We recently took over a tribal government plan and the prior TPA has been filing a Form 5500 for the plan since its inception. This plan truly qualifies as a tribal governmental plan and so it is not subject to the Form 5500 requirements. Should we file for the 2020 plan year and mark that it is the Final Form 5500 or not file and, when the IRS sends a letter requesting the filing, respond that the plan is not subject to the Form 5500 filing requirement?

Hello. I was wondering if anyone had heard of any guidance with respect to a participant who is an "eligible participant" for purposes of the 401(a)(17) limits who was terminated and was then later rehired by the same employer.

Under Treas. Reg. 1.401(a)(17)-1(d)(4)(B), an "eligible participant" for purposes of the grandfathered limits is "an individual who first became a participant in the plan prior to the first day of the first plan year beginning after the earlier of - (1) The last day of the plan year by which a plan amendment to reflect the amendments made by section 13212 of OBRA '93 is both adopted and effective; or (2) December 31, 1995." (emphasis added).

Based on the use of the word "first," I would believe there is an argument that an individual who was an "eligible participant," terminated employment, and was later rehired and became a participant again would still qualify as an "eligible participant" since that individual "first" became a participant during the appropriate deadline. However, I was hoping to see if anyone on the Board had heard any different or had alternate thoughts. The Preambles to the reg are not helpful

Thanks!

I came across a business owner that implemented an "Individual" Profit Sharing 401(k) Plan back in 2011.  Accordingly this do it yourself approcach did not include an employee that was hired in 2014 and still employed.  Does anyone have a recommendation for an ERISA Attorney in the Fort Worth, TX area that could prepare and file the VCP?

I haven't worked on a 403(b) in awhile, but my colleague is out-of-the-office and I'm getting questions from a potential client.

How can non-elective employer contributions be allocated to participants?  Can cross-testing be used, like in a standard 401(k) Plan?  What other formulas are allowed?

Thanks in advance!

Hi, everyone! I am not in the business but am a solo practitioner looking to set up a DB + 401k paired plan. The annual fees can erode the returns quite a bit. I was wondering if anyone can recommend lower cost offerings? Idealluy, below $2k annually. Thanks for any recommendations!

Hi,

I received a very helpful and detailed response, and want to show my appreciation. Is a like or a thanks (trophy) worth more? thank you.

We got a new client this year.   The owner gave us his information and he took huge losses (due to COVID) on his Schedule C.   He did have a net profit on his rental income on Schedule E.  If I am thinking clearly though - passive Schedule E rental cannot be counted for compensation for a retirement plan?  Is there any loophole?  He deferred every week and maxed himself out for 2020.  Any guidance is appreciated.

Has anyone had trouble filling a 401(k) admin position in recent months?  We are hiring and our ads have not generated much interest.  I've placed ads on LinkedIn, Indeed, and adding one to Benefitslink today.  I'm just wondering if others have had success and their recommendation for where to connect with good candidates.  

Thank you. 

Pretty sure this has been addressed before, but I can't find the discussions.  Active participant last made a loan payment in 2020, thinking it was paid off.  Investment house is showing she still owes $200 plus.  Investment house shows her loan as Deemed.  Can she still pay it off, and if so should she get a 1099R showing the loan default? 

Thanks! 

A 50+ year old single owner-employee has an existing SEP, which he maxes out each year. He is asking whether he could adopt a 401(k) plan and contribute only the catch up amount in addition to continuing his SEP contributions. He has plenty of income to cover it. So for 2021, he would like to max out his SEP at $58,000 plus contribute $6,500 in salary deferrals into a new 401(k) plan. He has no reporting requirements with the SEP, and he would be exempt from filing a 5500-EZ until either his 401(k) plan reaches $250,000 or he terminates it. Thus, his only current additional cost is the 401(k) plan document. Any problematic issues with any of this?

Hi

I have been doing some research and see if there is an update to prohibited transaction exemption - PTE - 79-60. I have a broker who wants to start a defined benefit plan and include insurance in the plan where he is the broker. I have always known about the 5% rule i.e. his commission from this transaction cannot exceed 5% of the total insurance commissions income received for the year.

I found nothing to the contrary i.e. no changes.

Please let me know your thoughts/comments, if any.

Thank you

PS insurance in pension plans should be illegal

Hi,

A Corp and their DB Plan was a fiscal year end of 7/31 until 7/31/19.

The corp switched to a calendar yr end by running a short year for 8/1/19- 12/31/2019.

Then they had a regular calendar yr for  1/1/2020 thru 12/31/2020.

The plan  also should have ran a short year 8/1/19 thru 12/31/19, however they forgot to file for this 12/31/19 short year. If they would file now for  12/31/19, they would need to file with the DFVCP to avoid large late fees.

Question:

1. Can the pension stay with another year of a 7/31 year end. Meaning file a 5500 for 8/1/19 thru 7/31/2020. And then switch to a calendar year by running a short year of 08/1/2020 thru 12/31/2020.

2. For the fiscal year end 7/31/2020 (if they can keep the plan with a fiscal year end for an additional year) the company can contribute up to 275,000. This contribution was made in march 2021. Can this contribution that was made for the plan year 8/1/19 -7/31/2020 be used as a deduction  for the 2020 calendar yr on the corporation's return for 2020 (as the company for 2020 was a calendar year)? Thank you very much.

I need some help

i have 3% nonelective safe harbor plan

eligibility for deferrals is 6 months with quarterly entry.  eligibility for safe harbor is 1 year with quarterly entry.  plan uses entry date compensation for those that enter mid-year

The plan is top-heavy for 2020.  I know I have to give the top heavy contribution to those that are only eligible for deferral, to satisfy top heavy.

I assume i need to make an additional contribution to those that entered mid year for the safe harbor, so that they receive 3% of full year compensation. 

is this correct?

Thank you for your time!

Hello, I am new to the VEBA world..

Where can I find detailed information regarding 1099s and compliance testing.

Hello,

I hope this post finds everyone happy and healthy. I'm relatively new to prevailing wage plans, so I have a few questions. My understanding is that a prevailing wage contribution is treated as a non-elective contribution, so it's included in the gateway and it counts towards top heavy. In this particular situation, the prevailing wage contribution has no eligibility or allocation requirements and it's immediately and fully vested. The ADP test is failing, so to what extent, if any, can the prevailing wage contribution be treated as a QNEC and be included in the ADP test? Can an immediately fully vested prevailing wage contribution be treated as a safe harbor non-elective contribution and, if so, can this be done operationally or does it need to be stated in the plan document?

Client has a simple 401k new in 2020. There are 2 employees in this company. Neither are owners. My Ft. William system keeps giving me warnings that I should be filing an EZ instead of an SF. When I run the edit checks, I get the error. When I "lock it" to get ready to notify the clients to sign, I get another pre-validation error.

Is anyone else running into this?

What is the exact rules/law for first year participant count in 5500-SF submission?

Thanks in advance.

I work with a MEWA and the association is questioning the 20 employee minimum for the COBRA subsidy.  Can someone point me in the direction of the reg that explains how the subsidy works with a MEWA?  If an employer that participates in the MEWA has fewer than 20 employees, do they still fall under the COBRA subsidy since they are part of the MEWA?

Thanks!

Hi.  Company A is being acquired by Company B (A's 401k plan is merging into B's).  Company A mistakenly terminated its employees and distributed the accounts.  My understanding is that this is an improper in-service withdrawal and is treated as an overpayment under EPCRS rules.  The correction rules (6.06(4)(b)) provide that the affected participants should be notified and asked to return the distributed amounts, plus earnings.  My question is related to the earnings.  Is it permissible to have the participant return the distributed principal and use the forfeiture account to fund the earnings?  My concern is that the participants will already be upset.  To add insult to injury, it is possible that the earnings rate on their 401k plan account outpaced their earnings rate on wherever they put the money after distribution; meaning that they may have to come out of pocket to make up the earnings.  

I am getting conflicting advice on my end.

Does the default 10% withholding apply to RMDs (unless they opt otherwise on W-4P)?

An entry on Investopedia says this:

Quote

Nonperiodic distributions paid directly to an employee are subject to a 10% withholding tax, unless the beneficiary elects to have no taxes withheld. Nonperiodic distributions do not include individual retirement account (IRA), transfers or rollovers, systematic withdrawals, or required minimum distributions (RMDs) [1]

However, that [1] points to the early withdrawal tax, not withholding.

Does anyone have a specific site as to whether the default 10% withholding applies to RMDs?

I always thought it did.