Hello,

Some background:

I had a sole-prop some time back and had a self-employed 401k plan with Fidelity with EIN of sole-prop

Then I created a s-corp and just used the same plan - changed EIN to S-corp, Name to a generic name - MKK-Plan. 

All good, no issues. I was thinking of shutting down the sole-prop but never did. 

Now, one of my clients (for whom I do most of my work) has changed their policy and want me to handle task based on sole-prop and NOT through my s-corp. 

Since I own both entities - S-corp and sole-prop, I'm assuming this becomes a control group and I can make contributions and profit share based on sole-prop earnings to the MKK_Plan as well. 

When making contributions, Fidelity asks for Employer Name and EIN and I assume, I'll still put in the S-corp name and EIN since that entity is Plan Sponsor, is that correct?

Where on 5500 do I indicate that this is a control group?

5500 instructions suggest that I'm still a Single-Employer plan, is that right?

Thanks for your assistance.

Hi

DB plan terminates and provides all participants their benefits, some rolled over into IRA's and some to the existing 401k/PS plan.

The residue i.e. overfunded portion, is transferred to the QRP under the terms of the plan and it will be allocated as profit sharing to all participants.

Upon distribution, is the portion under QRP subject to QJSA? If it is, best if all assets are subject to it otherwise nightmare to keep track of the assets.

Thank you

Hi,

The owner (active) of a corp took his RMD from his Profit Sharing Plan (his prior year end assets divided by age factor). Since this is an RMD, and he is not electing a benefit etc,  is an executed distribution election form  not required? Thank you.

I have a client (Company ABC) that is in the processes of purchasing another company (Company XYZ). It is a Stock Sale set to close on 9/30/21

Company XYZ has a plan but they are terminating before the sale. Company ABC has a plan but it excludes HCEs (except for age 50 for catch-up only) due to failing ADP test. Since it is a Stock Sale, are the HCEs of XYZ, HCEs from day one in ABC?

I would think yes since it is a Stock Sale, the employees of XYZ are treated as though they were always employees of ABC. Is there some grace period for those employees?

The client is wondering if the HCEs of XYZ would be able to participate in the 401k until 12/31/21.

Additionally, if the HCEs from XYZ are HCE after the sale, would they be allowed to roll money into the ABC plan even if they are not 50? The plan does permit rollovers for eligible employees or foreseeably eligible employees. Could we draft an amendment that would allow the under 50 HCEs to roll their retirement into the ABC plan?

We've had several deaths (post-SECURE Act) in different defined benefit plans, unfortunately, by participants who did not have designated beneficiaries on file.  Our defined benefit plan (volume submitter master) document identifies the following hierarchy for distributions to non-designated beneficiaries:

• surviving Spouse;
• children, per stirpes;
• surviving parents, in equal shares;
• estate.

My overall question is - under current regulations, is a defined benefit plan permitted to make a distribution to an Inherited IRA (via direct transfer) to a non-designated beneficiary?

If yes or maybe, does it matter who the non-designated beneficiary is?  We have the following true scenarios to deal with:

1. Terminated Participant A (died age 64 before NRA) has a surviving Spouse, and the distribution amount is over $5000.  Also, the plan is terminating.
2. Active Participant B (died age 32) only has one minor child, and the distribution amount is under $1000.  The plan is ongoing.
3. Active Participant C (died age 56) only has surviving parents (both older than age 72), and the distribution amount for each parent is between $1000 - $5000.  The plan is ongoing.
4. Terminated Participant D (died age 64 before NRA) has no Spouse, no children, nor any surviving parents, so his estate will receive the distribution; and the distribution amount is between $1000-$5000.  Also, the plan is terminating.

All participants were 100% vested at termination or at death.  NRA = Normal Retirement Age as defined by the plan.

In addition, these participants were also in 401(k) plans sponsored by the same Plan Sponsors as the defined benefit plans.  Does your answer to any scenario change depending on the plan type?

I think the answer for all four scenarios for both plan types is: No, none of these non-designated beneficiaries can elect to direct transfer their distributions to an Inherited IRA.

If I'm reading the Inherited IRA rules and plan document correctly, the reason none of these scenarios can result in a direct transfer to an Inherited IRA is because none of the beneficiaries were designated as beneficiaries by the Participants.  However, I rarely need to handle distributions due to death, so I am seeking input from more knowledgeable retirement plan practitioners.  Thank you for your help.  

There is a 401k plan that allowed for rollover contributions. It was restated & amended about 7 years ago and the permitted rollovers was switched to “no” but every year since then there have been rollovers into the plan. Can a retroactive amendment be done for this or does it need to go through VCP or self correction?

Good morning everyone!  I'm getting a question from someone regarding getting a Plan it's own TIN.

I know for the EIN, generally we use the employers to file the Form 5500 with the IRS.  Is there a need to get each plan it's own individual TIN, however?  And if there are two plans (i.e. a 401(k) and a Cash Balance), would each Plan need it's own individual TIN?

Thanks in advance for your help!  I believe they are looking for a TIN in order to open the pooled account for the Profit Sharing and Cash Balance Plans (not a 401(k)).

We file all our calendar year extension for 2020 in May, equesting extension  to 10/15/21.

More than one client recently faxed an IRS extension approval dated 8/30/21 aporoving the extension to 8/15/21, which assumes a PYE 5/31/20, which obviously is an incorrect extension for our plan.

Since the IRS wait time averages 30-60 minutes, I faxed a letter to Ogden, attaching our extension to 10/15 as well as their incorrect extension to 8/16/21 and a note to please change their records. 

Anyone else run into this??

I don't dabble too often in the education assistance world, but I am not 100% clear on whether a sole proprietor (no other employees) can sponsor his own Section 127 plan to take advantage of the recently modified rules on Section 127 plan and student loan repayments.  Does the nondiscrimination rule effectively make this unavailable? 

Participant P is fired sometime mid year in 2020, does not meet last day requirement for profit sharing contribution. 

In 2021, participant is awarded (by a hearing officer for the company) back pay for lost wages and his/her termination is deemed a wrongful termination. Participant is reinstated as an employee and is a participant in the Plan once again. 

Is participant eligible for the 2020 profit sharing contribution he/she missed due to wrongful termination? 

Does the Plan Sponsor have a correction to make re the 2020 deferrals the participant should have been able to make with respect to the back pay? 

Hi, 

One of the terminating plans has after-tax and funds of all non-responsive participants is to be rolled over to an IRA account.  Since few part's have funds in after-tax, I believe the after-tax money will needs to be put into ROTH IRA and the earnings into Traditional IRA?

Hi

DB/DC combo plans. DC is straight PS only, no other provisions. DB is covered by PBGC.

3 participants, owner/HCE, non-owner HCE and rank&file NHCE.

Both the non-owner HCE and NHCE terminated on 6/30/2021 but worked over 1000 hours. Assume each had final salary of 50k for 2021 i.e. the 2021 w-2's will show 50k for each.

Sponsor wants to terminate the PS plan as of 9/30/2021. His salary as of 9/30/2021 will be 200k and as of 12/31/2021 will be 290k. He has always been at maximum limits for the past 3+ years.

The DB plan will stay active for the time being - no 401a26 issues for 2021.

They are asking me to finalize the PS contributions for 2021 now. I have thoughts on performing all on a very conservative level but want to check on the following.

What salary do I use for the owner for deduction of PS portion and what salary do I use for testing?

If I did not ask the question properly, please feel free to correct.

Thank you

Hi

I think it is ok but want to see what others say.

Calendar plan for 2021. Only PS provisions. It is cross tested with a DB plan. Top heavy provisions only provided by the PS plan

2 rank&file employees terminated with 1000+ hours but plan has EOY requirement for allocation.

Only one rank&file in the DB and already accrued the 2021 benefit.

Sponsor will terminate the PS plan during 2021. However will continue working for the company.

Sponsor wants to provide PS contributions in excess of gateway requirements (combo testing passes easily with minimum gateway). Cannot do that with an 11-g so need to remove last day requirement.

I can do the amendment now retroactive to 1/1/2021, correct?

I also have a deduction and testing related question but will ask separately.

Thank you

I can't think of a better title to this issue, but here's the situation. DB Plan is terminated early in 2020 and the SB is filed along with the F5310 showing a contribution of $170000 made in Jan 2020. Approval letter received in June. The SB shows the $170,000 contribution. This is sole prop employer and the actuarial report is not filed with the F5500. The plan is quite overfunded and it is intended to set up a QRP Plan for the excess assets.

But  the client subsequently elects on his own to remove $170,000 from the Plan and as Employer he amends the business return and pays taxes on it. The question is what would you  do with the 2020 SB, which is the last SB for the Plan?  1. do nothing. 2. amend the SB  and file it with IRS Agent who approved the DT? The MRC is zero in either case and the plan remains overfunded in either case. What would happen if the plan was audited?

Regarding the requirements that elective deferrals and safe harbor contributions cannot be distributed to employed participants until they attain age 59.5 (assuming the doc permits such payouts), I was recently speaking with someone who mentioned that recent legislation (he said either the SECURE or CARES Act) now permits inservice distributions from all sources including deferrals and SH money.  I normally defer to him since he's a TPA, but I haven't been able to locate anything in writing that backs up this change - have the inservice rules changed in this respect?   

I have a plan that did not want to allow CRDs.  A few were paid by the recordkeeper and the Plan Sponsor noticed and shut them off.  I assume that the recordkeeper contacted Plan Sponsors to tell them the "default" was to allow unless they communicated that they did not want to offer.  When they noticed that some were paid, they shut them off.  The recordkeeper tried to recoup the money recently but the employees either didn't respond or had been terminated and had received a full distribution.

How should they correct?  I suggested having the Plan Sponsor adopt the CARES amendment but to only allow until they were shut off.  Any other ideas?  If they don't adopt the CARES Act CRD  - then don't they have a operation error where they did not follow the plan document?

I'm seeing that there is relief for the 5500 filing due date for those impacted by Hurricane Ida but I wanted to verify that this does not currently extend the date required contributions are due past September 15th.

I don't believe it has, but wanted to double check.

We have a plan with an effective date of 1/1/2020 but the plan didn't start contributing until March of 2021 and they are not going to make any Contributions for 2020 so they'll have NO Assets. I believe we still need to file a Form 5500-SF just putting zeros in the financials? Also since nobody has an account balance under 5c on the 5500-SF I assume I put 0 (zero). 

Client does not want to change the effective date to 1/1/21 which was suggested.

If a SH plan terminates with an effective date of 8/31, the termination is due to the company being acquired.  The final paycheck is not due to be paid until 9/9.  Can the plan continue to accept pretax and SH match contributions from the 9/9 paycheck?

This one I'm pretty sure is easy, but I just wanted to make 100% sure since someone asked me.

Can a sole prop, schedule-C have a solo-k AND cash balance plan?