Strategy goes back to the 80s, recently took over a client with profit sharing plan, owner and employee are the only two participants.  Employee's funds are with a mutual fund only; portion of the owners funds are invested in a limited partnership.

I know an independent appraisal is needed, but would the whole partnership be part of the plan investment or just the ratio of the original investment to the total?

Prior TPA used the full value.

I have a partnership that is husband wife with no employees so it is a "one-participant" plan per the definition. We started a 401(k) plan for them in 2021 and are trying to max out their contributions to $58,000 each using elective deferrals, profit sharing and after-tax employee contributions. The husband's self-employment income on his K-1 was $120,189 and the wife's was $118,664. They each want to make a $19,500 elective deferral and a maximum profit sharing contribution and then they want to max the rest with after-tax employee contributions that we will convert to Roth immediately after funding using an in-plan Roth rollover. I know you can "gross-up" earned income by the amount of their elective deferrals when calculating what their 415 compensation is and also when calculating the deduction limit. However, do the after-tax employee contributions reduce earned income for these purposes? I would think you would treat them the same as elective deferrals and these contributions would come out of earned income, not reduce it. My software is reducing earned income by the amounts of after-tax employee contributions and it is making my deduction limit lower and forcing my profit sharing contribution to be less. Any help with this would be appreciated. I have researched the ERISA Outline book and couldn't find anything. 

Thanks, 

Hi

I am having my first disability request in my entire career and a bit challenging to understand.

This is for a cash balance plan, 2 years old.

Document has a few options for benefits but do not see "lump sum". The only other option could be under "Other" which I am checking with the vendor.

The participant in question is an owner/HCE and unfortunately not much time left to live so no coming back to work. He is age 63+. He checks all the requirements of being disabled, unfortunately.

Currently on disability however still part of the company i.e. not officially terminated, at least that is what I am told. Still a 5%+ owner but no salary.

No interest credit as provided annual at EOY. It is a fixed rate so no interim adjustments.

From all the material I could find, looks like, can pay him his lump sum now, correct? He is already 100% vested.

I am assuming, being an HCE, I still have to perform 110% test, correct?

Anything else I am not thinking of/missing?

Thank you

Thought just came to me:  what if a participant is questioning his ADP refund?  

What if he says to the employer:  prove to me my refund is correct.

What do they do?

Wondering how others handle this. We have outstanding FSA reimbursement checks through our third-party administrator from current and former employees. These are reimbursement checks that have been sent to the employee and the employee has not cashed them. These can go back years, and involve employees that no longer work for us, or may also be deceased. What are the options that we can do? How have others handled this?

1. Are we able to put a time limit on these, and if they do not cash a reimbursement check that they forfeit the reimbursement?

2. If the check is reissued, we have no way of knowing if the employee’s address is current, so it could just be another check written that goes uncashed.

3. Is there a point where the TPA writes off the uncashed funds and returns the funds to us?

4. Are there any IRS regs that address this?

I’d love to hear some suggestions.

Thanks,

John

Plan was amended to allow for QNECs as hardship source, but they weren't offered as a source to Participants. Plan's only QNECs were two years of safe harbor contributions from 5 or 6 years ago. Only one participant requested a withdrawal of the maximum amount available. Can we treat as an operational error and allow a withdrawal now?

Company is LLC, taxed as a partnership.

A partner was issued a W2 for $150,000 from which she deferred $20,000.

The partner's K1 shows a loss.

Do I combine them for plan purposes?

Plan Effective Date: 10/01/2019 (age & service- waiver who employed on or before effective date)

Mr. B’s hire date 05/04/2019 and terminated on 09/21/2019; Rehire on 07/19/2020

What will be the Mr B’s entry date? Is he eligible to get entry on rehire date or service count will start from Rehire date?
 

 Thanks for your insights!

401(k) Plan has no HCE or Key participants.

Plan allocates TPA fees among all participants in equal amounts.

So those with large accounts will have less than 1% taken out, but a new participant will have 20% taken out.

This doesn't feel right but I am looking for an argument to give the plan sponsor and wasn't sure if there was some kind of discrimination issue.

The one who makes this decision is getting less than 1%.

Maybe it's simply that that is not 'reasonable'.

Client recently received an email from DOL--Office of the Chief Accountant, Division of Reporting Compliance--indicating that their 5500 for 2020 is missing.  The email includes an invitation to consider participating in DFVCP to pay reduced penalties for failure to file in a timely manner.  Email also provides links to DFVCP FAQs, one of which notes plans are eligible to file under DFVCP so long as they have not received written notice from the Department of a failure to file their 5500.  Huh?  We've seen situations where folks received notice from the IRS and then filed under DFVCP before any DOL notice but this DOL notice appears to be the first notice the plan has received.  Is the email they received sufficient to prevent them from using DFVCP or is this short of the disqualifying notice indicated in the FAQs.  Is this a new process or have we just not been privy to this before?  Thanks for any insight you can provide.

plan year end 9/2021   

Particiant  DOB 2/1/1940

What factor do I use?   the old table  17.9  or new table   19.3    to calculate the RMD

I am using the plan assets as of 9/30/2021

I remember seeing something about future interest crediting rate assumptions for Actual ROR plans to help pass non-discrimination and minimum participation tests.  Does anyone have any reference for this.  I'm looking at something where the actual ROR was less than 1% so I am having difficulty with my rank and file passing minimum participation using that as my projected rate.

A standardized prototype is deemed to pass and allows you to give nothing to an employee who terminated with less than 500  hours.  I have a volume submitter document that has each person in their own group. Can I exclude this employee form testing?

A plan participant has 3% stock ownership in the company sponsoring the plan. If you add the stock he is entitled to under their ESOP he would have just over 5%. Would stock ownership under an ESOP be considered in determining who is a greater than 5% owner for purposes of having to take an RMD?

Thanks.

I have a law firm that has approximately 25 partners.  There are a few that are more than 1% owners but their net earned income is below $150,000 and this makes them non-key.  Is the law firm required to fund the top heavy minimum or is this an obligation of the partner who is a non-key employee?

Looking at a possible takeover plan.... it is a Profit Sharing Plan no deferrals comingled asset account. The plan was always valued on December 31 and document reflects that.

However in early 2020 due to the major decrease in assets, the plan was run quarterly 3/31/2020 so participant distributions would reflect the reduced assets rather than paying out the 12/31/2019 account balances. The prior servicer never ran the rest of the quarters for 2020 and instead ran the 12/31/2020 report for the period 4/1/2020-12/31/2020. Document was never amended to reflect the change to quarterly.

This is the first time I have seen this situation, what are the implications for not valuing the all the quarters for 2020 and going back to annual? and what about the lack of amendment to quarterly?

Any help is appreciated

I have a small plan that has a couple of companies, a control group.  The owner of course earns compensation from each company.  When calculating the contribution the compensation I would  use would be the total he earned from all companies, correct? As I write this it seams like a no brainer but I just want to be clear.

Hi, 

Plan sponsor wants to terminate the profit sharing plan and wants to set up a traditional 401k plan may be within 12 months time, I believe they will still need to complete the 12 months waiting period post the last distribution and then set up a 401k plan.  If they set up a traditional 401k plan within 12 months time this will still lead to successor plan?

Thanks

Does anyone know whether the price an employee pays for the grant of an option can count toward the price of the exercise of the option for 409A-exemption purposes?

In other words, say employer's stock is worth $10 per share on the date it grants an option to an employee. The employee pays $9 per share for the grant of the option itself, and the price of exercise is $1 per share. A few years later, employer stock is worth $20 per share. The employee pays $1 per share to exercise the option. 

Under the 409A definition of "exercise price" it seems that only the $1 is considered ("...the consideration in cash or property that, pursuant to the terms of the option, is the price at which the stock subject to the option is purchased...").

Under 83, both the $9 paid for the grant and the $1 paid for the exercise would be part of the "amount paid" for tax-calculation purposes.

But would this blow the 409A option exemption?

I have a client that is US citizens and lives in the US. He work in the Cayman Island a few weeks a year and picks up the income on his Sch. C of his 1040. Can this income be used towards retirement contributions. I believe it is subject to self employment taxes.