Hi

Looking into a cb/dc combo for someone - both the sponsor and plan years are fiscal e.g. 7/1/2020 to 6/30/2021. Never worked on fiscal combo before.

DC has 401k + 3% non-elective safe harbor + profit sharing provisions.

A theoretical question:

The participant defers max for 2020 from 7//1/2020 to 12/31/2020 and max for 2021 from 1/1/2021 to 6/30/2021. So defers 39k within 12 month period. Salary and election to defer maximum from each paycheck - very high #.

Based on above, I should be checking for the following:

• Full 39k is included in the 410b testing
• Only one catch up? I have no idea on this especially if does catch up twice within one plan year.
• As the 415(c) limit is annual and within the plan year, the 58k limit is reduced by 39k of deferrals + 3% safe harbor this leaving very little for profit sharing (assume limitation year is plan year). So more goes to 410(b) and less goes to 401(a)(4).

Am I missing anything?

As someone mentioned during Derrin Watson's webinar last month, fiscal plans should be illegal especially with 401k features.

Thank you

It is my understanding that plan sponsors will be reimbursed for the COBRA subsidy through a credit against quarterly payroll taxes.  With a multiemployer plan that uses a TPA, there are no payroll taxes against which to take a credit.  How does the plan gets reimbursed?  Do they need to fill out the tax form and just put 0 for the payroll taxes owed?

What are your thoughts on whether an ERISA plan can participate in a private equity fund that invests in a medical marijuana processing company?

Has a PPT occurred if a government contract was canceled resulting in the involuntary termination of employees?  We are having discussions about the sale of a division and the result of a PPT. Does the fact that a government contract was canceled trigger a PPT?  It did not affect more than 20% of the workforce. Does it matter if more than 20% were let go? We think that would be a "no brainer" and if more than 20% were let go, we would recommend a PPT.  The cancelation of the government contract was not COVID related so we do not believe that the COVID relief applies. Thank you.

So my question is concerning an employer who would like to give his employees money when the plan starts (after meeting the eligibility requirements). This is a 401(k) Profit Sharing Plan, and this would be money that he is giving them as bonus or profit sharing from prior work they have done. Is this possible and are there limitations on how much he can give to each employee? The employer would like to give the employee that have been with him the longest a little more. I'd appreciate any feed back. 

Sorry, apparently I submitted this twice. Once is enough!!!

Long story short - participant loan apparently defaulted in 2018. Started making payments again in 2019, but should have been a deemed distribution.

Too late to correct under SCP, but can be corrected under VCP, as per RP 2019-19, Section 6, .07(3)(d).

Here's my question - the person involved is the company owner. Has anyone submitted under VCP in such a situation, and was there any problem with the IRS not approving it because it was the owner/fiduciary who defaulted?

Is a Plan Sponsor offering only Group MEC coverage to an eligible ICHRA Class of employees, also allowed to offer an ICHRA to that same Class of employees, since Group MEC is not Traditional Group Health Coverage (MVP), (only MEC), nor an Excepted Benefit under ICHRA Rules?  Same for offering the same ICHRA Class of employees both ICHRA and Group GAP coverage which covers a stated $ benefit amount of Deductible and Coinsurance?  Thanks, as I have been asked both, but can not find a definitive answer.

Reading a previous question, I just want to make sure I understand this. I thought that if a participant had an outstanding loan and they obtained a qualified event like the plan allows for early distribution, that the participant would be able to offset the remaining outstanding balance of the loan due to qualifying event. So if John was 58 when he took a loan for $10,000, after a year and half, he decides that he wants the remaining loan balance (say it's $7400 now) to be offset because he's now 59 1/2, I thought that was permissible. Am I wrong?

Two employers (A and B) under same control group each have separate plans (Plan A and Plan B).  Plan A terminates because employer A shuts down and many participants start working for employer B.  Most participants rolls assets from terminated Plan A into Plan B.  Plan B has predecessor language for eligibility and vesting for participants from Plan A.  They were given opportunity to take their balance or rollover to IRA or another qualified plan.  Question:  Are the rollovers from Plan A into Plan B considered "related" rollovers for top-heavy testing?

Owner does not want to complete beneficiary form because his spouse is his primary beneficiary and he has completed estate planning that his children are contingent for all accounts. 

Am I correct that a plan specific form needs to be completed so that the children would be considered contingent, otherwise should spouse predecease or owner & spouse die simultaneously, the plan's benefits will go to the estate rather than to the children?

Our client had a cash balance and profit sharing plan effective 2015. There was no 401(k) component, it was all employer money.

In 2020, they had an offer and thought they had sold their business, so they terminated their plans effective 12/31/2020 and assets were distributed. The deal fell through, and they'd like to put in a new CB and PS plan as of 1/1/2021.  Their payroll company is saying they can't do the PS plan, because they need to wait a year due to the successor rule. Is this true, if there was no 401(k) in the original plan?

Thanks - 

Sue

Can a plan run the ADP test on a disaggregated basis and the ACP test on an aggregated basis or do these have to be run the same way?  In this example, I know we would have to disaggregate the 410(b) test for the deferrals and would aggregate the 410(b) test for the match contributions.  This is a single employer plan and there are no controlled group members.  Thank you

My firm is taking over a calendar year Profit Sharing Plan where the current document indicates that the vesting computation period is Hours of Service (1000) commencing on the date the employee is hired and each anniversary thereof.  We are checking with the client and prior TPA to confirm that is how the vesting has actually been calculated for the participants, but are considering recommending changing the computation period to coincide with the plan year, rather than the employee's employment year.  If this change is made July 1, how does that affect the current participants?  Will we need to treat it similar to a short period of time and determine hours in 2021 based on their employment anniversary as well as based on the calendar year 2021 and possibly credit them with 2 years of vesting service?  Are there other pitfalls to consider with such a change?

Has anyone moved their desktops out to a cloud based environment, and if so with who?  We just started talking to "Infinitely Virtual" which seems like an interesting approach.  Unlike Azure, where we have to hire an IT firm to build the whole thing out, this platform seems like it's ready made with all the bells and whistles.  I know there are other firms out there like them, and curious to know what others have used.

Is a company in breach of contract if they specifically state that the employee is entitled to a 401k but never provides even after being asked repeatedly when the eligibility period has already passed?

I have an LLC with an S-election, which has been nominally profitable for over a dozen years. The S-Corp just has myself and my wife as the shareholder-officers. We have a DB plan coupled with a 401k plan. We draw a reasonable salary from the S-Corp, and the S-Corp contributes to the DB plan as well as some 401k profit sharing.

In the year 2020, at around tax return filing time for tax year 2019 (July 2020), the funds in S-Corp were running low due to loss of business, so I made a personal loan to the S-corp to cover the DB plan contributions along with 401k plan deferrals and 401k profit sharing contributions. Let's say this amount was about $100K. Also note that for tax year 2019, the S-corp had a small profit.

Due to continued loss of business in 2020, the S-corp for tax year 2020 had an even bigger loss, but in calendar year 2021, business is looking up a bit and there's some cash in the bank by May 2021. 

Question 1. Even though the S-Corp has a loss in tax year 2020, but because there is money in the bank earned in 2021, can the S-corp still contribute to DB plan and/or 401k Profit sharing, even though this will increase the S-Corp's loss? Note that even without the DB plan and profit sharing contributions, the S-Corp had a sizeable loss in 2020.

Question 2: Because of the $100k loan I had made earlier in 2020 to the S-Corp, I think that may have increased my "basis" in the S-corp? If so, can the S-corp's loss of tax year 2020 flow to my personal tax return for 2020, and could I deduct this loss against my personal income (from a second W2 job that I had to start in 2020 due to poor business) because I have "basis" in the S-Corp?

Thanks

John Bliss

We know that no signature required on Form 5558, but we have always dated the form.

I seem to remember the form has to be dated, but my software vendor says no.

Curious, I've got about 75 calendar year extensions, I'm doing currently, and if they don't need to be dated, great.

I have a client that sponsors a 401(k) plan & has been allowing employees the option to have 401(k) deferral elections applied to their bonuses. The plan document states that Bonuses are subject to the same deferral election as regular wages. Can this failure be self-corrected under Rev. Proc. 2019-19 by adopting a retroactive amendment to allow special elections for bonuses? Would this amendment be considered an increase in a benefit, right or feature?

I have about a 250,000 lump sum option i can take from the job i had in NH which has no state tax. 

if i take that lump sum while living in kansas, will kansas take state tax, even though i never worked in this state? 

or is it time for me to move to another tax free state?