I was just notified on Friday, that a client is changing their fiscal and plan year end from 9/30 to 12/31, effective 12/31/2019.     It's too late to prepare a 12/31/2019 5500, so do I  prepare a 9/30/2020 val and 5500 and then do a short plan year of 10/1/2020 to 12/31/2020?     Can I still amend the plan retroactively for a 12/31 fiscal and plan year end effective 12/31/2020? 

Thanks for your help

Husband & wife own 100% of business that sponsors a DB plan. They are the only employees, the only participants, and the plan's trustees. Husband wants to buy an investment property (a building housing a fast food restaurant, but I don't think that's relevant) 50/50 with the plan as tenants in common. I believe this is a PT. Does anyone disagree? 

When a participant has a small voer-deposit, and there have been gains, in lieu of calculating the applicable gains can we just withdraw the principal?

I looked it up in the EOB so I think the answer is no, but the terminology is throwing me a little because I'm referring to a "corrective distribution" just an overdeposit.  I assume there is no distinction, but asking anyway because we do spend a lot of time making sure we take as much money as possible from an NHCE which seems silly.  

6.j.(1) Losses. If the Earnings are negative, a corrective contribution or allocation does not have to reflect a net loss incurred under a defined contribution plan. See section 6.02(4)(a) of the EPCRS Procedure. Note that this exception to reflecting a loss applies only to a corrective contribution or allocation. A corrective distribution is required to reflect net losses.6.j.(1) Losses. If the Earnings are negative, a corrective contribution or allocation does not have to reflect a net loss incurred under a defined contribution plan. See section 6.02(4)(a) of the EPCRS Procedure. Note that this exception to reflecting a loss applies only to a corrective contribution or allocation. A corrective distribution is required to reflect net losses.

We prepared a loan document for a client in December, 2019, at that time, prime rate +2%, and loan issued at 5.75%.

With the COVID suspension and re-amortization, would the interest rate need to be the same?

Since the new re-amortization can not go beyond the original term of the loan, and this participant only made 3 loan payments prior to suspension, the new loan amount plus accrued interest from date of suspension through 12/31/20 at the same 5.75%, yields a higher monthly payment than the existing amortization schedule.

That does not make sense.

I just posted a very similar question in the 401K section of this forum.  As a matter of fact, I basically just copied the initial scenario description from there, but there are some differences in the questions I have.  Hoping someone can help me determine if I have a controlled group issue between multiple businesses my wife and I fully or partially own.  Businesses and ownership is as follows:

1. My wife owns 100% of a S-corporation that does not offer health insurance to her employees since most employees have coverage through their spouse.  We feel it would be redundant to provide additional coverage and instead utilize the funds she would be spending on health insurance to provide additional bonuses and extra paid vacation time to the employees.  This business and health plan have been active for many years.
2. I am a sole-proprietor and have taken a self-employed health insurance deduction for several years.  We have been purchasing our insurance directly through the exchange.
3. I have an associate that also operates his own sole-proprietorship.  That is his only business that I'm aware he owns and he is now on Medicare but I think his wife is still covered via a plan through the state (retired teacher).
4. I am forming an S-corporation with the associate and we each will own 50% to start.  The s-corp was formed to pay joint administrative and office expenses and will have one employee.  We will still operate our own sole-props and will only reimburse the S-corp for our pro-rata share of expenses.  The associate and I will not be employees of the s-corp, but will be officers and directors.  I would like to offer health insurance to the employee, but also want to look at options to obtain health insurance for myself and family through the s-corp.

Considering the above, my questions are:

1. First, are there any issues with me taking the self-employed health insurance deduction through my sole-prop even though my wife doesn't offer any health insurance to her employees?  While I believe I may technically be in a controlled group with my wife's business I am hoping that it doesn't impact my ability to take the SE health insurance deduction for our privately purchased insurance.
2. Second, for health insurance benefit purposes, would the new s-corp being formed be considered a controlled group with my sole-prop and/or my wife's s-corp?  I'm thinking this isn't the case since I am not an 80%+ owner of the new corp.  Assuming it's not the case I am under the impression that there should not be any issues providing health insurance benefits to the employee even though my wife doesn't offer health insurance to her employees.
3. Finally, if we are OK so far, would I be able to acquire health insurance for myself and my family by nature of being an officer of the s-corp without impacting my wife's business?  In a perfect scenario we will obtain a small group policy through the s-corp that covers employees and officers.  My partner would be exempted as he is on Medicare - though possibly he would be eligible to cover his wife through the group policy until she becomes eligible for Medicare.  In any case, I believe this all hinges on the new corporation not being in a controlled group.  IF it is part of a controlled group including my business and my wife's business I am hoping we can just reimburse the employee for individually obtained insurance through the health exchange and I can continue to purchase my own insurance and write if off via the SE health insurance deduction through my sole-prop.

Any help or insight on the above would be very appreciated.  Just trying to cover my bases so we don't get a nasty surprise down the road...

Thank-you!

Matt

Hoping someone can help me determine if I have a controlled group issue between multiple businesses my wife and I fully or partially own.  Businesses and ownership is as follows:

1. My wife owns 100% of a S-corporation that sponsors a 401K plan with safe harbor provisions in place.  This business and plan have been active for many years.
2. I am a sole-proprietor and have been funding an Solo(K) for several years - but my total annual contributions have always been below the employee-only contribution limit.
3. I have an associate that also operates his own sole-proprietorship.  That is his only business that I'm aware he owns and I'm not certain what he's been doing in terms of retirement plans.
4. I am forming an S-corporation with the associate and each will own 50% to start.  The s-corp will pay joint administrative and office expenses and will have one employee.  We will still own and operate our own sole-props and will only reimburse the S-corp for our pro-rata share of expenses.  My associate and I will not be employees of the s-corp, but will be officers and directors.  We would like to offer a retirement plan to the employee - but ideally a SIMPLE or SEP plan.

Considering the above, my questions are:

1. Is my sole-prop technically a controlled group with my wife's corporation?  Although I think answer to that question is probably yes, I am hoping that I'm OK since I have not been contributing over what the maximum of would have been allowed had I been a participant in her safe harbor plan.  However, going forward should I integrate my plan into her plan or am I OK keeping it separate?  FWIW, I am utilizing a brokerage account for my plan while there is no brokerage account option in her plan so I hope I can continue to operate in that same manner.  Also, if I am a controlled group I assume I cannot (or at least should not) try to operate a different type of retirement plan such as a SEP for my sole-prop?
2. Will the newly formed s-corporation be considered a controlled group with my sole-prop?  And taking it a step further, if that is the case would it technically be a controlled group under my wife's corporation as well (assuming my sole-prop is a controlled group under her s-corporation)?  If those are both YES I assume I would have to offer the employee coverage under the same 401K plan and likely change my Solo(K) to a regular 401K.  However, I am hoping that this isn't the case since I only own 50% of the new corporation.  As mentioned above, we would like cover the employee via a SIMPLE or SEP plan.
3. Will the new s-corporation and my partners sole-prop be considered a controlled group?  If that is the case I would think that he could participate in the 401K plan if he desired.  However, he probably should not operate a different retirement plan for himself.  Once again, I am thinking that because he only owns 50% of the corporation that he is not in a controlled group.

So, my hope is that the only controlled group in the above is my sole-prop and my wife's s-corp and that I will be OK since I would have been operating within the parameters of her plan had I been participating in it.  However, any insight into any of the above would be greatly appreciated.

Thank-you!

Matt

I own a small RIA firm in Michigan.  The majority of our assets under management are in 401(k) and 401(k)/Cash Balance combo plans.  Similar plan provisions, model portfolios, and fund lineups.  We also have an accounting/tax division with large overlap of our retirement plan clients.  I've explored the MEP/PEP structure a few times over the past few years.  Theoretically, it should be a great solution for a book of business like ours, however, I can't seem to make the fees or operations in a MEP/PEP structure materially better than our current set-up.  I'm thinking of trying to buy a small TPA and Record Keeper that would mainly serve clients within the RIA.  My hope would be that I could reduce price and streamline operations since so many of our plan are similar, and pass these savings along to clients reducing administrative fees.  Has anyone ever done anything like this, or know of any small firms that might be a good target for acquisition?   

It appears to me that if a participant was receiving RMD in 2019, (ex. 70 1/2 factor 27.4)

The participant was not required to have a RMD, but for 2021 the factor to calculate RMD for

2021  is 25.6?

Is this correct? Or is there a new table for calculation purposes?

Please provide the uniform lifetime table for RMD commencing 2021

qdro was finalized, she finally signed it and my lawyer submitted to my ex employer. It was denied because her SSN was not submitted and

they did not have it. I dont know it, so of course i tried in many ways to reach out to my ex to supply it to my lawyer and she just wont. 

so now what? is there a point i can just get my pension without her getting it if she doesnt comply? oddly, my lawyer has not returned any of my questions, so i have come here. 

thanks

I recently started a company in the 401(k) space. I am looking for an advisor with extensive experience dealing with the recordkeepers and rollovers. Please let me know if you are interested. My email is jiao.shuo@gmail.com and here is my linkedin profile https://www.linkedin.com/in/shuojiao/

Suppose I have a traditional 401(k) plan without a match. Calendar year end. There is an employee who was not given the opportunity to defer into the plan from January 1, 2010 to February 15, 2016.  Assume the error was discovered on February 1, 2016 and the participant was given the right to defer beginning on February 15, 2016.

Suppose further that the reason for the missed deferral opportunity was a mistaken exclusion of the employee (so there was no deferral election in place). To determine the corrective QNEC amount, EPCRS has you look at the ADP of the group of employees (HCE or NHCE) that this employee belonged to during that period. Suppose the employee has been a NHCE for the entire period. 

Also, suppose the plan does the ADP test on a current year basis. 

For 2010 through 2015, the ADP for the NHCE is known. However, the ADP for the NHCE for 2016 is not known. What ADP is used for the remaining 1.5 months (from January 1, 2016 to February 15, 2016) when the ADP for 2016 for the NHCE will not be known until at least 12/31/2016? 

I do not see an answer to this anywhere in EPCRS, but it could be that I am just missing something very basic. Does anyone have any thoughts? 

Company A, a C-Corp, was formed as a shell, started a 401(k), and the one employee of A rolled over his 401(k) account balance from a former employer. The 401(k) then bought all of the stock of A, and A bought a fast-food franchise with the proceeds. Some years went by, business grew, and A (still wholly owned by the 401(k)) wants to adopt a DB plan for the benefit of all its employees.

Any reason this can't be done? It seems to me that A is run as any other business, and in fact already sponsors a qualified plan (the 401(k) plan that owns A), so I don't see any reason why not.

Would the answer be any different if the franchise were its own entity, and instead of owning it outright, A and the other entity were a controlled group? 

client started a 401(k) in the same year they also had a SIMPLE IRA and also excluded employees  who were with a related employer (controlled group).  VCP says basically for the first issue you just file the vcp and ask the IRS to allow the contributions to stay in the plan.  However you also have to  deal with the people you excluded and make a corrective contribution.  Would IRS want you to make a corrective contribution for the improperly excluded employees to a plan the employer shouldn't have had?  

Does anyone else use YEDC? If so have you been having a lot of issues with the 2020 questionnaire. The website has been going up and down every day for us.

Company A sponsors a 401(k) plan and purchases unrelated Company B in 2017, forming a controlled group.  In 2018 Company B adopts its own 401(k) plan.

The entire time through 2020 the controlled group has been relying on the coverage transition rules.

It seems to me that Company A would have reliance, but Company B should not have had reliance since the Plan started after the transaction and during the transition period.

If that is correct, and assuming the two plans could not satisfy coverage separately, would the correction be to retest both plans together starting with the 2018 plan year?

Thank you very much.

I probably know the answer to this but will ask anyway...employer has a SIMPLE IRA and only owners are contributing in 2020.  If we start a 401(k) in 2021, and we cover NHCEs, do we get the credit?  (NHCEs were eligible in 2020 but none were contributing.)

Hello, new to the forum and new to the concept of a backdoor Roth.

Over 50 years old with a combined household income of over $203K. Already maxing out our 401K's and was looking at catching up more on retirement funding (better late than never). Was suggested by Fidelity to try a backdoor Roth. Told it only takes two days for the funds to secure and then can perform the rollover, so waited until Dec. 28th to fund the Traditional IRA with $7K. Still in time to complete the conversion before the end of the year, I believed. But Fidelity took over a week before allowing the conversion, pushing the conversion into 2021. 

Question #1: The Traditional IRA was my only Traditional IRA and was funded with after-tax dollars. We make too much too attempt to try to deduct the contribution from our taxes, instead the desire is just to build up the Roth IRA over the next several years using the back door method. The Traditional IRA was only funded for a week and made no money so only the base $7K was converted to a Roth IRA. During the conversion, I was asked if I want to pay taxes on the money now (withhold) or later. I chose not to withhold. I am assuming that the withholding and paying of taxes is only for people who have either made a profit on the investment or have previously deducted this on their taxes. Is this correct thinking? 

Question #2: As I said, I want to contribute the maximum ($7K) every year into the backdoor Roth. What are my options for 2021? What is the important date here?

Question #2B: In other words, what it the difference between two people, one who both contributes to a Traditional IRA and completes the backdoor conversion to a Roth IRA in December, and another person (me) who contributes to a Traditional IRA in December, but fails to convert it to the Roth until January? Are both people able to wait until, say late February,  and refund the Traditional IRA with another $7K and convert it a week later in early March and have the December/January transaction count toward 2020 and the February/March one count as 2021? 

Question 3: Form 8086. Is this form needed now every time I file taxes so that I don't have to pay taxes on the $7K that I used to fund the Traditional IRA with after tax dollars?

Thank you in advance for any help. I searched for this exact situation in the forum, but couldn't locate the same question.

Paul

I just received in the mail a check from my 401k from my previous employer ~$400. I had only been with the company for a very short period of time before quitting. I'd estimate it was only about 4-5 months. 

My question is. Is it possible to still rollover this cash into an IRA? It says that the distribution type on the statement attached to the check is "Termination Benefit", and the Distribution Category Code is 1. It shows that there was Federal withholding  taken on the total amount but no state withholding.

if a plan has an early retirement age of 50 and 10 years of service in the plan and they have an active participant who wants to default their outstanding loan and pay the taxes and penalty which is all in the employee 401k source.  Would they be able to default the loan and pay taxes this calendar year and not keep the interest continuing until termination with this option seeing this would be a distributable event for them