A client sponsored a SEP during 2021 and started a 401(k) plan with new comp in 2021 as well. They made some deposits into the SEP already, I know that these contributions have to be combined for limitation purposes but am not clear if these contributions can be used to satisfy 401(a)(4) testing. 

Has anyone used self-correction under the new Rev. Proc. 2021-30 for a correction by plan amendment that only affects HCEs?

We have a 403(b) plan document that excludes highly compensated employees from eligibility for purposes of matching and nonelective contributions. In 2016 the employer requested an amendment to the plan document to remove the eligibility exclusion for HCEs to receive matching contributions. Consistent with the requested amendment, the employer began making matching contributions for HCEs but cannot find a record that the plan amendment was ever signed. It has only impacted 1-3 HCEs in each year, and the dollars involved are relatively small in comparison to total matching contributions and plan assets.

Assuming self-correction is otherwise available, it does not seem clear from 4.05 that this could not be corrected by a retroactive plan amendment outside of VCP.

I have a question similar to the below thread, my question is the same as QP-Guy which was never answered. Buyer purchases the assets of another company. The seller maintains a 401k plan. The attorney's overlook/never discuss the implications of the 401k and the deal closes with no mention of the 401k. The buyer and seller then ask what happens to the 401k. My question is, all employees of the seller incurred a distributable event on date they were terminated by the seller and hired by the buyer. Now, (one month later) the buyer wants to assume sponsorship of the sellers plan to avoid defaulted loans, distributions or any disruption to the sellers plan. I don't think it works that way. 1.401(k)-1(d)(2) references a change in sponsor but I have always seen the change in sponsor in connection with the buy sell agreements at the time of closing. 

Can the distributable event be undone after closing? 

Thank you

Husband was receiving RMDs (in late 70s) and died 1/2/21, leaving IRA to wife.  Wife died 2/1; account was never moved to her name.  There is a child or children who are estate beneficiaries.

The investment company is saying that the money belongs to the wife's estate and I agree with that.  They are saying that the child/ren can set up an inherited IRA account and take it over 10 years.  After working it through and typing it out, I agree with that, but wanted to see what others think.  Nothing fancy with the estate as far as trusts.

Hi

Combo Plan. Total 15 participants

DC plan has all 15 participants of which 6 are terminated

CB plan has only 6 participants of which only 1 terminated (9 others are excluded categorically)

Do I have partial termination issue with the CB plan?

Thank you

Anyone know if this is allowed? Same employer, two different plans. Thanks in advance.

I know there are proscribed steps to find lost participants before you can shuffle their benefit to an IRA.

However, is there such a rubric for when participants cannot be located when they have to be sent an SAR, SPD or SMM?

For example, plan is adding installment payments as a distribution option.  An SMM is prepared and mailed to all affected participants.  That will include any former employees with a balance in the plan.

What happens if some of the SMMs to former EEs come back as undeliverable?  Obviously, the SAR will come back, too.  Are there rules similar to the ones for the forced distributions?

If so, does anyone ever really take those steps?

There is an October 1st deadline for setting up a safe harbor 401(k) plan. Is anyone aware of any exceptions to this deadline for setting up a safe harbor plan after October 1st?

Two separate questions: (PY 7/1 to 6/30)

1)  PSP has last day requirement only.  If someone's last day worked is 6/30, do they a PS allocation?  Why or why not?

2) For 5500 participant count.  If last day worked is 7/1, are they considered 'active' for 5500 purposes at BOY?  Why or why not?

Total compensation for all eligible participants = $950,000

Then, 25% of total compensation = $237,500. 
Which sources will be counted for this deduction? (Profit sharing, Safe Harbor, Match.. which sources are to be count

Thanks in advance.

Participant maxes out his 401k at Employer at $26,000.  He starts a new job in December with immediate eligibility and a match.

My advice is go ahead and contribute to get the match and then request a refund of your 401k after year-end.  My recollection (which I cannot confirm) is that such a refund request would not kick off an orphan match situation requiring match forfeitures.  The logic of course is the employee could request the excess refund from either plan.  Anyway if someone can set me straight one way or the other I would appreciate it. 

Completely different of course then someone getting matched on 401k over $26,000 in the same plan or even for the same employer.

I wanted to revisit a post that I reviewed  from a few years ago relating to the acceleration of vesting/payment that is appropriately treated as a short-term deferral (see prior post here https://benefitslink.com/boards/index.php?/topic/63098-accelerating-payments-under-short-term-deferral-exception/ ). The question I have is generally whether company discretion to accelerate the vesting payment could serve as a premise the payment is no longer subject to a substantial risk of forfeiture. below is a brief fact-pattern of a situation that may present this issue, of course the facts are exhaustive so add in any points or items that may impact the analysis. 

Example - under a long-term bonus plan an employee is entitled to as a bonus payment of a portion of net company earnings for years 1 with 50% of the bonus being payable on 3/15 year 2 and 50% payable on 3/15 year three. The plan provides the employee must be employed on the payment date to receive the bonus. An employee wants to retire 1/1 Year three, and the company decides to move up the vesting date and payment of the second 50% payable on 3/15 to the employee's retirement. 

My understanding from the previous post is that since the payment was not covered under 409A to begin with, as a short term deferral, the acceleration is permissible and not a 409A violation. My question however, is whether the employer's discretion to accelerate the payment could be argued to no longer make the amounts subject to a substantial risk of forfeiture due to the risk of forfeiture not being substantial due to the company's discretion to voluntary accelerate the payments, cause the payment to fall outside of the short-term deferral. I know this is a facts and circumstances test, but does anyone have any insight on whether the company discretion may impact the substantial risk of forfeiture analysis? Thanks in advance for your time in reviewing and responding!

If a company with 1 employee - the owner - claims SIMPLE contributions on the tax returns and has not made the contributions for 2019, 2020, and 2021, what is the best solution?  It is not a lot of money that is owed to the plan (under $15,000 plus earnings I suppose).  All of the contributions go to the owner as employee and employer contributions.  Any insight is appreciated!  Thank you!

A client closed down her single member plan and it's final liquidation occurred on 11/23.  The balance is $0.  My next step is to prepare a final form 5500-EZ.  

Do I  use the 2020 EZ?  and change the year end to be 11/23/2021?

Just want to do it correctly, cross the T's and dot the I's

Thanks

Current 401(k) Plan will have around 140 participants as of 12/31/2021, thus making it subject to a certified audit. The plan sponsor, to avoid the cost of an audit, desires to split the plan into two (plans are identical), effective 1/1/2022, so that each plan has 70 participants, making them not subject to audit. The assets of the plan will not be split, but, rather, will remain in the current trust, and will be administered and "record-kept" by the current TPA.

Questions:

As the old plan will technically have 140 participants on 1/1/22, and then, later in the day, will be at 70/70, is the old plan subject to a one day audit?

Second, is it allowable for the assets of both plans to be in the same trust? I would say yes if the trust were designated a Master Trust, but the TPA has no idea as to what a Master Trust is. I did some reading and came upon a Group Trust, but this appears to cover plans of different employers.

Any comments would be appreciated, thank you!

Hi, 

one of the client would like to know if the 16b indicator can be removed any idea how this can be done? 

H and W divorce. Both are under 59 1/2. H is awarded $11,000 from W's IRA. He does not intend to roll it over. An Order Transferring IRA Incident to Divorce (similar to a QDRO) is drafted, signed by H and W and approved by the court. If this were a distribution from a qualified plan under a QDRO, H would include the distribution in his income but would not be subject to the 10% early withdrawal penalty. Question: Is H subject to the penalty tax here? 

Hello,

We have a law firm client that is looking for options to making their partners whole because they have to pay 100 percent of the cost of their coverage outside the cafeteria plan. This may not make them whole, but  the only option I can think of might be for the partnership to pay a flat amount to each partner (or maybe just the cost of EE only coverage)  for the coverages as a business expense? I would recommend the same flat amount as each partner shares in the partnership’s profits, so the dollar amount contributed to the partnership should not favor family coverage over single or spousal coverage. The partner may need to include the payments in gross income, which he should be able to deduct on his income tax return.   Are there any other options?

Thanks in advance!

Does anyone have a Disclaimer of Benefits form I can use?  I'm sure there's a standard or I could probably create my own, but I don't want to re-create the wheel.

We have a spouse who wants to disclaim the benefits of his deceased spouse and have the kids get the money. 

As I understand it, he cannot disclaim the benefit and choose who it goes to, but that's not an issue as terms of the plan say after the spouse, the benefit goes to children equally.

In this case, not in RMD pay status.

I don't work at all with SIMPLE Plans - client with 401(k) (my client) and another client with SIMPLE Plan are merging in a stock sale.  There will be a third, brand new Company [effective 01/01/2022] with a new EIN for all employees.  The new Company wishes to continue the 401(k) plan with the new Company as Plan Sponsor and terminate the SIMPLE Plan, which would happen regardless because there will be well over 100 employees after the merger.

I believe I understand the transition year, which in this instance will be the 2022 plan year.   However if all employees are now on the same payroll in 2022 (under the "new" Company and EIN) is it still possible to have the SIMPLE participants making SIMPLE contributions and the 401(k) participants contributing to the 401(k) Plan for the 2022 transition year?

Thanks in advance.

edited to add:  So is this a dumb question because of course they would all be on the same payroll for the transition year? 

Also - the SIMPLE participants are going to be excluded by amendment prior to the start of the 2022 plan year.  (Coverage is ok regardless.)