Start-up plan in 2020 expected to be a solo(k) plan covering only owner & possibly spouse (who did not work in 2020).  Eligibility is age 21 & 3 months elapsed time, monthly entry dates.  Owner actually hired a part-time employee in July 2020 who became eligible in November, and terminated in December.  Testing determined no contributions were required for this NHCE employee.  So the participant count on 1/1/20 was 1 (owner only) and count on 12/31/20 was 1 (owner only).

Assets were under $250k the entire year.

Does this plan need to file 5500-SF or can they use 5500-EZ and not file for 2020 due to assets under $250k?

Client has an old 403b, pre 1/1/09 contracts.   They need to sign off on distributions and she wants to know if she has any fiduciary liability with respect to these old contracts.  They are all individual contracts, such that they cannot move them to a new provider without consent and they cannot change the funds available as they would in a 401k because they are essentially IRA's.

I gather the answer is "yes" but curious if anyone has an article I can provide that sort of delves into this issue in some amount of detail.

Also curious what others are doing about the these "ancient frozen Non-ERISA plans" and the related plan documents.  A lot of sponsors don't even know these plans are out there (they only find out about them a participant comes out of the woodwork for a distribution).

Just curious as to what other folks have decided. I've decided that for most purposes, the "rigid" discretionary match is useless (or perhaps I should say overly restrictive), and we're using the flexible discretionary match for pretty much everything except where the client wants a fixed match in the document. You just have so many more options.

I should hasten to add that we do NOT use the PPD document, so if you are using PPD, then your opinion re the "rigid' match might be very different.

Curious as to other thoughts - pros, cons, which are you using? Only downside from my perspective on the flexible match is the notice requirement, and the notice is VERY easy.

Edit - as I read the original post, I think I worded something poorly - when I said "useless" I didn't really mean that. I meant "useless" for most of our clients, as they usually want more flexibility than is permissible using the "rigid" discretionary match. But the rest of my question still stands - interested to see what others think. Thanks.

Plan has a pro rata formula.   3 participants, 2 owners and one NHCE.    25% of plan compensation is 149,126.93.    Company would like to make a 129,000 contribution.   

The 2 owners make around 266,000 each and their P/S contribution is capped at 57,000.00    Their deferrals are less than 6,500 so all are reclassified as catch up.    Their contribution percentage comes to 21.39% and 21.41%.    Can the remaining 15,000 be allocated to the participant, her contribution percentage would be 25.71%.    I can't get the software to allocate it like this, not sure If i'm not remembering something that would prevent the company from contributing that much.   The max the software will allocate is 25% to the NHCE.    

Hey Tom - heard things might have gotten a little rough down there in Jacksonville - everything ok with you?

SEP, owner was only participant, was funding 20% monthly based on her compensation for 2021. Now realizes the only employee is eligible as of 1/1/21. Owner has stopped contributions and now is considering removing her contributions instead of funding (with lost earnings) contributions to participant through the same period. Can contributions be removed because the owner changed their mind? I see corrections process for excess contributions but not sure this can be considered excess? If they can remove, I assume the same process for removing excess?

Thanks for any help.

I don't recall much discussion on this.  We have always used age nearest for 401(a)(4) testing.  Any comments or thoughts on using either attained age or age nearest in 401(a)(4) testing?  And for DB/DC combo testing, does different definitions of "age" matter (for example, DB is age nearest month, DC is age nearest or attained age), since testing is usually not a plan document provision.

Thanks...

Client wants to transfer a whole life policy on his life to a profit sharing plan in which he is a participant. There is a PTE which allows the transfer subject to certain requirements dealing with value. Assume that is not at issue and that the ownership of the policy can be either personal or corporate.

Can he make it as an in kind contribution equal to the CSV?  If the policy has no CSV, can it be transferred unilaterally? If it is transferred, do the transfer for value rules require that the portion of the Plan's death benefit attributable to the insurance policy be treated as income?   

Some use the 5500s to determine the count for the PCORI fee.  Our client had this scenario and question. I wondered if anyone could assist: 

• “Original” ERISA Plan Year : 6/1/19 – 5/31/20
• Short ERISA Plan Year: 6/1/20 – 6/30/20
• New ERISA Plan Year 7/1/20 -6/30/21 

As this group is technically self-funded for their medical plan, they are required to pay the PCORI fee.  This poses a challenge this year as they  actually have two plan years which end before October 1, 2020 as highlighted above which would need to be accounted for in the upcoming PCORI fee filing.  As we know, the IRS does require the PCORI fee to be paid for a short plan year. 

The Group typically uses the snapshot method, However,  the form does not provide a spot to account for multiple plan years (e.g. the average covered lives in tis case would need to be identical to “fit” within this form.).  Can you offer any guidance on how the group should address this short one month plan year when paying the PCORI fee?

The Form 5310 instructions indicate the Form must be submitted online starting 4/26/2021.  Has anyone gone through this process?  If so, did you create a Company Account under the client or the TPA?  Seems a company account must be created under the client, but then the client has to complete all the info. and upload the necessary attachments which may be difficult for the client to handle.  We have called the IRS and they did not have any guidance.

I'm trying to find something that is written by the IRS or perhaps a prestigious law firm that talks about the proper treatment when a schedule C proprietor has negative self-employment income but has already funded his or her simple IRA contribution.

Does anybody have such a resource? My assumption is the contributions are refunded, adjusted for gains.  Because the deduction will not be taken in 2020, my assumption is that solely the investment earnings will be taxable in the year distributed. But I would still like to find something written on the topic in a formal way that  I can provide to a CPA I work with.

My understanding is that the deadline for a participant to elect voluntary after-tax contributions is the due date for the employer's tax return (as opposed to traditional or Roth elective deferrals, which must still be elected by December 31 (even though they can be funded later).  Can anyone point me to authority either supporting or correcting that understanding? 

(Note:  I'm specifically asking in the context of a solo 401(k) plan for a sole proprietor.)

Thanks!

I’m an advisor creating a 401k plan with individual brokerage accounts that each have a unique portfolio of stocks (not as an SDBA- these managed accounts would be considered plan assets), and haven’t been able to find platforms that can support this. I’m building out the participant and plan sponsor web portals to get the needed inputs and convey the investment choices, and have direct API communication with the custodian, but need to outsource the administrative functions. Anyone with experience in this?

I have a question about how to report the transferred participants on the SSA when the same company created a new plan and transferred some of the participants to that plan.

So, the same company is sponsoring both plans. The first plan (Plan Number 001) transferred some participants to the second plan by the same employer (to Plan Number 002). The SSA instructions seem to indicate that the transferred participant must be terminated to be included for the SSA purposes (here's the language from the SSA instructions: "When the benefit of a separated participant with deferred vested benefits is transferred from one plan to the plan of a new employer"). Since these participants are not terminated (they are still employed by the same company, but are now with the other 401k plan by the same employer, would they need to be included in the SSA?

Thanks!

Good afternoon to all,

We are setting up a new plan for a controlled group of 5 companies that will probably have 2,000 participants when it's all done.  By design, HCEs and Keys are excluded from participating.  There will never be a test failure such as ADP, ACP, 410(b), Top Heavy.  That's not the issue.

The issue is that the owner (one man owns all of it) wants to pick and choose select groups or individuals to whom he will give a discretionary match and/or a discretionary profit sharing contribution according to his pleasure.  His idea is that since there are no applicable tests to fail, why not?

We feel uneasy about this but can't find anything to hang our hat on.  Is this really permissible?

Thanks for your thoughts on this.

Client had late deferrals in october 2020 that were quickly corrected in November 2020.  I am preparing a Form 5330.  The lost earnings were not posted to the plan until June 2021.

I am preparing the 5330 for 2020.  Do I also have to prepare a 5330 for 2021?  I'm unclear on what triggers multiple filings. In my case only the earnings were deposited in the following year so I'm not sure if that requires an other 5330 for 2021..

thanks!

Any other Relius users have this issue? I'm wondering if I have a setting in Plan Specs not marked correctly. 

When I run the 410(b) Coverage test, Relius is including Terminated Participants with <500 hours as eligible for the test. However I know this group of participants is allowed to be excluded from the test. Am I missing something? 

this is not a life changing question, more of a curiosity.

So 5500 deadline falls on a weekend and so is actually due 8/2.  Would that make filers (without an extension) have an SAR due date of 10/2 instead of 9/30?

In the scope of a VCP filing, we are including some non-amender failures for the last two restatements. Has anyone had the experience of the IRS asking the plan to produce documents prior to the ones included in the VCP filing? Is there a rule that an employer must retain a copy of each and every restatement and amendment?

ERISA Section 209 says that the employer must "maintain records with respect to each of his employees sufficient to determine the benefits due or which may become due to such employees. " For a profit sharing plan that only provides discretionary employer contributions, should we assume that the IRS can expect the employer to maintain a copy of each plan document that was in effect when any current employee participated in the Plan? 

(And it is a long story as to why we would not just include all missing documents in the filing.)

I read another post relating to a QDRO that said there was no limit on how much of a former spouse's retirement can be awarded in divorce. But it seems that the FERS/CSRS regulations limit the award to 50-55%. Am I correct?

Thanks.