When testing a 401(k) plan that has made the determination to terminate the plan. Would the plan year end date for purposes of non discrimination testing be the date the termination resolution was signed?

Here is a example:

The company is going out of business and the resolution to terminate the plan was signed in March. Would non discrimination testing be run from 1/1 - March (the plan is calendar year) or would the compliance testing run from 1/1 - the date the assets are at zero?

An employer is required to fund additional money due to market fluctuations to pay out the final benefits and close a plan. The date of the funding is past the  deduction deadline (9/15/20)  for the year of plan termination (2019).  Can they deduct the contribution for the year it is made even though the plan was not active for that year?  I am being told that it's not deductible for 2020 since they do not have a plan for 2020.  

Here are some example dates:

Plan termination date 12/30/19

Tax deadline 9/15/20.

Contribution date  11/1/20.

Hi. How do you handle the contribution calculation for an HRA when a participant makes a mid-year change in coverage?  We (the employer) provide a $1,500 HRA contribution for Employee + 1 (spouse or child) coverage and a $750 contribution for Employee Only coverage.  We have a participant that changed from Employee + 1 to Employee Only coverage on April 1st.  Is the calculation simply pro rated for the remainder of the year?  

Here is an illustration of my thought process:

$1500 divided by 12 months = $125 per month for January - March = $375.00

For remainder of the year, $750 divided by 12 months = $62.50 per month for April - December = $562.50

 $375.00 + $562.50 = $937.50

Is this the correct approach?

Can a "regular" HRA be amended mid-year to either increase or decrease what the employer will cover? Received this question from a CPA, and while I believe it is possible (although I'd also think that if benefits are being reduced, it would only be for amounts not already incurred prior to the amendment date) I'm not sure.

Hi,

Is a Schedule A required to be filed with a 5500EZ? Thank you

Been filing 5500SF for this client, 2 owner LLC taxed as an S-Corp.  Should I now be filing an EZ?  2 owners are the only employees.  No unqualified assets

There seems to be some confusion about whether the Carrier pays bthe PCORI or the employer (sponsor)? I believe its the sponsor's responsibility.  Comments?

Hi, 

One of my client is terminating a plan that is part of a controlled group.  Company (A) is the parent company, company (b) is the entity, there will be a spin off of company (b) and once the plan is set up and funds moved from company (A) to the spin off plan, post that the plan will terminate.  Now question how do they determine what the termination will be for c ( Spin off ) plan? 

Also I believe the parent company will need to amend the adoption agreement, by removing company (b) from the document correct? 

Thanks

Simple question, a 401(k) Plan only allows for salary deferrals and a 401(k) ADP Safe Harbor Match. If eligible and assuming no outstanding loans and the total amount in his account meets the amount of his financial need, can the participant take a hardship distribution of 100% of each account?

I have a client that has 5 entities, all owned 100% by Person 1. A-E.

The 401k plan is set up under company A. Companies B-E are adopting employers.

Companies A-D are being sold on August 1. They will be 100% owned by an unrelated company from Person 1.

Person 1 will still own 100% of company E and the sole purpose of Company E will be to perform management functions for companies A-D.

Since there is no common ownership as of August 1 between companies A-D and company E, is E still part of the controlled group? Can employees of company E still participate in the plan either for the remainder of the year, until August of next year or must their participation end on August 1?

Some plan sponsors are getting calls from former participants who receive SSA letters about benefits they may be due.  But these participants are born in the 1970s!! Anyone else hearing the same thing?

Assuming a non-US citizen does not pass the substantial presence test and is classified as a non-resident alien for tax purposes, what restrictions/limitations may prevent them from contributing to a 401(k) and/or IRA? Please assume the individual maintains a US work visa and is seconded overseas while still being paid by the US entity, and they return to the US for short periods of time throughout the year.

I understand the individual must have US sourced income, but is there any firm guidance on how much? Is 1 day working in the US sufficient to classify the individual as having US sourced income and allow contribution to a 401(k)? Any special considerations if contributing as Roth vs. Traditional? Is it possible/common for a plan to specifically exclude non-resident aliens from contributing at all? Are the restrictions different for an IRA?

A participant is angry about a fund replacement decision made by his Plan's Investment Committee. He's has formally requested HR provide him with a copy of the report provided by the Plan's investment consultant advising them to make the replacement. The consultant's report was strictly for review by the Investment Committee and not plan participants. When told this, the participant got very angry and now thinks his employer is trying to hide something from him. How best to deal with this, would you provide him a copy of the report?

Assume a DB plan offers a lump sum window.  Shortly after the window closes, the plan administrator is contacted by a terminated vested participant who never received the paperwork because the address on file was outdated.  I would assume that the plan cannot now offer this individual a lump sum because it would conflict with the terms of the amendment that provided for the window (unless the plan is further amended).  However, if the plan administrator was less than diligent in maintaining current address records for its participants, I can see how they might have some culpability here (particularly given the DOL's recent aggressive enforcement in this area).

Surely, this is a fairly common occurrence.  What have others seen in terms of handling?

The simplified facts are ... A catch-up eligible individual participated in a CY 401(k) plan through September 30, 2020 and deferred $19,500.  A portion of the plan gets spun off and the individual defers $6,500 in the new plan in  Q4.  

Can I use $6,500 as catch up in the first plan and not use any catch-up in the second plan?  i.e. treat the individual as deferring $13,000 plus $6,500 catch-up in the first plan, and $6,500 and zero catch-up in the second plan.  It seems that should be fine, but I want to check if I am missing something.  Thank you!

Do we know if e-signatures are acceptable for beneficiary forms?

I have read so much I am now becoming confused..... here is the situation -

A CPA reached out to me regarding a single member client she has.  This client was persuaded to open a 401(k) by the financial advisor who quite frankly I don't think knew anything about pension plans.  Anyway, here is what happened:

She opened a 401(k) for 2020
Rolled SEP money in (lots)
Contributed to the plan in 2020
- Deferred the max (23K)
- Maxed the employer (37.5K) upon advise of the financial advisor
ONLY HAD $35,212 in schedule C compensation

All contributions made in 2020.  

Taking the excess contribution out starts with deferral money then employer? or does it matter?

Depending on what comes out.... 
1099-R the deferral... withhold taxes
1099-R the employer, don't withhold taxes, code 8P
perform the withdrawals before the 2020 taxes are filed

Thanks

I'm just curious what large plan sponsors do when it comes time to provide an updated SPD, or the SPD for a new FSA provider.  Since electronic distribution remains opt-in for welfare benefits, do most plans print them out?

I work on a plan that is an owner/spouse CB plan. The couple got divorced, and the QDRO says the AP gets X% of the owner's account balance as of a certain date.

The parties involved apparently all agreed to a dollar amount based on X% of plan assets.

However, when I look at the actual benefits as of that date, the AP should have received tens of thousands of dollars extra, if I take X% of the Participant's CB benefit as of that given date.

When I initially received the QDRO and reconciled the plan assets and determined more money was due, the attorney who drafted the QDRO came back and said there is nothing more due, because both parties received what they had agreed on.

I'm curious if anyone has opinions on this. I'm thinking it's a case of a poorly worded QDRO and/or a misunderstood attorney, but I suppose I let it go if everyone's happy? Are there legal ramifications to be wary of here? Or maybe the QDRO is perfectly fine, and the way they have handled everything is okay? Thanks in advance.

Two person Solo 401(K) for a Husband-Spouse Partnership LLC.
Filed 5500-EZ first time for 2019 as the plan assets crossed $250K first time.
Closed the LLC 12/31/2020 since could not sustain due to Covid-19. As of 12/31/2020 there were assets.
In June-July 2021 Rolled over to IRA for one partner and Transferred to workplace 401(K) for the other partner with a W2 job.
There are trailing dividends coming through.

When do I file the final Form 5500-EZ?
File 5500-EZ for year 2020 as Final OR File 5500-EZ for year 2021 as Final, with 2 participants [5a(1)&a(2)]at the beginning of the year 2021  and zero [5b(1)&b(2)]at the end of year 2021? If Final has to be for 2021, what is the deadline?

Thank you!