We took on a client - 403(b) plan - that never filed Form 5500. The plan was in existence since 2004.

We are filing the late returns under the DFVC program.  Since 5500-SF is not available for years prior to 2009, is it ok to file Form 5500 from 2004-2008 and Form 5500-SF for 2009-2019 or should we use the same Form for all open years?  

Thank you.

I would have sworn there was an option to mute someone but I cannot find it. Maybe it never existed?

Many retirement plans, in provisions for an involuntary distribution needed for a plan to meet a tax-qualification condition under Internal Revenue Code § 401(a)(9), define that required beginning date (with some variations) as April 1 of the calendar year following the later of the calendar year in which the participant attains age 70½, or the calendar year in which the participant retires.

One suspects many plan sponsors, if not falling in with a form document, might have preferred to provide the latest age or date that does not tax-disqualify the plan for failing to meet § 401(a)(9).

For IRS-preapproved documents of the cycle now or soon to be presented to users:

Do some change 70½ to 72?

Do some avoid stating a specific age, instead referring to § 401(a)(9)(C)?

Or does a document not change anything about this point?

I've gotten conflicting answers on this - but if someone is overpaid from a payroll perspective, and it causes an overpayment on a deferral and a match - 

Does the overpayment for both have to be put into the forfeiture/suspense account? Or can they be refunded back to the company as a mistake of fact?

Does Code 4 on the 1099-R qualify for the Coronavirus tax relief for Tax Year 2020?

Company deposits 250K during 2020 to their DB Plan.  This is below the maximum deductible amount.   Can they deduct 150K in 2020 and save the remaining 100K deposited and deduct in 2021?

Thank you.

Hi, I have some employees who elected to participate in my plan this year who are per diem. Their longevity and income over 2 prior years made them eligible.  However I am seeing recently that some employee's may not work for a couple of weeks at at time. My payroll company is accruing their contributions and are planning on withholding on the next paycheck.  Since its an employer sponsored plan, they are not giving me any guidance - they are saying they will do what every I advise. 

Are there any rules around this?

Given the workforce I employ, withholding 4-5 weeks of accrued contributions, even though it will go into their plan, will still be large hit to the employees in question and I suspect they will not be happy about. Trying to get ahead of this. 

appreciate any insight. thanks Vincent

Here's the question from the CPA - Owner (age 40) owns 20% of a Real Estate firm (no qualified Plan).  The Other Owners are parents (65%) and someone else unrelated 15%.  I have been told that ALL of the Sales Commissions are paid to the Individuals (about 50 of them) and they are reported on 1099 income.  The CPA would like to set up a SEP with the 40 year old above, and I have been told there is no management function here either.  I just don't think it's passing the sniff test, but I could be wrong.  Any suggestions?

Hi

A hypothetical question. Please ignore any testing other than deduction.

Assume a DB/DC combo plan. DC is 401k deferral and profit sharing only.

Plans are not top heavy and also not covered by PBGC.

In the DC plan, have a bunch on HCE's deferring only.

To determine the 6% limit (or 31% combo limit), are the HCE's compensation included? 

One scenario, include them in the DB and another scenario, exclude them from DB.

Thank you

Former Employee left in 2019,turned 70.5 in 2020.  Her first RMD was for 2020, but that was suspended.  Initially, she needed to take that one by 4/1/21.

But since she didn't have to take it, the 2021 RMD will be her "first."  Does she have until 4/1/22?  Or is is due by 12/31/21?

What I have come up with may just be me re-inventing the wheel, so if that is the case call me out on it.

I am looking at retirement in terms of having 3 'types' of money.  Tax deferred, which is the worst kind.  Money with capital gains tax.  And the best kind - ROTH.

My plan is this:

Out of the traditional 401ks that my wife and I have gotten during our life I am going to pull out 24k a year in retirement.  That number is important because with the standard deduction I will not pay taxes on it.  From there, I will pull out money out of our brokerage account, amounting to roughly 56k, which puts me just under paying long term capital gains tax.  And lastly I will pull out whatever else I want from our ROTH accounts which by their nature I do not pay tax on.

Is this a good strategy, because as best I can figure it I will pay nothing in taxes and have an income in retirement over 100k.

Hi, 

Terminated employee in DC Plan elected a lump sum and 20% was withheld as required. The 20% sat in the plan until the following plan year when it was sent to the IRS. The 80% that the employee received as a lump sum was shown on the 5500SF in the year it was received and the 20% withholding was shown on the following year 5500 SF (since it sat in the plan assets until the following plan year).  Are there potential penalties for this and can this be rectified? Thank you very much.

My wife and I have developed a new strategy for our retirement, but I have run into a bit of a snag in figuring out in what way taxes are taken out of her paycheck.

My wife makes 40k a year, and her employer offers a ROTH 401k which we are now taking advantage of.  It matches 4 percent at a 100 match%.  My wife is 55 years old.  We have decided that for the remainder of her working life she will contribute as close to the max of 26k a year that we can, which currently translates to her contributing 70% of her income to her 401k.  I make enough money to where I can cover all of our expenses and we should be able to live comfortably until retirement.  However, although I make good money (over 100k a year) my employer offers nothing in the way of benefits, so we get all of our benefits from her employer. 

The max her company will allow her to contribute is 75%.  We have no issue if she has no actual income coming into the house, and all of her money goes into her ROTH 401k. However, we do have an issue with too much money being taken out and not enough left in there to cover our health insurance.

So this is my question.  Do employers first take out tax and insurance and than use what is left over as a percentage?   So with her 40k lets say tax and insurance equals 10k a year, leaving her with 30k, of the 30k $22,500 would go to her ROTH 401k.  Or, do they take out the money first from her gross income of 40k (which would be 30k), and than subtract tax and insurance? 

I am aware of the 26k limit for her.  Or to put it more plainly, if her employer allowed a 100% contribution would they take out the insurance and tax before putting the rest in, or would she not have money left for her insurance?

Two participants took distributions in 2020.

The paperwork CLEARLY states that they wanted state tax withheld at 10% (New York).  The major carrier failed to withhold.  Participant only finds this out in February 2021 when they get the 1099-R.

The carrier told me that because NY doesn't have mandatory w/h, they just don't do it.  Even though the form, again, CLEARLY, has a section for it.

Does the participant have any recourse against the plan/carrier for failure to execute the instructions (in seemingly good order) of the account holder?

The client wanted to move to a calendar year and thus created a short plan year 10/1/2020 - 12/31/2020.  The CB document indicates 1,000 hours required for an accrual so it appears there is no CB accrual during the short plan year.

In this case, I'm assuming we still use the combined plan gateway rules, but there is no CB accrual when generating the required gateway percentage.  

I feel like I'm overthinking this so just looking for clarity.

I've found conflicting opinions. Some say yes, others say that you fail the 25% Key employee test. Seems to me the latter is correct based on a literal reading, but maybe I'm missing something, or perhaps the IRS has opined informally on this, etc...

Good morning everyone!

I just took over a client that hasn't made their required Profit Sharing Contributions (it's used in conjunction to a Cash Balance Plan).  It turns out the client hasn't made their Profit Sharing Contributions since 2017, and there are also receivables from prior to that.

The client didn't take the deduction on their tax returns, if that matters.

Has anyone had this experience and how have you handled the lost interest since these contributions are clearly late?

Thanks everyone!

Company B was acquired by Company A in an asset sale.     During the acquisition, Company A created a new Company, named it Company C (different and distinct EIN from company A) and this is the company now paying the former employees of Company B.

Company B previously sponsored a plan and intends to terminate it. 

Company C would like to establish a new plan for its employees only and want to rely on 410(b)(6)(C) transition relief.  All the documents I have read on this issue talk about the current existence of a Plan and that Plan having met coverage prior to the transaction, thus the ability to reply on the 410(b)(6(c) rules.   But no plan existed for this new company. So I don't think that the client can rely on the 410(b)(6)(C) transition relief.    Is my logic correct?

Any guidance that can be provided would be greatly appreciated.

Employee A quit the day before PY 2020 began.  It was not until a week into PY 2020 that the company paid A for his unused vacation pay.  The plan has a 401k safe harbor 3%-of-pay featyre.  Does A accrue 3% on his unused vacation pay paid in 2020?  

I have a 403(b) plan with a 1/31 year end.  HCEs are excluded from the fixed matching contribution formula, but after performing the ACP test, it appears that HCEs could be allocated a small matching contribution and the tests would still pass. The Employer wants to amend the plan to allow such discretionary matching Employer contributions which would apply to HCEs for the Plan Year Ending 1/31/21, as well as a true up provision for the fixed matching contributions that are already in the document that would only apply to NHCEs.

Does this seem okay if the Employer signs the amendment before April 15th?