Hi

Drawing a blank for a change.

Looking into a cash balance/401k combo plan. Non PBGC therefore 6% limitation on DC plan deduction limit.

401k plan with deferrals, 3% non-elective safe harbor and profit sharing provisions.

HCE's are excluded from the profit sharing portion only i.e. they defer and received the safe harbor - top heavy plan.

Do I count their salaries towards 6% deduction?

Thank you

Need help on understanding COB with COBRA.  Situation: I had medical COBRA after being laid off.  After getting laid off, my spouse obtained a FT job with benefits and I am included as a dependent on her medical insurance.  For one month, these two policies overlapped before I terminated COBRA.  For my claims during this "double-coverage" month, is COBRA still primary for me or does it switch to secondary and my spouse's insurance becomes primary for me?  Thanks for help in navigating the COB.  Makes a big difference with meeting deductibles.  

This is a question I’ve never seen come up - apologies if it has and I didn’t see it.

We have a terminated participant in a US ESOP who is a resident of Great Britain (a nonresident alien).  He rolled over the non-stock portion of his account balance to an IRA in the US (apparently he plans to work in the US again some day), and had his employer stock distributed to a US investment account so he could benefit from the net unrealized appreciation rules.  We reported his basis as a taxable distribution on a 1099R, putting  his NUA in box 6, and put the total value of his total stock distribution (basis + NUA) on the 1042-S.  He is now telling us that we should have put all the  info on the 1042-S, and there was no reason to file a 1099-R.  I’ve read the instructions for both forms multiple times now, and can’t see where NUA treatment is discussed at all.  That seems reasonable to me, as the purpose of a 1042-S as I understand it is to identify US-source income so the appropriate treaty provisions may be applied to it.  Has anyone else ever faced this issue?

Thanks! 

Entrepreneur has two separate businesses, no employees.  Is he able to sponsor multiple plans on his own behalf, each with their own limits?

Group:

Client, who has an ongoing DOL audit and pending US Tax Court petitions related to its S esop, received a very weird looking email asking them to be part of the DOL Dallas TX data collection dept for national collection of data re monthly payroll. 

And that a representative will be calling to discuss various payroll related items. 

I don't believe in coincidences with the Govt. Are many of your clients receiving  similar letters and emails? 

We also have a pending FOIA request for a number of items related to the clients ESOP. 

I'm inclined to not have client interact with DOL given all pending matters. 

Thoughts and comments appreciated. 

Thank you 

We have a plan that had 121 participants in 2018 so we had to file as a large plan with audit.  In 2019 the participant count fell to 113 (but we found out this year that number was overstated due to employees really terminating on 12/31/2019 that weren't reported as such on the 2019 census).  These same employees did not have account balances so if we were to amend the plan's 2019 5500 filing the participant count would be less than 100.  As of PYB 2020 the participant count stands at 80.  

Not sure I'm understanding the 80/120 rule.  Do we have to continue to file 5500 with large plan audit for 2020 or can we go back to filing the 5500-SF?  This plan also terminated 12/15/2020 and paid out all assets by 12/31 so we really don't want them to have to do another plan audit if not needed.  Thank you anyone for clarifying.

I'd like someone's opinion on this subject.

We have a 401(k) Profit Sharing Plan that terminated on 12/31/2019.  They have still not paid out the participants even though the vendor and TPA have been encouraging and trying to help them to do so.  As this plan is now considered "on going" does it have to be restated for Cycle 3?  I'm thinking yes!

LLC elects to file taxes as a corporation. 

Owner receives  broker commission paid to her c/o LLC.

She reports commissions on 1040 Schedule C and does not take W2.  

Would these commissions be eligible earnings for 401k purposes?

Back in February of 2020, the plan sponsor received a draft QDRO to review. Everything was in order and client was to tell the attorney to submit for signature.

The signed QDRO was delivered to the plan sponsor in March of 2021 ( signed by the judge one year after the draft was reviewed).  In September of 2020 the participant took a COVID-19 withdrawal. Leaving an account balance of about $1000.

The account balance as of today is only $5,000.

1. Is that that the amount the plan pays to the Alternate Payee? The Alternate Payee would then have to seek legal action against the participant for the balance?

2. Is the plan sponsor responsible for the balance of the QDRO Payment since they allowed the withdrawal in September?

Since the signed QDRO was not recorded by the court, was the participant  able to access funds from the account?

Bottom line, does approving the draft QDRO require the plan sponsor to  put a hold on the account and limit any withdrawals, or is the plan sponsor only responsible  once they receive the signed QDRO.

Because I posted Jokes like this......

Most people don't know that back in 1912, Hellmann's mayonnaise was manufactured in England. In fact, the Titanic was carrying 12,000 jars of the condiment scheduled for delivery in Vera Cruz, Mexico, which was to be the next port of call for the great ship after its stop in New York. This would have been the largest single shipment of mayonnaise ever delivered to Mexico. But as we know, the great ship did not make it to New York. The ship hit an iceberg and sank, and the cargo was forever lost. The people of Mexico, who were crazy about mayonnaise, and were eagerly awaiting its delivery, were disconsolate at the loss. Their anguish was so great, that they declared a National Day of Mourning, which they still observe to this day. The National Day of Mourning occurs each year on May 5th and is known, of course, as Sinko de Mayo.

An individual is a first time homebuyer.  His IRA is in an 18 month CD that will mature in October.   He expects to close on a home approximately July 31.   He wants to take a $10K IRA distribution for the home purchase, but the CD won't mature until after the closing.  He can borrow $10K from a family member for the gap period from closing until October.

Can he still withdraw from the IRA after-the-fact and count it as a home purchase distribution exempt from the premature distribution tax?  If so, is there a time limit?  I would assume so. 

All I can find states that the purchase must occur no later than 120 after the withdrawal, but nothing I've found addresses a withdrawal after the purchase.  

thanks. 

We have a failed 2015 ADP test that was not corrected timely. We are now correcting under ECPRS using the one-to-one correction method.

Our intention is to allocate the QNEC to employees who were NHCEs in the year of the failure and are also NHCEs in year of the correction. If allocated this way, three NHCEs would receive a QNEC allocation of greater than 5%, while three would not receive a QNEC at all (they are no longer employed). 

Is this allocation permissible using the one-to-one correction? 

Any insight is appreciated! Thanks

Assume an individual operates two separate, distinct Schedule C businesses as a sole proprietor.

One business has a net profit of $50,000 while the other as a net loss of $5,000.

The line for Schedule C on the 1040 would reflect the combined $45,000 as would the computation for the self-employment taxes.

However, what is "earnings from self-employment"?  Is it only the $50,000 from the profitable business?  Or, the combined $45,000?

And, if the $50,000, what is the "Allowable....deduction for one-half of your self-employment tax"?

Would it be the actual self-employment tax as reflected on the 1040?  Or, would it be the theoretical (higher) amount that would have been deducted if the self-employment income was only $50,000 (and not reduced by the $5,000 loss)?

Thanks

Vinny

Hello,

I need to audit our safe harbor match and need assistance with creating an Excel formula. Our match is 100% match on first 3% of deferred salary; then 50% match on next 2% of deferred salary. I currently have this formula =(MIN(D3,3%)*C3)+IF(D3>3%,MIN(D3-3%,2%)*0.5*C3), but it does not factor in if an EE defers 5% or more. 

Participant (non owner) over RMD Age, on workers comp so not formally terminated, and requests eligible in service distribution. With no distributable event, would part of this distribution be treated as an RMD at time of distribution? If not, say participant formally terminates later in the year but there is no more account balance - in that case send a letter and issue 1099-R for RMD amount?

When someone is missing in a plan term and the money is auto-rolled to an IRA, where do you send the 1099-R?

Participant requested a distribution from a terminated plan.  She actually came in and picked up the check. Withholding was properly taken and submitted.

Her check was never cashed. 

And she cannot be located.

(and the Trustee took it upon herself to stop the check)

What to do now?

Can they open up an IRA with after-tax basis with these funds?

Question: is the following loan in default or still within a correction period?

Participant took a loan in 4th Quarter 2020 and repayments were to commence via payroll withholding, 1st payment late December 2020, 5 Year repayment.

Assuming this Participant is a Qualified Individual under CARES, loan repayments could be delayed until January 2021 at which point the loan balance plus interest could be re-amortized for a new 5 years. To date, the Participant has not made any loan repayments.  Under this scenario is the cure period June 30 2021, for at least all missed loan payments January 2021 through March 31, 2021?

Thank you.

I have client with a solo-DB (husband and wife) that is overfunded by about $500k.  They contributed the maximum deductible against recommendations and investments were aggressive (again, against advice) and returned about 15% a year.  They also have a solo-401(k) plan - the plan I administer.  Both are in their mid-40's so nowhere near retirement but they are at a point where they finally understand they can no longer make contributions to the DB.

Can they:

1) Rollover their DB benefits to their 401(k) and transfer the excess in the DB plan to an escrow account in the 401(k) (without excise tax) to fund employer contributions until they are exhausted?

2) Then, in a couple of years, can they start-up a new DB plan?

Hi to All,

We have a plan drawn up by a local ERISA attorney that is a tribal non-ERISA 401(k) plan.  One of the participants routinely exceeds the 402(g) limit by about $1,300 each year. We bring it to the attention of the plan administrator and ask them politely to please monitor this carefully and stop doing it, but we are ignored.

If this was a regular corporate 401(k) plan of any of our other clients covered by ERISA, we would get in touch immediately upon the discovery of the error and let them know that the excess plus earnings has to be removed.  We haven't done that so far with this client because they are a tribal entity, the plan isn't covered by ERISA, and we don't know to what extent they have to follow the rules.

Does anyone else have any experience with this or insight as to how to handle it?

Thank you as always.