I have a SOLE PROPRIETOR issue regarding 415 and shutting down the QRP Plan. There are no employees. The SP has Earned Income of $100,000 for 2021. He has a QRP profit sharing plan consisting of an asset transfer from an overfunded DB that was terminated in the prior year. There is also a separate 401(k) plan and owner wants to make a $15,000 401k deferral plus allocate the remaining assets in the QRP and terminate that Plan this year. The QRP has  $43,000 in unallocated assets in the transferred assets suspense account. The Earned Income is $100,000 and there are several issues:

1. Can the $43,000 be allocated to the SP this year? The plan doc  for the QRP ( FIS ) states only the minimum amount to allocate under the 7 year rule.  

2. If the $43,000 can be allocated in the current year, how do you determine the 415 limitation? If it was a formula based  percentage allocation like 20% of pay, it is easy to compute the portion that is the taxable compensation, portion eg ( 1-.25/1.25) and thus compute the 415 limit. I don't see how to split the $100,000 with the QRP allocation to compute the 415 limit.

Comments appreciated.

Hi

A curiosity question.

I am looking at an SB prepared by another actuary for a terminated plan.

It was a calendar plan with val date as of end of year.

SB was prepared with 9/30 year end (term date) which is fine.

When SB was filed, this val date change was filed as a funding assumption change.

Is this correct?

Thank you

If anyone from Relius is actually moderating this today, what is going on with ASP and Comcast.  Our IT person just said it's not our network.  This is an ASP issue.  It's a weekend and it baffles me that their is no support on the weekends prior to deadlines.  Hello??

Can't get in the website, anyone else?

What the heck - are you all down?

Hello! Would greatly appreciate any help on the following - IRS Notice 2008-59 (Q/A 21) states that employers can make HSA contributions for a prior tax year, provided the contribution is made by the federal tax return due date (without extensions). What can an employer do to correct delinquent contributions if the tax return due date has already passed for the previous year? Many thanks!

We recently moved from one trustee to another.  The old trustee did not require us to get a separate EIN for the rabbi trust, the new trustee does require this.  They say they need a separate EIN to file a 1041 for the Trust.

Is this a concern?  Could a separate EIN jeopardize the unfunded status of the nonqualified plan/rabbi trust?  Is there any risk of not having a separate EIN?  Can we (is it reasonable to) push back here?

DB Plan, owner only, and EZ Filer. Recived a IRS notice 238, that for PYE 12/31/2017, penalty of 150k. He has filed all timely. Even more perplexing is that the notice states clearly that for plans up to 12 31 19 the max. penalty is 15,000 and  for forms due after 12/2019 max penalty is 150,000. Since this notice is for the 2017(due prior to 12/2019) year why are they charging above the 15,000 maximum.penalty? I did hear that OGDEN (where they recive the 5500EZ filings) was still closed at October 15, 2020. Are they processing the 2019 fotms now and saying that they are late? On the other hand the notice says this is fire the 12/31/2017 year end. Thank you very much.

Controlled group situation- the entity within the control group that sponsors the retirement plan is being sold. Client wants to "transfer" the sponsorship of the plan to one of the remaining entities within the group. How would we handle the change in the EIN of the sponsor of the Plan when filing the 5500?

401(k) Plan is in awful shape, so owner, whose business is in just as bad shape, has asked to terminate it.  As far as I can tell he is simply not going to resolve everything and just wants to give the participants whatever balance they can.  He also has no intent of paying fees related to VCP and VFCP corrections.

So I've basically been asked for help so that participants can get balances paid out.  I know the typical response is run, run for your life but I've never believed that is truly a solution, nor does that benefit the non-owner participants.

Apparently, he has not paid at least 2 years worth of safe harbor contributions.

This is a pooled account and the owner has proposed the following:

He has no intent of making those safe harbor contributions, but he would be willing to give equivalent balances (contributions + lost earnings) out of his account balance to help make those participants 'whole'.

I"m just curious of any thoughts about this.

I'm curious when most new (small) plans tend to acquire their first fidelity bond and how that affects reporting on Form 5500-SF.

New plan didn't manage to purchase their bond during first year plan in effect (2020), and only purchased upon review in early 2021.

My approach is to report no fidelity bond on 5500-SF but just wondering if it's legitimate to report the bond since it's in effect at time of filing 5500-SF, even though not in effect during that plan year.

I've seen variations of this question on here, but nothing exactly on point. What does a plan do with the benefit of a deceased former participant when there is no beneficiary, no estate, and the plan is terminating? 

401(k) Plan participant died in 2013 and plan was notified in in 2015. There was no beneficiary on file. According to the plan document, if there is no designated beneficiary, the beneficiary shall be the surviving spouse and if there is no spouse the beneficiary shall be the executor or administrator of the participant's estate. It appears there was no estate established and employer cannot find any heirs. 

The plan will soon be terminating due to a merger. What should be done with this participant's benefit? 

I am 62 and retired.  I have a Roth 401(k) which has satisfied the five year period for taking tax-free earnings.  I plan to roll this Roth 401(k) account into a Roth IRA.  Does the five year period start anew?

Company A purchases Company B in stock sale.  The transaction occurs in 2021. 

Company A sponsors a calendar year end safe harbor 401(k).  The safe harbor is an enhanced, 100% of the first 4% match.  The plan requires age 21 and One Year of service for eligibility.

Company B sponsors a calendar year end safe harbor that also uses an enhanced 100% of the first 4% match.  Company B's plan requires age 21 and 3 months of service.

At some point Company B's plan will be merged into Company A's plan. 

I understand that it would be best to merge the plans at the start of a new plan year.  It is not possible at this point to merge for 1/1/2022. 

If Company A does not want to wait until 1/1/2023 to merge the plans and they do so mid 2022, what pitfalls need to be overcome?

Company A has been considering making their eligibility requirements more liberal anyway, so moving to a 3 month wait would not be an issue.  And both plans use the same match formula.

If Company A amends eligibility to 3 months effective 1/1/2022, that effectively ends the coverage transition for 2022, correct?  But if the intention is to merge the plans in 2022 the coverage transition would end in 2022 anyway.  That being said, would it be better to wait until the plans merge in 2022 for Company A to amend eligibility, or would amending at the start of 1/1/2022 be the preferred way to go?

Are there any "mid-year" amendment concerns since we are talking about safe harbor plans?

I've already advised the client that any decisions should be reviewed by their legal advisors, especially any decision that might affect the length of the coverage transition period, so this is more for my own education.

Thanks very much.

What is the due date for the deposit of a profit sharing contribution in a non-profit?  They are exempt from filing a form 990 or 1120.   

If a participant waives the right to participate in the Plan, do they also waive the right to receive the top heavy minimum as well?  

Thank you

Can the cost of the Fidelity bond be assessed to the plan (from forfeiture) and/or participants?

TPA produces annual 5500s.  Client constantly indicates on annual data request that no contributions were submitted late per DOL rules.  TPA enters zero on the proper line of 5500/5500-SF.

Later it is determined that the client has been depositing weekly payrolls only once per month for years.

TPA brings this up with client, they say they don't have any money to pay lost earnings or to pay TPA for calculation.  They do not want the item listed on the 5500 either.

What is the TPA's exposure for producing the 5500 with no late contributions when in fact there were?  The TPA is not signing the 5500.

This is truly a hypothetical question, but comes to mind since there have been a couple of "mistake of fact" distributions recently.

Suppose you have a legitimate mistake of fact contribution. In order to return it to the employer, it is supposed to be returned within 1 year.

Now suppose it is past the 1 year, before it is even discovered. I believe it then needs to be allocated as an employer contribution. Other opinions? Other solutions you have used or heard of in "real life" situations? Just curious.

Hypothetical for the moment, but could become real. Participant dies, no named beneficiary. Under the plan default, it goes to the daughter. Daughter is non-responsive, although her location is known.

This doesn't really fall under the "can't be located" missing beneficiary. Let's assume after a period of non-response, the plan just cuts her a check. If she doesn't cash it, what then? Does anyone happen to know if Millenium Trust or similar organization will accept a rollover to a beneficiary IRA in these circumstances? (I realize I can contact them - just wondered if anyone already knows). Other options?

P.S. - let's assume it is over $5,000, in case it makes any difference in your thoughts.