The 415 test we just performed for plan year 2020 included the sum of the 2020 401(k) deferrals, the lump sum 2020 401(k) match determined and deposited in 2021, [there were no 401(k) forfeiture allocations made in 2020 or in 2021], the 12/31/20 ESOP contribution allocation, and the 12/31/2020 ESOP forfeitures allocation.  Under this test let's say there is 415(c) room to do a Mega Backdoor Roth Contribution and for the sake of argument let's say the room is $20,000.   I assume that this after-tax $20,000 should have been contributed in 2020, with an immediate Roth 401(k) conversion after each payroll contribution if that's how we do it.  What happens if the participant over-contributes, for example, we allowed an after-tax contribution of $22,000 in 2020 vs the finally determined $20,000 that the max should have been.  I assume the $2,000 plus earnings could have been returned by April 15, 2021 to avoid double taxes?  Is that how a Mega Backdoor Roth is administered?  Generally speaking, it always involves a return of excess before April 15?  The earnings are taxable in the year of distribution, so no 2020 W-2 needs to be changed, right?  Your advice would be appreciated.  Thank you!

Good afternoon to all,

A prospect, a doctor, has one employee who is currently paid W-2 wages.  He wants to terminate her as a W-2 employee and then engage her as a 1099-R independent contractor.  After all that is done, the next month he wants to start up an owner-only type of 401(k) plan that covers only himself and his wife, who he will bring onto the payroll.

Do you see issues with this?  We feel like it's a very aggressive posture to take but not necessarily an illegal one.

Your advice is always appreciated.

A physician practice would like to make a loan to a surgery center as an investment from the plan.   The loan will earn 10% interest and it'll be for 1 or 2 years.   He would like to loan them $100,000 out of $1.8 million assets.   This is a pooled profit sharing plan, 6 participants.  Is this investment allowed?   If so, anything that must be done to allow for it?  

We are starting the process of selling our TPA business.  We focus exclusively on administration, compliance, and plan documents.  Our book of business consists mainly of DC Plans plus a handful of DB plans.

If you are in the market for buying a book of business or know somebody, please let me know.

A new 401(k) plan is setup later in 2020 with an effective date of 1/1/2020.  Profit sharing effective 1/1/2020,  deferrals and 3% SH Nonelective effective 10/1/2020.  All ees hired on or before 1/1/2020 are eligible for the plan.  Comp is full year comp (not date of participation).

Employee is hired in 2019 and thus a participant in the plan on 1/1/2020, but terminates on 8/1/2020.

Question:  Is this participant required to receive the 3% safe harbor because they were eligible to participate in the Plan on 1/1/2020, or do they not receive the safe harbor because the safe harbor portion of the plan was not in effect until after their date of termination?

Thanks very much.

Plan reports show funds distributed and it is reflected as a distribution.  The following plan year the vendor reflects the funds as unclaimed property and returned back into plan.  How is this reflected on the 5500?  The funds were also then redistributed and cashed

This one always gets me.  The deadline to furnish the SMM is 210 days after the plan year in which the amendment is adopted.

So, if a plan amends to allow in-service withdrawals effective Feb 1, 2021, they don't have to tell the participants about it until August 2022?  19 months after the effective date of the amendment?

Doesn't seem right.

We are filing an anonymous VCP.  What should we use for plan sponsor, plan name, plan number and EIN on pay.gov?  We will redact the plan information in the attachments but what do we use for the online 8950 Form?

An individual withdraws $100,000 as a CRD in 2020, and the $100,000 includes the individual's 2020 RMD. Can the RMD be repaid in 3 years, as it was part of the CRD?

I was hoping the experts on this message board could provide me their opinions.

I have a client that sponsors two Plan; Cash Balance and 401(k).  These plans have been in effect for several years.  The Plan sponsor is a Corporation owned 50/50 by two brothers.  The W-2 wages the brother receive from the Corporation are well below the annual wage limits and the contributions are well under current year allocation limits.

Their accountant called me yesterday asking about setting up a Keogh Plan for one of the brother for his Schedule C Income.  This was the first I ever heard about any Schedule C income.  In fact, both brother receive Schedule C Income from a sideline business.  I would like to include the wages from the Schedule C Income in their current Plan without going to the expense of setting up another Cash Balance Plan and/or Profit Sharing Plan.   

Since the SECURE Act allows for the adoption of new Plans after the end of the Plan Year do you think this would include becoming an adopting employer to the already existing Plans?  I would like to add both brothers as adopting employers to their Corporate Plan.

What do you think... is this possible?  

Hello everyone. I hope this post finds you all happy and healthy. I have a client who is making deposits to the trust account in the same amounts as the advisory fees to "reimburse the plan for the advisory fees." I know that such deposits must be treated as nonelective contributions, but for the life of me I can't find the citation. I would appreciate your help. Thank you.

If a PR Plan has been dual qualified in the US,   must minimum participation, top heavy rules, RMD, and PPA rules be satisfied?

Good afternoon everyone, 

We recently had a client express interest in qualified disaster distributions (QDD's) as they are allowable under the Consolidated Appropriations Act 2021 and prior law. I realize that these cannot be used if COVID is the only major disaster declared in the area. However, this client is in an area that experiences frequent and intense hurricanes, so I think they are good on the first prong below. A "qualified individual" is an individual:

1.  whose principal place of abode at any time during the incident period of any qualified disaster is located in the qualified disaster area with respect to such qualified disaster; and
2.  who has sustained an economic loss by reason of such qualified disaster.

My question is surrounding what we, the TPA, would need to include on the form we provide to this client specific to proof. In certain distributions, we've required a showing of proof that the individual meets the requirements. I'm not sure if this can be treated like COVID distributions (CRD's) where they self certify, or if we need to include some other showing of proof that participants would be required to include in their submission for such a distribution. 

Wondering if anyone has thoughts on what type of proof a participant would need to submit for this type of distribution? Thanks in advance!

I've been trying to research this issue but so far have fallen short. The plan's eligibility for employee deferrals is age 21. But eligibility for Safe harbor NE and Profit Sharing is age 21 with 1 year of service. We are assuming because eligibilty for the Safe Harbor is more restrictive than that of employee deferrals, we do not get the "free pass" on ADP testing. The question becomes, who then do we include in the ADP test? What we think is the employees that need to be included would be those who have met eligibility for employee deferrals, but NOT eligibility for Safe Harbor contributions. However, we are having difficulting finding that anywhere. Thoughts? 

Group:

I inherited from another esop advisor a client whose S Corp (Acme Inc) is OWNED 100% by an ESOP. 

Said bank account is titled 'Acme Inc.'

New TPA (former TPA retired) is suggesting there should be a bank account only in name of ESOP that reports all transactions. With no support or cite to a DOL reg. 

Fwiw, in a number of successful no change audits over last 12 years with S ESOPs, all with almost identical bank account names, no auditor has ever said there's an issue. 

Anyone have a cite/regulation or case that stands for position that an esop bank account needs to be titled with the name (ESOP)? 

Thank you in advance. 

I’m wondering whether a 401(k) or other individual-account retirement plan’s summary plan description ought to include a part that explains risks about an individual’s data security, and ways for the individual to help manage those risks?

Is it a good idea?  Is it a bad idea?

What are your reasons for including or omitting such an explanation?

I have a plan who failed the adp/acp test and refunds were processed.  I included the gains from their late deposits in the test as they were not transferred to earnings at the investment house.  It affected about 30 people and except for 2 people the amounts were well below $1.00.  The other 2 were around $2.00.  Is this a huge deal?

I have a CPA asking for advice on completing the tax returns for a client who has a cash balance plan (I thought that was a CPA's area of expertise, but I digress). Plan sponsor is a LLC filing as a sole-proprietor. The CPA wants to know how much of the cash balance contribution applies to the owner and how much applies to employees. He is also asking if it is appropriate to report the owners "portion" of the contribution on Schedule 1 of the 1040 while the amount applicable to employees will be reported on his Schedule C.

1. Is it proper to report part of the cash balance contribution on Schedule 1 instead of reporting it all on the Schedule C?

2. If the answer to #1 is yes, how do we break down the cash balance contribution between the owner and employees?

I am neither an expert on tax returns nor an expert on DB plans. I tried to figure this out from Publication 560 and it does say "Sole proprietors and partners deduct contributions for themselves on line 15 of Schedule 1" but I'm not certain if that is referring to just DC plans.

Suppose you have a business that has been filing 5500 forms separately for Vision, Dental, Medical plans, etc.

Now they switch to a Wrap plan. So only one 5500 filing. Do they have to file a "final" form for the formerly separate plans? That seems crazy, but if they don't, will they get nasties from the DOL?

Geez - look at 2019...

A plan is amending vesting to a more liberal vesting schedule.   They want this to apply to all balances active and terminated.  We are getting push back from the administrator that the new vesting can only be applied to current employees and terminated employees are required to stay on the prior more restrictive schedule.  I have never run into this below and does not seem correct.  Anyone else run into this?