Company sends out an email to all employees before the entry dates to notify them that it is time to enroll or change their elections.   Eligibility is one year (1,000 hours) and then enter on 1/1 or 7/1 following.    A key employee's wife who is part time, was eligible for the plan as of 7/1/2020.    She did not enroll in the plan, and administrator missed her in the 2020 safe harbor calculation because of her part time status and didn't realize she worked more than 1,000 hours in 2019, she worked 936 hours in 2020.   Her date of hire was 1/7/2019 and she worked 1, 039 hours in 2019.

Is the email that was sent enough proof that she was notified? or is a corrective contribution needed.   They don't individually notify anyone  and never have had an issue. 

Getting questioned on the setup, so I wanted to make sure there wasn't an issue.  Client wants to set it up as 500 for a Year ofAccrual Service (so they are eligible to receive a contribution) but 1,000 hours for a Year of Vesting Service.

Cash Balance Plan.  Entry is going to be 21 with 3 months of service.

Thanks in advance everyone!

Is it typical for participants in one 401(k) plan with pre-tax and Roth to have the same investment elections or is it typical for a participant to choose an investment election for pre-tax and a separate election for Roth?

Thanks!

Hi

A hypothetical (might be reality soon) situation - never had to deal with it, believe it or not:

2020 required contribution is 150k and sch c income is 0.

Client has the money to make the deposit and will do so by 9/15.

A few questions:

• Will this amount be part of 2021 deduction?
• For 2021, say another 150k required contribution and another loss on the schedule c. What happens, carries over 300k as non deductible for future years and can deduct in future years?
• 2021 has a good schedule c income and the 404o limit is over 300k. Can he deduct for 2020 and 2021 contributions as the total will be less than 404o limit?
• Anything else i am not asking?

Thanks

Currently our plan has no age/service requirement for deferrals and the non-safe harbor match.  The non-safe harbor match is a payroll period match with no other allocation conditions.  The owner is trying to save some money and would like to amend the plan now to change the eligibility requirements for participation in the non-safe harbor match plan component and require an employee to be at least age 21 and have a year of service.  I understand from the TPA that this would be allowable, just as long as we pass coverage testing and ACP testing.  For the ACP component plan, the TPA is saying that we need to include in the testing group anyone who is eligible to defer, which would mean a lot of these employees who don't meet the new eligibility requirements for the match would be counted as receiving 0% match.  I was thinking we would be able to exclude the employees who don't meet the new age 21 and year of service requirements.  Can someone explain how these tests would work with the dual eligibility requirements? Thanks.

I have a plan that only has 3 participants and only the owner salary defers.  During 2020 and part of 2021 there was a mess up at the payroll company and the salary deferrals were not deposited into the 401(k) account at all.  The deferrals were withheld from each payroll just not deposited.  If this only effects the owner is it necessary for him to pay lost earnings to himself and then is it further necessary to file a 5330 for him to pay penalties for himself?

I'm sure most of us are familiar with Rev. Rul. 2019-19, which essentially says that an uncashed distribution check is still taxable and subject to reporting and withholding for the year of issuance.  If the individual actually cashes the check in a later year, it is not subject to tax, reporting, or withholding in that later year.  Has anyone seen guidance on how to handle reporting where the initial distribution was a direct rollover, but the participant never provided the check to the new institution?  What if the participant requests a new rollover in a later year?  Obviously, there are no tax or withholding implications of a direct rollover, but should another 1099-R be issued?  I would think so...  

Who is responsible for filing the 5500--plan administrator or trustee?

We have a client whose business closed.  Unbeknownst to us, they terminated the plan and paid all the assets in 2021.

Obviously, they have to file 2020 and 2021 5500s.

Client says "who will know"  if they don't file any more 5500s?  I know that answer. Plus, he says, there's no more money to pay us for the 5500.

But if they don't file, who does the IRS/DOL go after?  The plan administrator or trustee?

Can IRS/DOL go after his personal finances?  I know for fiduciary breaches they can do that.  Is filing the 5500 a fiduciary act?

I want to impress upon him the gravity of the situation, but I want to properly put the fear of God in him.

Suppose you have a former 25% partner in a firm that has sponsored a 401(k) plan for many years. The partner has been winding down and will have less than a 5% capital and profits interest in the firm before his required beginning date in 2022. He eventually just plans on being an employee indefinitely with great work hour flexibility. 

Since his interest went below 5% in the year before the year he would normally begin taking RMDs (and will stay below 5%), I would think he would qualify for the RMD exception. Anyone agree or disagree?

Suppose a small non-covered DB plan terminates with excess assets.

The plan document contains a maximum benefit of $3,500 payable at normal retirement age. No participant is close to their 415 limit. However, one participant has accrued a $3,500 benefit prior to the plan termination date.

The plan has excess assets of $21k. Normally, we would simply allocate the excess to all participants (3 in this case) in a non-discriminatory manner.

I would think (but am not sure) that the one participant at the $3,500 maximum could not be allocated any of the excess. Does anyone agree / disagree?

Thanks.

Hello everyone. Client wants to put in 100% of missed deferral instead of 25% under EPCRS. May a client do that or would the 75% be considered a non-elective contribution?

Hi

If anyone saw this, did you notice anything on pensions i.e. extension for 5500 and also 9/15 contribution dates? I browsed quickly.

In the past they were specific (Sandy etc).

IRS: Tax relief now available to Ida victims in New York and New Jersey; Oct. 15 deadline, other dates extended to Jan. 3 | Internal Revenue Service

We have a Plan that provides benefits vest on 1/1/2022 (if the participant is employed) and are paid within 30 days thereafter (so, within the short-term deferral period).  Clearly, the Plan doesn't provide for nonqualified deferred compensation, and 409A doesn't apply.

We want to amend the Plan to provide those same benefits vest on 1/1/2023 (if the participant is employed) and are paid within 30 days thereafter (so, still within the short-term deferral period).

Can we do this?  It seems that we are just switching from one 409A-exempt arrangement to another, so I can see the argument this doesn't ever implicate 409A.  But I also see the opportunity for abuse here, and I believe I've seen commentary on this before (I just can't find it now).

Bonus Question: Would it be any different if we were accelerating the vesting/payment rather than deferring it further (but still keeping it within the short-term deferral window)?

Hi

Plan is calendar 2020.

5%+ owner terminates in April 2020 and sells his ownership to the other shareholder.

Under HCE, because he was an HCE on 1/1/2020, he is HCE for 2020.

How key employee rules, are the same here i.e. he is a key for 2020 because he was on 1/1/2020?

Thank you

Hi all! first time posting here. 

I have a 401k plan where in 2019 plan year a excess SH contribution was identified, the auditors made us move the excess match to "Excess contribution payable" as a liability and reduce the SH contribution line on the financial statements. Nothing was done to schedule H. The excess SH from 2019 was put into the employer's forfeiture account. How do I fix the reconciling payable in the 2020 plan year financial statements? Should that SH excess been a payable at all if the amount was going to go into forfeiture and not paid out by the plan?

Any insight is appreciated. 

I've looked a a variety of loosely related threads but none get to the heart of my question so I'll ask it here.  I have a plan sponsor that would like to pick up ALL fees for plan participants, including fund fees.  The plan uses a combination of pooled funds (CITs & MFs).  Shy of converting everything to SMAs or having the fund companies develop an entirely new class of funds that are stripped of all fees (both unlikely for different reasons), this seems like it would involve some form of sponsor reimbursement to the Plan.  Key concerns identified so far that I'm looking for insights on:

• Is there a viable path to get these fees reimbursed by the sponsor to get to the intended result without running afoul of various rules pertaining to employer contributions?
• Is there a viable path to get these fees reimbursed by the fund company that doesn't involve the employer making a reimbursement and thus avoiding the challenges of them being considered an employer contribution?
• Related to this 2nd approach, it seems that the the Revenue Sharing rebate analogy may be useful (the practice or recapturing and rebating 12b1's, SubTA, etc. without them being considered an employer contribution).  Could that analogy be extended so that the entire Expense Ratio is rebated in the way revenue sharing is?

This is one of those topics where I fear that the employer has a reasonable & positive motivation but the legal and operational hurdles might be difficult or impossible to overcome.

26 CFR § 1.414(c)-5 provides: "common control exists between an exempt organization and another organization if at least 80 percent of the directors or trustees of one organization are either representatives of, or directly or indirectly controlled by, the other organization."

I'm trying to determine if a not-for-profit corporation and a LLC are in a common control group. Obviously a LLC does not have directors in the conventional sense, but what if it has a board of managers that are the functional equivalent to a board of directors? Does anyone think that the managers should be considered directors in this situation? The tax-exempt corp does have complete control over who the managers are. Should also point out the LLC is treated as a partnership for tax purposes. 

Thanks! 

Five weeks ago filed their own divorce forms taken from here https://onlinedivorcer.co.uk/. Two weeks later I was fired because my psychological state was very bad. I know that it is my own fault and I had to keep myself in hand, but it’s too late to discuss it. Now I thought about my savings. I can lose a part during a divorce, right? How can you avoid this? We didn't hire a lawyer, we tried to save money. Therefore, I am looking for help on the forums.

Plan terminated in mid 2020 but failed to transmit participant contributions with the proper time frame for a couple of pay period in 2018 and 2019. This is disclosed on all 5500s for 2018, 209 and 2020.

I am helping to do a VFCP filing but am curious if anyone has ever encountered this.

Do you think we have to re-open the plan to deposit the missed earnings or simply mail checks to the participants and issue 1099s? 

According to Pensions & Investments, the House Ways and Means Committee this week will consider legislation that would “require plans to offer participants with more than $200,000 in their accounts an option to take a distribution of at least 50% of their vested account balance in the form of a protected lifetime income solution.”

House Committee to consider requiring employer-sponsored retirement plans | Pensions & Investments (pionline.com)

What do BenefitsLink mavens think about this?