Plan is failing ADP test.  One HCE getting a refund had both Roth and Pre-tax deferrals during the year.

What is the protocol for doing the refund?  From which source(s) do you start using amounts?

Is it a plan document issue?  Administrative procedure?  Does the participant have to make the final call?  (Is that even feasible if we are coming up on processing deadlines?)

As usual, your thoughts are appreciated.

For purposes of computing the equivalent accrued benefit at NRA in a cash balance plan, can the benefit decrease at a later point in time due to a decline in the projected interest crediting rate?  Practically it will likely not matter since a participant will opt for the cash balance account value.  There is no early retirement date in this plan for what it is worth. I would think it could decline,but not sure if the IRS has ever opined on this. The 411 regs were written with traditional defined benefit plans in mind so not much guidance there.

Does anyone have the formula for a self employment integrated contribution calculation.  My formula is not working correctly with the check and I am not sure if it’s the way I am checking it that is the issue. 

Quick Question:

Company A - Husband owns
Company B - Wife owns, currently all work done for Company A

The plan is for Company B to start expanding and doing legal services for additional clients.

What is the fallout for setting up separate plans for Company A and Company B?  Can they do it, or do we have an affiliated service group issue?

A small corporation wholly owned by a husband and wife has a solo 401(k) plan that they established in 2020 and includes a 1-year eligibility provision. The plan uses a prototype document from a major financial company designed for individual owners and SE companies. The corporation is about to hire their first employee and knows that the plan needs to change, which would require a new restated document and additional help with plan administration. The financial company, which is also the trustee, states that they only provide these services to clients with 20+ participants as their minimum annual fees starts at $20,000. The corporation’s payroll service, which uses a bundled approach to administer or provide recordkeeping for the smaller companies quoted annual fees less than $2,000. However, claims that they cannot convert the prior plan to a traditional or safe-harbor (SH) 401(k) plan because the current financial institution uses unbundled services. The payroll service which uses Guidelines states that they could not setup a new traditional or SH-401(k) plan until the current solo 401(k) has be terminated for 12 months.

My goal is to find a service provider that will convert or restate this plan and provide annual recordkeeping/administrative services for a 3-participant plan for a reasonable fee.

Any takers?

Hi

Doing a 110% liability test for a CB plan.

As far as I know, one can use any reasonable method as long as it is approved by the sponsor and stay with the decision forever.

The methods I am aware of are, 415 lump sum assumptions, 417e assumptions or 430 assumptions. Assume AFTAP is not an issue.

Usually 430 assumptions would yield lowest amounts but in my case nothing is working so looking for another way to lower the liabilities and see if they can pay the HCE who is now terminated and under disability. I would like to get this done before an accrual for 2022 happens which will make things even worse.

Any other methodologies that I am not thinking of? 

I know the bond/annuity etc options but trying to avoid.

Thank you

Participant terminated, entitled to payout, check was requested from the annuity carrier.  Plan Sponsor receives the 1099-R  showing Plan Sponsor as the recipient, with the gross amount the participant is entitled to, and an amount withheld. The broker must have established the annuity in the company name and not the name of the Plan. I would think the annuity carrier paid the IRS the withholding but under their EIN.

Annuity carrier sends Plan Sponsor a net check, sponsor deposits into their corporate account and pays the participant, cross referencing the whole transaction.

Now participant is calling client complaining she ever received a 1099R, and client  comes to us to prepare.

I believe that since withholding already paid, I would show the net distribution as the  gross and the net amount taxable with $0 withheld?

So I'm struggling with this - distribution from a Defined Benefit plan - participant wants to roll into a Roth account in a Governmental 457(b) Plan. 

I'm thinking it must be rolled into the 457(b) plan as non-Roth, then converted as an on-plan Roth rollover. But that seems stupid - can it just be rolled directly to the Roth account in the 457(b) (and of course reported as taxable)?

Column b of the Form 6088 asks that you indicate if each participant listed is an HCE. For this purpose, is a former HCE considered an HCE?

Thanks for any responses!

What happens when the plan's method of crediting hours of service is the elapsed time method?

is a Year of Service merely when someone works for 12 months straight (or credited due to spanning rules)?

How does that translate to calculating Otherwise Excludable?

I have a participant in q 403(b) plan who was hired 7/3/18 and worked 350, 650, 675, 720 hours in '18, '19, '20 and '21.

Is the OEX rule purely 1,000 hours in a year, or can it be based on elapsed time and depends on the plan's definition?

can this person be OEX or no?

Client bonused himself $28,000 to max out his deferral

He reported on his W2 $28K in box 12 and coded it D
I told him he exceeded the 402g limit 

He withheld taxes from the $28K and deposited $25,858 into the plan.

He wants to say that the extra $2K is a voluntary contribution.  He can do this (doesn't exceed 415 limit) but it needs to be in Box 14... correct?
And technically he needs to actually deposit $28,000... correct?

In the end he needs to amend the W2 and make whole the $28K in the plan... correct?

A plan sponsor provided a hire date that was actually months before the employee was actually hired.  As a result the employee was included in the profit sharing contribution calculation.  A contribution was made on the employee's behalf.  This is a straight PS plan, not a 401(k).  Do we have to honor the contribution, or actually, do we have to take it away ?

Thanks

Plan only does deferrals and safe harbor match.  One employee met the one year wait, but not enough hours; sponsor let her in anyway.  Found out the following year, so did a corrective retro-amendment to let in the NHCE for deferral & SH match early.  Does this take away the top heavy exemption?

Hi

Combo plan, CB+DC.

An HCE was employed in 2020 as a w-2. Excluded from CB but included in the DC.

Now I am informed that he terminated as an employee on 1/2/2021 and became 1099 employee for 2021. He had $0 W-2 for 2021 however they make 26k deferral plus non elective SH on his behalf for 2021.

How is he treated for all coverage and non-discrimination testing? How is his deferral/SH to be corrected?

Thank you for your comments.

if a plan has assets with VOYA or a vendor like this, is there a requirement to attach/create a Schedule or do you just report fees/commissions on 5500-SF

For Universal Eligibility, is regularly scheduled for 20 hours per week determined week by week, or is it an annualized test?

In other words, if a 40 hour per week temp is hired for a one month engagement (less than 1,000 hours expectation) can they be excluded as being regularly scheduled for less than 20 hours per week, even though they will be 40 hours per week for one month?

The 1,000 hour test in the 2007 regulations, the LRM definition, and Notice 2018-95 all state that the 20 hour test is really based on expectations for a full year, rather than a week by week schedule. This makes sense in a way. What if you hired a 40 hour per week employee for just a one week assignment ? 

Still, I see many different "interpretations" of UniVersal Availability on websites, and they all dance around (or are unaware) of this issue.

I get around it for most clients by making 403(b) available for all, but this interesting issue came up. 

As you are aware, many moons ago, we / I would file an 8955-SSA to show participants with balances in a retirement plan.  These were typically un-locatable or non-responsive participants, and filing this form was "THE" alternative to a 100% withholding to the IRS.  (They frowned upon 100% w/h, didn't they?!?)

A) does anyone file an 8955-SSA anymore?  I only have small clients (<20 participants each), so this need does not arise often if ever.

B) is there a way to see what has been reported for a specific EIN?  I just found the 2017 8955-SSA of a takeover client in the previous TPA's records.  I don't know what, if anything, was filed prior to 2017.

Thanks!

BTW - I did a search for "SSA" prior to posting this, but "0" topics were found.  Sorry if this topic is redundant.

See the following excerpt from IRS Notice 2020-52. the situation at =hand is this: SH nonelective plan, and the HCE's are excluded from receiving the SH contribution, although a "discretionary" SH contribution may be made on their behalf. They want to amend plan to exclude bonuses for Non-owner HCE's. No problem doing this with a 30 day notice, as the bonuses wouldn't be paid until close to year-end (2022) anyway. I'm curious as to opinions on whether the 30 day notice is required in the following particular situation:

No notice - just amend currently with no notice (if it ever comes). I think it is, to be safe, but maybe I'm being overly conservative. 

III. CLARIFICATION OF REQUIREMENTS FOR REDUCING CONTRIBUTIONS MADE ON BEHALF OF HCEs As described in section II.B of this notice, contributions made on behalf of HCEs are not included in the definition of safe harbor contributions. Accordingly, a mid-year change that reduces only contributions made on behalf of HCEs is not a reduction or suspension of safe harbor contributions described in §§ 1.401(k)-3(g) and 1.401(m)-3(h). However, a mid-year change that reduces only contributions made on behalf of HCEs would be a mid-year change to a plan’s required safe harbor notice content for purposes of section III.B of Notice 2016-16. Therefore, in order to satisfy the notice and election opportunity conditions of section III.C of Notice 2016-16, which apply generally to changes that affect required safe harbor notice content and are not reductions or suspensions of safe harbor contributions, an updated safe harbor notice and an election opportunity must be provided to HCEs to whom the mid-year change applies, determined as of the date of issuance of the updated safe harbor notice.1

One of our clients just received an IRS Notice CP214, which describes the circumstances under which a one-participant plan must file a Form 5500-EZ.  The last line of the notice states, "Alternatively, you may be able to file Form 5500-SF online using EFAST2's web-based filing system or through an EFAST2 approved vendor."

The 2021 Form 5500-EZ specifically state that a one-participant plan cannot file a  Form 5500 or Form 5500-SF.

Am I misinterpreting the CP214?

Thanks.

Participant A was a participant in the C 401(k) Plan until she terminated employment in 2020. A takes a Coronavirus-related distribution during 2020 and elects to have the tax spread out over 3 years. During late 2021, A starts a business as a sole proprietor and sets up a solo 401(k) plan. If A repays the full amount of the one-third of the 2020 distribution that would otherwise be taxable to her in 2021, and contributes that amount to the solo 401(k) plan, can A deduct the amount of the 2021 repayment on her 2021 tax return? Assume that the total amount contributed to the solo 401(k) plan, including the amount repaid of the repaid Coronavirus-related distribution, does not exceed the 402(g) limit on elective deferrals or the deduction limit under Code Section 404(a).