This client sold his business, it was absorbed by a larger company.  Almost all of the employees went to work for the new owner.  

Many employees are rolling their pension accounts into the new employer's plan, some into IRAs.  One employee has a loan and would like to "cancel it out" and only roll over her tangible assets to the new employer's plan.  Am I missing anything... any reason she can't do this?  Split her distribution into 2 parts, rollover to new plan and cash distribute her loan as a taxable distribution?

Thanks

Some governmental employers allocate a matching contribution under a § 401(a) plan on a participant’s deferral under a § 457(b) plan.

Does any provider’s IRS-preapproved document allow a user to specify this within the adoption agreement’s check-the-boxes (or allowed fill-in) choices?

If not, how the IRS would respond to a Form 5307 application in which this point is the only variation from the preapproved document?

Welfare Plan has reached 100 participants so it's time to file the very first 5500.

Apparently their existing plan document shows a 6/30 plan year end, but their policies are calendar year.

They'd like to change the plan year and create a short plan year for the last year (ie today is 4/20/22 and they would like a short plan year 7/1/21-12/31/21).

I think it's too late to retroactively (and easily) amend for that short plan year.

But curious of other's opinions in the following two scenarios, if it can be done:

1. 7/1/21 count < 100 so no 5500 required for a short 6-month plan year
2. 7/1/21 count > 100 so a 5500 would be required at 12/31/21 (not yet due)

Can a money purchase plan be merged with a profit sharing plan

before 7/31/22, so only one plan must be amended for cycle 3 restatement?

I have a client who doesn't want to provide statements for terminated participants who are 0% vested, but have not yet been out 5 years therefore the money in the account has not yet forfeited (it's all Profit Sharing money).

Is there something in the regs that requires statements be sent to these participants?  Can someone point me to it, if there is, so I can provide it to the client?

Thanks in advance!

I've heard that we are supposed to go by the check date to determine if a refund is "late" or not.  For example, if a refund is processed March 15, but the check date is March 16, then it's considered late and the penalties apply.

Do the IRS folks really look at the check register?  Wouldn't they use a transaction report that shows the distribution was done on 3/15?  has anyone ever been dinged on that?

What if it's an ACH that doesn't happen for two or three days?  There is no check register to, pardon the pun, check.

Single-member LLC that has elected to file as S-Corp has a cash balance plan that covers the owner and a handful of employees.  The contribution for the 2021 plan year was deposited on March 10, 2022.  The deposit was for the recommended contribution calculated by the actuary.  The CPA who is preparing the tax returns for the business is telling the owner that the contribution applicable to the owner's benefit cannot be deducted for 2021 and must instead be reported on the 2022 tax returns.  The returns are otherwise being completed on an accrual basis.

I am neither a CPA nor an actuary, but I've been a TPA for a long time and I've never heard of this.  I didn't even bother asking how the CPA determined the portion applicable to the owner.  Is there a rule preventing the business from taking a tax deduction for the portion of the accrued cash balance contribution that is applicable to the owner's benefit?

Just want to make sure I've thought this through properly:

Company has 3 employees.  2 owners employed since 2015 or so, and staff person hired May 2020.  Staff person is a decade older than the owners, so cross-testing is not a consideration.  [Edit:  Dang, I wish I hadn't posted this in the cross-tested section then, I suppose.]

Generous CB plan has 2 year eligibility, so it has been owners-only so far.  401(k) plan has 2 year eligibility for company contributions, 1 year for 401(k).

For 2021, prior TPA was allocating only 3% to the staff person, as a nonelective top heavy minimum (listed as profit sharing on their report).   But 6% each PS to the owners.

The nonelective test has me thinking.  Even though the staff person is nominally only eligible for the 401(k), the TH requirement is forcing her to get a nonelective contribution, one that is not going to pass when compared to the owners' amounts.  (As in, it doesn't matter if staff person hasn't met the normal eligibility for a nonelective contribution, the top heavy requirement made her eligible anyway, and now she's subject to her rate against theirs.)

If they give her 6%, I suppose they could be done.  She's not eligible for the CB plan at all.  And the DC plan would have a uniform allocation rate, so each plan passes coverage/nondiscrimination separately.

Or are they indeed okay with just the 3?  The allocation to the staff person is the greater of the plan's "normal" formula, or the top heavy formula.  (Since her share would legitimately have been zero.) And the plan would pass coverage if she were not considered benefiting, because she's not "normally" part of the coverage test anyway, having not gotten the 2 years of service yet.  (Thinking 1.401(a)(4)-2(b)(4)(vi)(D)(3) here)

Thanks.  (Never mind that they didn't get any deferrals out of the staff person, so I've got other reasons to think about the 3% and how it's not enough of a QNEC if they allocated it that way.)

--bri

We have a Cash Balance Plan and a Profit Sharing Plan that we are combining for testing. The Profit Sharing Plan defines Compensation as Compensation from date of Participation. We have several employees who became eligible 7/1/2021 so we would use their Compensation from 7/1/2021 to 12/31/2021 for allocation. The Cash Balance Plan defines Compensation as full year compensation. Can we use the two different definitions of Compensation for the 401(a)(4) testing? Is this allowed or do we have to use full year Compensation for testing?

we have a participant requesting for a distribution of their excess deferral today 4/18/2022 which is the tax deadline. We can distribute the excess deferral however the check will be dated after today of course. Is the excess deferral deadline the day of distribution or the check date?

For Welfare Benefit plans normally have a form 5500 filing exception (if not a MEWA or Certain Entities Claiming Exception (ECEs), on page 3 of the instructions, bottom right 1. A welfare benefit plan that covered fewer than 100 participants as of the beginning of the plan year and is unfunded, fully insured, or a combination of insured and unfunded. Some interpret the lines 5 & 6 instructions (page 18 bottom right, bottom link) to include active eligible employees (most full-time employees are eligible at the beginning of the plan year, during Open Enrollment, while new hires can also be elgible as of the beginning of the plan year) to those participating.  See the bolded below and let me know if you also believe all active eligible employees are to be counted?

Hi, 

I've encountered a very strange situation, one of the terminating we have a participant with a bad ssn and also the account was set up without a name I'm not really sure how this could have happened.  Since the ssn is incorrect and we don't have a name how can these account be handled does IRS provide any guidance on bad ssn and unknown name. 

Hello my fellow pension geeks! I can't find this anywhere specifically mentioned, either in the 5330 instructions or on this board. Can the filer (not the preparer) sign the form electronically through something like DocuSign? The 5330 instructions do not say either way. The 5330 is also not listed on the irs.gov website as allowing electronic signatures for 2021. However, it would greatly help out for a project I'm working on. 

Please let me know your thoughts or share a resource I may have overlooked. Thank you kindly!

thank you for any help with this. Thank you!

IRA owners can have their RMD's used as QCD's. But Qual Plans cannot. Is there any way around this?

QCDs are a no brainer for those who give to charity anyway, because QCDs reduce AGI. Normal charitable contributions go on schedule A, which almost no one files anymore.  They get no charitable deduction.

Small business owners who continue to maintain their qual plans have to take RMD's but cannot use the QCD advantage.

Is there any way around that?

Hi Good Morning, 

A terminated plan needs to be re-opened because the plan sponsor discovered that some employees who were eligible for the employer incentive and Match did not receive it.   I believe the employer contribution is a taxable event however the plan sponsor feels its only reportable income similar to employer paid health insurance is that true? 

Thanks 

A terminated participant has an account balance with a client 401k plan that exceeds $5000.  I have looked through the document several times for guidance.   All I see if forms with signature lines for participant and plan sponsor.

Q:   If the balance is over $5000 and it (plan) is not subject to QJ&S annuity rules - does the distribution  form have to be signed/approved by the spouse? 

Or is that something the plan sponsor can decide arbitrarily?  The platform says they are set up to require spousal consent, but I don't see anything in plan document.  Thanks for any feedback.  They are holding up the distribution for this..  

An overfunded DB plan covering only the 100% owner is terminating and a QRP 401(k) plan is being set up to receive the excess assets while the participant's DB benefit will be rolled over to an IRA.  She will need to complete a distribution election form for the IRA RO, but does an election for the RO of only excess assets to the QRP also need to be made?  If so, would anyone have a sample they can share? 

Also, I imagine the RO to the QRP would need its own 1099-R, but what code would be used - G for direct RO?  This is a first for me so any help would be great! 

A participant passed away shortly before her RMD age.  Her spouse is the beneficiary and he is beyond age 72.

He does not want to take distribution of the account balance and prefers to leave it in the plan. 

(1)  Can he leave the balance in the plan indefinitly?

(2) He must begin taking RMDs from the plan; is this based on his DOB alone or does the deceased spouse's DOB factor into this as well?

Thank you