reason he would not be able to file the amended return accordingly. Is there some rule that indicates that once you file the return it's case closed, or is it permissible to amend under the circumstances?

Sole proprietor sponsor a qualified plan. Starting 1/1/22 it became a corporation. New name, new EIN. Besides restating the plan to reflect change in business structure, name, EIN, etc. is there any other paperwork required for the new entity to continue the existing plan?  The 2022 5500 will also show the changes.

Thanks for your help

Hello everyone,

I appreciate your feedback to confirm my understanding of the interplay between the 402(g) and 415 limit with respect to catch-up contributions. I have a catch-up eligible participant who deferred $24,960 for 2021. Of this amount, $5,460 is considered a 402(g) catch-up. I believe I'm allowed to re-characterize the remaining $1,040 as a 415 catch-up correct? If so, the allocation for 2021 would be as follows:

1. Deferral: $18,460

2. Catchup: $6,500

3. Match: $11,232

4. Profit Sharing: $28,308

5. Total Annual Additions: $64,500

In order for our valuation software to do this calculation requires me to over-ride the participant's 415 limit, so I'm reluctant to do so unless I know for certain that my reasoning is correct. Thank you!

Hope everybody is doing well.

Currently, I'm working on a plan and the facing the following issue- 

' an employee made overfunded contribution in Deferral $1,500 & Safe Harbor Match $450 source in 2020 plan year and then it got corrected in 2021 plan year''

Now, do  I need to report these amount under 8D or 8E in 2021's Form 5500-SF?

8 D - Benefits paid

8 E - Certain deemed and/or corrective distributions

Please note, John Hancock report stated these amount as In Service distribution.

Thanks for your insights.

Having a discussion with a CPA and not sure I understand what needs to be used. No 401k deferral. No exclusions listed in the document.

This is for 2021 and for an LLC filing as an S-Corp

W2 Box 1   $92,000

W2 Boxes 3 and 5 $75,000 - SS and Medicare wages

Earnings summary states

Gross Pay $75,000

Plus S-Corp 2% Medical premium $17,000

Reported W-2 wages for Box 1 $92,000

Reported W-2 wages for Boxes 2 and 3 $75,000

What is the compensation to be used for pension purposes?

Thank you

I know this has come up several times on here with considerable back and forth.

Any chance we can get some definitive answers on the topic of whether catch up contributions are allowed to exceeds 100% of comp? The argument relates to Internal Revenue Code Section 414(v)(3)(A)(i) not actually specifying a requirement for 100% of comp for catch ups.

So just to confirm:
-All 50+ year olds are able to tack on extra $6,500 to 100% of their comp (if comp is below the 415 specific dollar amount limit)?

-Some 50+ year olds are able to tack on the extra $6,500 to 100% of their comp and depends on certain facts and circumstances?

-No 50+ year olds are able to tax on the extra $6,500 to 100% of their comp and those that claim that 414(v)(3)(A)(i) allows for effectively excess of 100% of comp for catch ups are mistaken?

Here are a couple of examples as food for thought (if you were able to confirm treatment for each you'd be a rockstar):
-$10,000 self employed schedule C and 50+

-$0 self employed schedule C and 50+

-(negative $5,000) self employed schedule C and 50+

-$20,000 W2 and 50+

-$58,000 W2 and 50+ while using after tax contributions

-$61,000 W2 and 50+ while using after tax contributions

-$20,000 in a partnership

There was a change in the plan trustee/administrator, The new trustee distributed loans that were not current with payments but did not include any of the accrued interest from the prior trustee in the 1099R (nor any interest through the date of distribution). I thought the appropriate correction would be to restore the loan balances equal to the accrued interest on date of transfer to the new trustee and distribute this balance (with accrued interest) to the participant.

The new trustee says they "cannot go back and establish loan balances for these participants" and "they would have no way to track these loan balances in the future". 

I think this is a plan failure and if you are not going to restore/distribute the balances that the employer would have to remit the accrued interest to the plan. I cannot find anything on point for this. Any guidance for this issue would be greatly appreciated. 

We have a pretty straightforward small 401k plan (about 6 participants) that uses W-2 wages for plan compensation.  The owner wants to transition from W-2 wages to providing "guaranteed payments" to all employees.  I am not certain I completely understand what this involves but he says they can withhold 401k contributions before making the guaranteed payments.  But do guaranteed payments also have federal/state/local taxes withheld before being paid? If not, can these wages still be used for 401k plan purposes?

Any advice on what questions we should be asking would be greatly appreciated.

Thank you

I'm setting up a DB and 401(k) for a prospect.

All employed on the effective date enter the plan on the effective date; anyone hired after, 12 months of service.

Plans will state Vesting from the effective date of the plan - DB has to be -3 year 100%, but PS will use 2/20.

I do recall a thread mentioning this would not be possible?

I have a client who received an in-plan Roth transfer election form from a participant on 12/27/21. The request was submitted to Nationwide the custodian on the same day.

All participant's contribution sources are record kept in the Nationwide account. No transfer of funds from outside of Nationwide. Nationwide shifted the funds from pretax source to roth on 1/3/22. Is there any guidance available that would allow the conversion to be taxed in 2021 as requested by the participant even though Nationwide will be issuing a Form 1099R for 2022?

I reviewed notices 2013-74 & 2010-84 which states taxed in year of receipt or year of conversion. Can one argue that the conversion occurred at the time of the election?

Hi, 

Good Morning!

Looking for guidance on Successor plan. One of the terminating plan the plan sponsor intends to establish another 401k plan with a different EIN, Will this lead to a successor plan situation?  I understand if a 401k plan is set up/exists from the termination date and until ending 12 months after distribution of all the assets can lead to successor plan however I'm not sure if EIN has anything to do with the successor plan rule. 

Can an employer set up another 401 k plan with a different EIN? 

Thanks 

I looked, couldn't find the answer.  

For a  business to be eligible to file an EZ can the business have employees but none of them are eligible due to the hour requirement?  Case in point,  summer camp where counselors all work less than 1,000 hours.  Only husband and wife owners work 1,000+ so only husband and wife are participants.

Thanks

We have a client that is a non-profit organization with a 401(k) Plan.  I know they could have either type of plan- (403b or 401k)..They want a nutshell reason why a 401k is better than a 403b or/an explanation of the primary differences in the two.  Does anybody have a concise answer or opinion on this.   They don't have many participants yet.  Thanks!

A client has chosen to withdraw from a union MEP and wonders how other employers in this situation have addressed the loss of potential future benefit to unvested participants. Has anybody had this experience / negotiated with a union to address some recompense?

Good afternoon!  Generally when we put in exclusions from compensation in the document we state specific items to be excluded.  I have a client that basically wants the document to state that compensation excludes "All Non-Base Compensation".

Would this type of generalized exclusion be viewed as acceptable by the IRS?  The software would support it, under the "Other" exclusions.

Thanks in advance!

4 companies (S-corps) are part of a controlled group and sponsor/participate in a safe harbor 401(k) PSP with 1 year eligibility and monthly entry dates. Effective January 1, 2021, one of the companies changed ownership and is no longer part of that controlled group of companies. Their employees that were participants as of 1/1/2021 are still participating in the plan. They actively deferred in 2021 and have received a match. The plan's profit sharing allocation has not yet been deposited. 

The company that changed ownership, Company A (S-corp), identifies with business code 484120 (general freight trucking long distance). There are 5 owners - 3 of which own 26% each and the other 2 each own 11%. This same 5 owners also have identical ownership in another company (partnership), Company B, that identifies with the same business code. Company B has a SIMPLE Plan effective July 1, 2020 with full eligibility and the 3% match election. 

Does the existing 401(k) plan need an amendment to add Company A as an unrelated participating employer effective 1/1/2021 effectively making it a MEP? Do Company A and Company B form a new control group? If yes, then how do they sort out the 401(k) plan that Company A currently has and the SIMPLE plan Company B currently has for both 2021 and now 2022?

Thanks!

I know that a 5% or better owner must take an RMD when they turn 72 even if they are still working.  Is a wife also required to take her RMD even if still working?  Do attribution rules require her to take an RMD once she becomes RMD age even if she is still working?

I've heard that some high level players are saying that IRS is no longer accepting applications for Vol Sub Minor Modifier determination letters in the client's name for Cycle 3 Restatements but haven't seen anything in writing. I'm sure these folks' comments were misunderstood - right?  

If an employer wants to establish a new program to make lifetime payments to some former employees who retired long ago, would the program be considered an ERISA pension plan?

29 CFR §2510.3-3(b) says that the term "employee benefit plan" does not include a plan under which no employees are participants covered under the plan.  The definition of "employee" is "an individual employed by an employer".  At least one court has interpreted that language to mean that ERISA covers a plan only when the employer established it to provide benefits to at least some of its then-employees.  A few other courts have said former-employee-only plans are not ERISA plans based on the policy argument that the objective of ERISA is to ensure that workers get promised benefits upon retirement, especially since some of the promised benefits were in lieu of other compensation that workers may have received, and those objectives do not apply to such plans.

Is anyone aware of more definitive authority that could support (or contradict) the position that ERISA does not cover plans that are established to provide benefits to former employees only?