A husband and wife are participating in the same plan and they are each others' beneficiaries.  The wife dies in 2021 and the husband elects to 'roll over' her $40,000 benefit within the plan, that is, her benefit will now be shown as a segregated rollover account for him in the plan.  The resulting 1099 will show him as the recipient and use code 4G to show a death benefit that was rolled over.  The husband then terminates his employment and elects to roll over his $30,000 account balance and the new $40,000 rollover account into his IRA during 2021.  The 1099 for that rollover will show a gross distribution of $70,000 and show code G.  The 2 1099s will seem to show distributions totaling $110,000 for the husband as recipient when he only actually had $70,000 paid out.  Is this the correct way to report these transactions?

• Traditional IRA owner, 82, died in December 2021 - He took his 2021 RMD prior to his passing
• Surviving spouse, 81, 100% primary beneficiary
• Surviving spouse transferred his IRA assets to her traditional-IRA. However the transfer of assets occurred in 2022 - therefore his IRA had a 12/31/21 value

Question(s)

• Is a 2022 RMD due on the (now deceased husband's) IRA based off the 12/31/2021 account value?
• Does the wife include the balance in determining her 2022 RMD? 

What am I missing?

All guidance is welcomed

Plan A is a Safe Harbor Match, calendar year-end Plan that provides for prevailing wage contributions and a cross-tested profit sharing contribution. Allocation conditions for profit sharing are last day and 1,000 hours. Document allows prevailing wage contributions to offset all Employer Contributions.

I'm (somewhat) familiar with using Prevailing Wage contributions as QNEC in the ADP test. However, as the Plan is Safe Harbor, I don't need the prevailing wage to count as a QNEC for ADP testing. 

I am struggling with how to approach the Prevailing Wage contributions for cross-testing. Its my understanding these contribution are treated as Non-Elective Contributions for testing purposes. Thus, logically, I should include them for gateway and 401(a) cross-testing. This is a takeover plan and based on the 2020 Valuation Reports, I can see the prior TPA included the Prevailing Wage in gateway and 401(a).

Is this the general consensus in how to test these prevailing wage contributions?

If I were using the prevailing wage in ADP as a QNEC to help pass ADP testing, I think there would be some additional considerations/limitations in whether and how to use those prevailing wage contributions in cross-testing. But, since I am not doing so, is it as straight-forward as just adding them as if they were profit sharing contributions?

We have a restaurant client that is having an issue with their tipped employees that are deferring into their plan.  I have had large restaurant chain clients in the past and this was never a problem, so I am trying to see if anyone has run into this and if so, how did you handle? 

If their tips are paid in cash, some of the employees, after taxes and deductions have $0 paychecks, so there is nothing to take the deferral from.  They discussed requiring the employees to give the cash back to the employer to make the deposits, but is that the best solution?  Another thought was to exclude tips but then I am not sure they would pass 414(s). 

Any thoughts, guidance is appreciated.     

Hi, A DB Plan rolled the excess assets into a qualified replacement plan. Some one mentioned allocating the excess each year dollar for dollar. For  example, if an employee's salary was 58,000 then you can allocate 58,000 of the excess for that year. Is this correct? Thank you.

What is the penalty for a client that has not funded their safe harbor match yet for 2020?  Thank you.

I can count on my ten fingers (and not use all of them) the number of plans I've dealt with that allow participants to purchase life insurance.

And even less experience in what to do when it comes time to distribute those policies when they terminate employment.

Are there good resources that explains when needs to, or can be, done in these situations?

I'm not sure if this participant wants to keep the policy or cash it out.

Any ideas would be much appreciated.

Our client, a doctor with a one-person cash balance and profit sharing plan, took his RMDs for 2021 in January/February 2021.  He obviously forgot, and took duplicate payments in October 2021.  We are proposing correction differently for the two plans:

1.  There is no provision under the pension plan that allows an ad hoc in-service distribution.  Although distribution can commence after NRD while in-service, the form of payment would have been either an annuity or a lump sum of his entire vested accrued benefit.  Pursuant to EPCRS, we are planning on treating this as an overpayment (i.e., a payment not authorized by the plan) and having him repay the distribution.

2.   The profit sharing plan does allow for in-service distributions, so I can't think of any way this can be treated similarly (even though the participant did not complete any election form or waive withholding).  We are planning on correcting this via a 60-day rollover back to the plan (for which repayment is now extended until 2/15/22 due to Hurricane Ida).  Is there any other way to handle this?

How do we prepare the Forms 1099-R for 2021?  The initial RMDs will be reported properly for both plans.  Does the pension plan report the second distribution as a normal distribution, or not?  If yes, how does the participant reflect the repayment to the plan in 2022?  With respect to the profit sharing plan, I assume the second distribution is reported as a normal distribution and then the participant reflects the rollover on his Form 1040 for 2021 even though it was completed in 2022.  How is this ever reconciled with the IRS if they only receive the 1099 but no 5498 (that an IRA trustee would file)?

Any other suggestions on how to resolve?

Thanks.

Ok, this is a little strange and well outside of my wheelhouse; I would appreciate any input and a direction on where to begin.

An employee died in late 2021; at the time of his death a review was being conducted of his pay.  It was later determined that he had been underpaid and a retroactive pay order was going to be necessary; a large retroactive pay order.  A portion of this pay will be a 401k employer 2% contributions.

Because final wages to the employee will not be paid during the year he died, the wages aren't subject to FITW.  We are unsure how this affects calculating 401k contributions.  Again, this is well outside of my wheelhouse and I do not know where to begin.  I appreciate any and all input.

One owner of 2 LLCs. 100% owner for both - pass through single member.  

LLC 1 - no employees, traditional 401k and he wants to max out profit share and employee deferrals

LLC 2 - 4 eligible employees, 1 participating.  SH 401k with 4% match (100% to 3%, with 50% for 4th and 5th%)

Given large profit share of first LLC 1 the concern is the 4% match doesn't cover the discretionary PS piece for LLC 2?  Does every employee have to get same percentage PS for LLC 2 or do we go to a cross tested plan (new comparability)?

Hi, 

We have terminating plan were there are few deceased part's some of the vendor's do not accept deceased part account.  I believe PBGC does accept however how do I get a contact which I can refer the client to. 

Thanks

Does any vendor of IRS-preapproved plan documents offer a version that is similarly Hacienda-preapproved to meet Puerto Rico’s tax-qualification conditions?

If any, is it available with IRC § 401(a)? with IRC § 403(b)?

If not available as a dual-qualified document, does any vendor offer a document on which Hacienda issued a preapproval letter so a user may rely without submitting its own application?

So, the 100% owner, who is over age 65 which is NRA, takes a distribution from the plan. Problem is that the plan does NOT permit in-service distributions, even at NRA.

I THINK this overpayment can be corrected under SCP with a retroactive amendment to conform plan terms to the operation of the plan. I haven't delved deeply into Rev. Proc. 2021-30 yet - just going from memory. But I wondered if anyone had dealt with this recently and had an opinion? Thanks.

P.S. it does appear that it would otherwise be allowable under 6.06(4)(a), which refers you to 4.05. Under 4.05(2)(a)(i) and (ii) - it appears it satisfy (i). My only "squeamish" issue is whether it satisfies (ii) since it is due to the impermissible distribution to a HCE. It would be available to NHCE's as well, but the only current correction would be for a HCE.

We are in the process of distributing benefits from a small Cash Balance Plan that is covered by the PBGC.  There are two participants with lump sum benefits less than $5,000 that cannot be located.  The Plan allows for automatic rollover of small benefits.  Can we rollover the lump sum to an IRA for the two participants that cannot be located or do we have to go through the missing participant program with the PBGC? 

I feel like I should know the answer to this but it is not coming to me.  If a plan has semi-annual entry dates, Jan 1 and July 1, and a participant does not enroll on January 1, can they still sign up for the plan later in January because the plan allows contribution changes at any time?  

Do we take the position that the individual is changing from 0% to 5% (or whatever) and that is allowed any time?

Or do "contribution changes" refer to something other than changing from 0%?

Our firm has been using Corbel docs for years. FIS took over a few years ago.  In doing the amendment process from PPA plan documents to Cycle 3 plan amendments, FIS has a cool way of converting the checklists so you can quickly restate plans for cycle 3 without having to go back and enter each checklist question. We use the IDP form of plan document, so we're going from a IDP PPA plan doc to the IDP Cycle 3 amendment.

After running several plans through the process,  we found numerous syntax errors in their cycle 3 document. I discussed this with FIS back in November but they have yet to correct the problem.  Is anyone else using FIS documents for the IDP format ( one single plan document) and are you having a similar problem?  If so I would like to know your experience with FIS and what I can do to resolve this. I suppose I could switch to a non-IDP document format but that would not be our first choice. 

S-Corp sponsors a SH 401(k) plan, which allows for deferrals, SH match and discretionary PS contributions, and plan loans. 100% shareholder in S-Corp took out a $50,000 plan loan in late 2019, with payments from bi-weekly payroll beginning January 2020. All loan payments were deducted from shareholder’s pay in 2020.

 In 2021, due to cash flow problems, shareholder did not receive several paychecks. He missed paychecks for ten of 26 pay periods in the year. For the pay periods in which the shareholder did not get paid, no loan payments were withheld for those pay periods. (There was at least one loan payment withheld from his pay in each calendar quarter.) In addition, due to cash flow problems, the S-Corp did not remit any withheld loan payments to the retirement plan after January 2021. (All 14 loan payments withheld in 2020 but not previously remitted were remitted to the plan in January 2022. )

In March, 2021, the shareholder sent a personal check for $20,000 payment on the loan. The plan is on FtWilliam document and allows for such additional payments although it does not allow for refinancing.

What are the options to fix this situation?  Can the $20,000 be used to satisfy the loan payments that were missed because no paycheck was issued?  Is it possible to avoid a deemed distribution?

What are other issues that need to be addressed (other than educating the shareholder about missing loan payments)?

Thanks!

Back when there was an amnesty program for the Form 5500-EZ a bunch of single member plans came out of the woodwork asking me to prepare the paperwork to take advantage of the free compliance option.  A simple process.. no big deal.

Before X-mas a client who left me came back telling me the new TPA disappeared and did not file the 2019 or 2020 form 5500s.  Simple question....

Paying the $1,500 fee ($750 for each year)...   when you complete the online calculator, if you follow it all the way through it takes you to a payment option.   Is that the best way to go?  There is the option to mail in a check... not advisable? 

I've done the work and am ready for them to remit the fee.  Just looking for opinions   

Hi

It has been a long time since I came across this as all my plans are done on volume submitter.

Somewhere in the corners of my old memory I remember that if DC plan is done as standardized prototype and if the DB plan is done a volume submitter, it was not permitted to be set up this way. Only standardized plans can be set paired??

What am I not remembering here?

Thank you

We read the new FAQs 51 as requiring that plans cover at home antigen AND antibody tests, provided they meet the statutory criteria of FFCRA 6001(a)(1) (e.g. approved by FDA or have an EUA).  This is based on FAQ 42, Q4 which includes serological tests, i.e. antibody tests, in the definition of in vitro diagnostic tests.  Commentary thus far focuses on the antigen test (i.e. to detect the virus) and not antibody, so just looking to see if others interpretting these FAQs to also cover at home antibody tests.  Thanks.