DBP participant has an annuity benefit that is less than his/her 415 limit but their lump sum exceeds the maximum allowable. Can the plan pay the maximum lump sum which, for example, converts to 90% of the accrued benefit using statutory assumptions and then pay the remaining 10% of accrued benefit as an annuity (assuming the plan document allows for bifurcated benefit distributions in general)?

Good afternoon folks - new to the boards.

I've received inconsistent responses to an issue I'm facing, and interested in the expert opinions found here on the board. 

I have a Solo 401k/profit sharing plan for my business, which includes my spouse and me. In 2020, I added a DB Cash balance plan. We have both contributed the max employee deferral for 2020, including catch-up contributions. Typically throughout the year, we contribute 25% of compensation to the plan as the profit sharing contribution, rather than waiting until the end of the year. 

We continued this practice even as we were exploring the adoption of the DB Cash balance plan, which we adopted prior to year-end 2020.

We now find that we have made profit sharing contributions in excess of the 6% limit for combined DC/DB plans, when considering the minimum funding contribution for the DB plan will be in excess of 25% of compensation (we are both over 55). I had hoped that since we were in the same plan year, and the contributions affect both my spouse and I equally, that we could transfer the amount exceeding the 6% of employer profit sharing contributions to the DB plan as part of the minimum funding DB contribution for the same plan year.  However, it appears more likely that we need to keep the contributions and any earnings in the DC plan, and report them via 5330 to liquidate against future year contributions.  

Has anyone dealt with a similar situation, and what was your solution? Ideally, I'd hope to transfer the excess 2020 profit sharing contribution to the DB/Cash Balance plan as part of the minimum contribution for 2020, as a correction. Open to any suggestions (the one I'm taking for sure is to let someone handle this going forward as it's too much to do this and run a business). 

Thanks in advance - 

Good morning all!  It's been awhile since I completed a 1099-R for a beneficiary, so I just wanted to confirm.  We use the name/SSN for the beneficiary and if they rolled it over it goes as a G, correct?  Or do I use Code 4?

Thanks in advance!

Hope someone can clarify this situation for me on the correct titling of my solo 401k plan (traditional 401K & Roth 401K accounts)

Facts:

I operate a business as a professional corporation (PC) with myself as the only employee and adopted an updated plan recently with Etrade as a simplified (prototype) 401k plan, Etrade is the custodian & I am the trustee. I amended my former Corporate 401K documents held at Vanguard by transferring balances that are in excess of $250K to Etrade. Etrade insists that the title of my brokerage accounts account is my personal name (not the corporation name) i.e. Joe Doe individual 401K plan - NOT Joe Doe, PC 401K plan FBO John Doe (same for Roth 401K account) even thought I completed the plan applications in the PC name as the business (Etrade has my 401K account statements are in my personal name -John Doe Individual 401K Plan)

I think the statements must be in the PC's name & Etrade says it does not matter since the account was set up in the PC name on their records (not shown anywhere on statements)  and they are only the custodian. Who is correct? Do I have a potential problem of an invalid plan? Will my corporate contributions  to this plan be a problem?

What about filing form 5500EZ? Will this be a problem if plan name does not match statements name?

Thanks

I won my case against pension plan. They breached qdro and my rights. Paying all back payments with interest and re instating my monthly benefits.  That's great, but, can I file to get all my lawyer fees back ?

This was a domestic relations civil case. And I should have never been in court if they would have not lied and cheated me.

I am in P A.  Are there cases texts or laws I can look at?

Employee requested a COVID-related distribution from 401(k) plan. Custodian has come back and told the employer that the SSN provided for the employee "does not exist according to the IRS database" and they cannot issue a distribution without a valid SSN. I presume this was actually determined using the Social Security Number Verification System (SSNVS), but am not positive. There's no suggestion that this is a duplicate SSN or actually belongs to another person, etc.  Employer has had no issues with wage reporting for the SSN. Employee insists the SSN is correct. 

Question - Can the custodian (a bank) refuse to make the distribution from the plan based on the info from the SSNVS? I know they need an SSN for the 1099, but they have a number to use that is not linked to anyone else. Does a bank have an obligation to verify an SSN before making payment?

Client has a pooled trustee directed 401k trust.  Trustee has a 5 year fixed annuity held in the plan showing the Trustee as the annuitant and the 401k plan as the beneficiary.  Annuity has matured and funds were distributed to the plan in 2020.  Client received a 1099R reflecting this as a distribution with the Plan as the Taxpayer and code 1 as the distribution code.  This doesn't seem right to me but this is about the only annuity I have held in a plan so wanted to be sure I'm not leading the client astray.  Should a 1099R have been issued in this case?  I would say not because it was distributed from the plan to the plan.

Two brothers each own 50% of corp A and 50% of corp B.  Corp A & B are completely different business entities and have no business between the two.  Because their common ownership is 100% of both corps, I am assuming they are a controlled group, is that correct?

A client is an adopting employer in an MEP, and has only one employee. This employee will be terminating soon, and is 0% vested in his employer source. If the company does not hire a replacement for this employee, what happens to the forfeited employer money?

We want to time auto-escalate at the same time as annual salary increase to help/encourage employees to increase 401(k) plan contributions up to our 6% match.  Is that okay to do mid-year?  June 1 is the salary increase date.  

The federal Thrift Savings Plan allows retirees to direct the TSP to purchase an annuity from an insurance company (either the entire or partial balance of the participant) when participant retires.  IRS pub 721 says the participant is not taxed until the annuity payments are paid to the participant.  What IRS section allows the transfer of the purchased annuity from the TSP to the insurance company to be considered a nontaxable event?  Is the annuity considered part of the TSP plan even though the insurance company is now in charge of the payments and issues the tax documents each year?     Most plans require direct transfers or rollovers to remain tax free.  

Inquiring if regs allow the addition of profit sharing provisions as follows:

During the 2020 calendar year, a client starts/sponsors a new Plan, with elective deferral provisions only, effective 01/01/2020. Plan executed 02/01/2020. During the 2021 calendar year, the client wishes to add profit sharing beginning 2020 (as of the original effective date of the Plan). 

Because the client has until their tax filing to make a Profit Sharing Contribution, is it fair/accurate to say that the client may add PS as of 01/01/2020 as long as the amendment is executed by their tax filing?

Plan allocates 5% profit sharing to all eligibles, but everyone is in a separate allocation group. Plan is not a safe harbor 401k.  Plan is failiing ADP but if I do a bottom up QNEC of 5% to both of the lowest paid employees my ADP testing is passed.

If I run a(4) testing with QNEC's I can get it to pass because with QNECs they pass the GWM.  If I run without QNEC's, they are not getting ANY nonelective and thus require no gateway minimum.

Is my logic here correct?  The plan passes rate group testing with the two bottom people treated as not benefitting.

https://www.docusign.com/products/identify

I was researching about esignatures, which for some reason I incredibly interested in??, and came across this method of identifying that an individual is who they say they are.  This sounds an awful lot like something that is very important, especially when some termiated employee comes back 10 years later for their money having moved 3 times, etc.

Anyone ever used something like this (or this for that matter)?

I am a financial advisor and my partner is a CPA with her own practice. We are both located in Southern California and service only Asian business owners. After spending most of our careers in the Asian market we have concluded that there is a huge demand and supply gap for a TPA firm to service small business, high income real estate agents, dental practices and other high income 1099 professionals in this market. The current market is dominated by a couple TPAs and we believe there is room for another to thrive. We are looking to start offering TPA service catering to this market. Neither of us have any experience nor interest in becoming a TPA ourselves and would rather partner with a establish TPA who can design and administering qualified retirement plans.

I am writing to see if anyone would be interested in exploring a partnership model. Our job will be to acquire clients and client liaison, we will have our own staff that helps communicate between you and the clients including translations. You will be in charge of all the plan designing and administration work and all other TPA functions. The TPA does not need to be in Southern California but would help if there is not a huge time zone difference.

Please message me if anyone wants to explore this partnership and we can work out the details.

Thank you

Has anyone heard of any updates to how to file for the 10% early withdrawal penalty? I know there has been much discussion, such as changing box 7 on the Form 1099-R from a 1 to a 2 2, then completing the Form 5329, and I've heard people say leave it a 1, file Form 5329 to claim it as Other, and leave it alone for now and wait for guidance, which I can't find any. When I went to the IRS website for the latest Form 5329, it says it is still a draft, and do not file. Any thoughts or findings?

I am considering selling my TPA firm.I am looking to sell it for 1x annual revenue with a continuation on of the employees. Please let me know if you have any interest.

Hi -- I am trying to prepare a VCP application regarding corrective contributions. I found a relevant summary of the IRS's Summer 2011 Retirement News for Employers newsletter that appears to be prescribe the correction approach, but it is no longer available on the IRS website. Any idea how I might access this old guidance? 

Thanks!

see the attached.  I'm very happy with this. Every time rule of parity would come up I would research for an hour.  I finally wrote this down.

Let me know what you think!  I would incorporate suggestions and reshare.

[Edited to add revised pdf, 1/24/2021 in the early am][Edited to reattach the revised PDF per suggestions/corrections].

Rehires And Rule of Parity.pdf

So, how much of a thing is this?   An employer used to have a bunch of employees.  They changed things up in 2020 and all the employees are now gone, just the married couple owners who are left.  In 2021 they want to start a plan.  Reading the reg and Example 1 would imply that setting up a plan would be discriminatory timing.  So are they just SOL and can't have a plan? Not ever?  Assuming they want to do a 401(k)/PS.  The former employees have no compensation in 2021, so their 415 limit is zero.  How does that work?

Or if they want to do a DB?  I suppose a DB could grant benefits to former employees, but with no current year annual additions possible a combo won't work.

And how many former employees and how many years where this is a problem or it goes away?

Or is this reg so unworkable as to not really be a thing?