Plan document facts:

• The only pre-retirement death benefit allowed is what is required by law (the minimum spouse's death benefit)
• It can only be paid as a life annuity to the spouse
• The plan contains language allowing "election to allow participants or beneficiaries to elect 5-year rule". This language can be found on page 132 of the IRS' Defined Benefit Plan LRM package.

The obvious issue here is that the plan does not provide for a death benefit where the entire interest can be distributed by the end of the calendar year which contains the 5th anniversary of the date of death. Is this just a situation where, for this particular qualified plan, this election is not applicable? Or am I missing something?

Good morning

Drawing a blank here.

Can QRP be used to satisfy 3% non-elective safe harbor (or even safe harbor match)? This is in addition to profit sharing allocation that will be provided as well.

Thank you

Good morning!  Is there a limit to the number of times a loan can be refinances in a 401(k) Plan?  I don't see anything in the regulations, but my document provider appears to have default language that limits the number of refinances to twice.  I wanted to make sure that we could remove that language without there being an issue.

Thanks in advance!

I recently reviewed a VCP submission where the attorney stated in the application that the Participant exceeded both the 402(g) limits and the 415 limits for five years. 

Basic facts: Schedule C Employer who sponsored both a defined benefit plan and a 401(k) Plan.  The Participant, who was over age 50, deferred up to the 402(g) limit each of the five years in question.  This individual made contributions to his defined benefit plan each of the years in the amount of his Schedule C Income less the Self Employment Taxes.   The net affect is that he deferred more than 100% of his Earned Income.

He obviously exceeded 415 limits and has excess contributions in his 401(k) Plan.  However, I did not think that 402(g) was limited by wages.  I always thought it was a straight dollar limit.  The 1099-R instructions state that Excess Deferrals not distributed by 4/15 of the following year are subject to double taxation.  This same language is not included when you are dealing with excess Excess Contributions.  

I realize that the only contributions to the 401(k) Plan were employee deferrals.  However, if they did not exceed the 402(g) limit are they still considered Excess Deferrals or can they be considered Excess Contributions.

Thanks for any insight.

Hi

I am fairly certain that it is ok to do the following but want to confirm:

Joe owns 50% of company A (other 50% owned by unrelated person)

Joe owns 100% of company B

No affiliation between the 2 companies.

Joe can set up a DB plan separately under each company with full 415(b) limits as long as ownership is 50% or less in company A, agree?

Joe can set up a DC plan separately under each company with full 415(c) limits (58k in each company) as long as ownership is 50% or less in company A, agree?

Please disregard any PBGC coverage issues as this is a general question

Thanks

Recently had an advisor present a scenario where Company A (the client) has a SIMPLE IRA and planned to proceed with the Plan for 2022; however, an unplanned acquisition (believed to be stock) just occurred and Company B (acquired company) has an existing 401(k) Plan.  The transition rule could cover this but the employer is asking if they could take over the 401(k) and put both Company A & Company B employees in that rather than one group in the (k) Plan and one group in the SIMPLE IRA.   

I could not find anything to support this but assuming it would not be a benefit cutback is there any relief, for the employer, if the employees get a term notice, albeit after the 11/02 deadline and the employees are receiving a better benefit?

A CPA came to me with this scenario...

She and her partner own an accounting firm (Company X)
The accounting firm is owned by her S Corp (Company A) and her partner's S Corp (Company B)

Accounting firm ownership % is Company A 25%, Company B 75%

Company A owner earns W2 wages from Company X, Company B owner takes his Company X compensation in the form of a K1 to Company B

They want to setup a 401(k) plan for Company X.  

Q1 - I don't see any problem there... Company X pays it's employees and they can defer if they want.  Correct?

Q2 - In this scenario do we have to include all 3 companies?  
I don't see a control group

Q3 - Can each company have their own plan?

I guess what is throwing me is that the S Corps own the accounting firm, not individuals.  Does that make a difference?  Am I missing anything?
 

Is anyone familar with "Participation Loans" as described below?  Can a bank use their profit sharing plan's assets to purchase a portion of a loan from the lead lender?  

"As defined by the FDIC, a loan participation is an arrangement under which a lender originates a loan to a borrower and then sells a portion of that loan to one or more other financial institutions. The lead or originating lender retains a partial interest in the loan, holds all loan documentation in its own name, services the loan, and deals directly with the customer."

Thank you...

Have an S-corp client.  Father owns 100% of company.  Daughter only employee covered.

Can they file an EZ?  Does attribution count for this?

All of our 401K SH plans are the safe harbor non-elective, so this situation has not come up yet.

Our client maintains a 401K with safe harbor match, 100% up to 4% of compensation.

To date, all eligible have deferred, for next year there will be one participant who will not be deferring.

Q. If a participant does not defer, obviously they need to get the 3% non-elective if he meets age/svc; if the client makes a discretionary PS contribution greater than 3% (minimum is 5% to pass gateway for the new comparability profit sharing portion), is the full 5% contribution considered to ALL be profit sharing subject to vesting schedule, or does 3% need to be at 100% and the remaining 2% subject to the vesting schedule?

Client recently discovered they qualify for exemption from 5500 filing as a governmental plan.  They currently sponsor an ERISA-exempt 403(b) plan (employee deferrals only) and 401(a) plan with only employer contributions for which they have been filing a 5500.  Based on newly discovered governmental plan status they want to freeze the 401(a) plan and have participants rollover their accounts through in-service distributions to the 403(b) plan in 2022.  If there are some participants that choose not to rollover their accounts and there are assets still in the plan for the 2022 plan year, what do we do for the 5500? 5500 instructions say a final return cannot be filed if assets remain in the plan but technically the plan is not subject to ERISA so no 5500 is required.  Thoughts?

An employer sponsors a nonqualified deferred compensation plan, which it would like to terminate before year-end and begin paying out beginning after 12 months and ending within 24 months in accordance with the plan termination rules.  Individual agreements with each of the 3 participants provide for a specified dollar amount to be paid to the participant every year for 10 years beginning when the participant attains age 62.  The specified dollar amount will be reduced by 5% in connection with the termination, a reduction all participants are agreeable to, and will sign releases concerning.  Is this an exception to the otherwise applicable prohibition against applying a "haircut" to accelerate payment?  Also, can the timing of payouts over the 12 - 24 month post-termination period vary among the 3 participants (e.g., participant 1 gets a lump sum distribution on 12/31/2022, participant 2 gets a lump sum distribution November 30, 2023 and participant 3 gets a partial distribution on 12/31/2022 and the balance paid on November 30, 2023)?

Hello,

Question is if a recordkeeper did not start RMDs by the required date, does the RMD amount for 2022 get adjusted to take into account the missed RMDs?  The situation is a new recordkeeper is processing the RMDs.  The participants did not start RMDs for a few participants going back several years while with the prior recordkeeper.

Thank you.

ERISA 403b plan failed ACP test. Can the employer use QMAC to cure the failure?

Plan document is silent to QMAC but does include QNEC solution. Called the plan document provider (FT Williams) and they stated that document was silent to QMAC, but does not preclude them. Therefore QMAC could be added to the document.

I could not find QMAC option in other 403b documents when doing an internet search.

Thanks!

Owner of a professional services firm retires, or almost.  All other employees start up a new firm in the same location, same office and start up a new plan.

Turns out former owner/retiree is maintaining his old firm for part time work and still comes to the office.  Admin staff still provides services, though currently not clear how much work or if they are getting paid.

While reviewing Startup Costs Tax Credit, made me wonder if there is some kind of controlled group issue here, which may affect eligibility for the Tax Credit, as well as nondiscrimination testing, at least.

Hi

3 year old DB plan (combo tested with a PS plan) hard frozen early 2021 (before 1000 hours accrued) with no accruals and no further new participants. EOY val.

Top heavy and PBGC covered.

Assume that 401a26 will need to be tested. Any reason why I cannot use acc-to-date method for 401a26? I just cannot seem to find one but wanted to confirm.

Will not test together with the PS plan for 2021 as I do not handle the administration of the PS plan i.e. not sue if historic data is correct or not - to use acc-to-date method.

Thank you

Does anyone know what changes the No Surprise Act causes on the SBC and how it needs to be presented?  Are there even any changes?

I wasn't sure and a client is asking.

Thanks!!

Client had a solo 401k and terminated it on June 30th.  On July 1 they hired there first employee and created a brand new plan giving immediate entry.  

Client received a 13k profit sharing allocation on the terminated plan.

Do we have a coverage or discrimination issue with the new plan?  

Hello,

Plan originally covered 100% owner and spouse, exempt from PBGC coverage. They have since divorced but spouse has remained as an employee. No Minor children between them. Ex does not have options to stock under 1563(e).

Does the 5 year look back for ownership purposes for PBGC coverage extend to owners by attribution during the last 5 years or is it only if they had 10% direct ownership on their own?

One of the selling points of a 3(16) service is that they sign the 5500 for their clients.

I understand that a true 3(16) administrator can sign as Plan Administrator on 5500's.

But I always thought that if the Plan Administrator and Plan Sponsor were the same, you only needed a signature on the top line, Plan Administrator, but if they were different, you need 2 signatures.

So, obviously the appointed 3(16) is NOT the sponsor.

Wouldn't two signatures still be necessary?

If not, why are there two lines?  If you only sign as sponsor w/o administrator the filing fails.