Hello everyone. Client wants to put in 100% of missed deferral instead of 25% under EPCRS. May a client do that or would the 75% be considered a non-elective contribution?

Hi

If anyone saw this, did you notice anything on pensions i.e. extension for 5500 and also 9/15 contribution dates? I browsed quickly.

In the past they were specific (Sandy etc).

IRS: Tax relief now available to Ida victims in New York and New Jersey; Oct. 15 deadline, other dates extended to Jan. 3 | Internal Revenue Service

We have a Plan that provides benefits vest on 1/1/2022 (if the participant is employed) and are paid within 30 days thereafter (so, within the short-term deferral period).  Clearly, the Plan doesn't provide for nonqualified deferred compensation, and 409A doesn't apply.

We want to amend the Plan to provide those same benefits vest on 1/1/2023 (if the participant is employed) and are paid within 30 days thereafter (so, still within the short-term deferral period).

Can we do this?  It seems that we are just switching from one 409A-exempt arrangement to another, so I can see the argument this doesn't ever implicate 409A.  But I also see the opportunity for abuse here, and I believe I've seen commentary on this before (I just can't find it now).

Bonus Question: Would it be any different if we were accelerating the vesting/payment rather than deferring it further (but still keeping it within the short-term deferral window)?

Hi

Plan is calendar 2020.

5%+ owner terminates in April 2020 and sells his ownership to the other shareholder.

Under HCE, because he was an HCE on 1/1/2020, he is HCE for 2020.

How key employee rules, are the same here i.e. he is a key for 2020 because he was on 1/1/2020?

Thank you

Hi all! first time posting here. 

I have a 401k plan where in 2019 plan year a excess SH contribution was identified, the auditors made us move the excess match to "Excess contribution payable" as a liability and reduce the SH contribution line on the financial statements. Nothing was done to schedule H. The excess SH from 2019 was put into the employer's forfeiture account. How do I fix the reconciling payable in the 2020 plan year financial statements? Should that SH excess been a payable at all if the amount was going to go into forfeiture and not paid out by the plan?

Any insight is appreciated. 

I've looked a a variety of loosely related threads but none get to the heart of my question so I'll ask it here.  I have a plan sponsor that would like to pick up ALL fees for plan participants, including fund fees.  The plan uses a combination of pooled funds (CITs & MFs).  Shy of converting everything to SMAs or having the fund companies develop an entirely new class of funds that are stripped of all fees (both unlikely for different reasons), this seems like it would involve some form of sponsor reimbursement to the Plan.  Key concerns identified so far that I'm looking for insights on:

• Is there a viable path to get these fees reimbursed by the sponsor to get to the intended result without running afoul of various rules pertaining to employer contributions?
• Is there a viable path to get these fees reimbursed by the fund company that doesn't involve the employer making a reimbursement and thus avoiding the challenges of them being considered an employer contribution?
• Related to this 2nd approach, it seems that the the Revenue Sharing rebate analogy may be useful (the practice or recapturing and rebating 12b1's, SubTA, etc. without them being considered an employer contribution).  Could that analogy be extended so that the entire Expense Ratio is rebated in the way revenue sharing is?

This is one of those topics where I fear that the employer has a reasonable & positive motivation but the legal and operational hurdles might be difficult or impossible to overcome.

26 CFR § 1.414(c)-5 provides: "common control exists between an exempt organization and another organization if at least 80 percent of the directors or trustees of one organization are either representatives of, or directly or indirectly controlled by, the other organization."

I'm trying to determine if a not-for-profit corporation and a LLC are in a common control group. Obviously a LLC does not have directors in the conventional sense, but what if it has a board of managers that are the functional equivalent to a board of directors? Does anyone think that the managers should be considered directors in this situation? The tax-exempt corp does have complete control over who the managers are. Should also point out the LLC is treated as a partnership for tax purposes. 

Thanks! 

Five weeks ago filed their own divorce forms taken from here https://onlinedivorcer.co.uk/. Two weeks later I was fired because my psychological state was very bad. I know that it is my own fault and I had to keep myself in hand, but it’s too late to discuss it. Now I thought about my savings. I can lose a part during a divorce, right? How can you avoid this? We didn't hire a lawyer, we tried to save money. Therefore, I am looking for help on the forums.

Plan terminated in mid 2020 but failed to transmit participant contributions with the proper time frame for a couple of pay period in 2018 and 2019. This is disclosed on all 5500s for 2018, 209 and 2020.

I am helping to do a VFCP filing but am curious if anyone has ever encountered this.

Do you think we have to re-open the plan to deposit the missed earnings or simply mail checks to the participants and issue 1099s? 

According to Pensions & Investments, the House Ways and Means Committee this week will consider legislation that would “require plans to offer participants with more than $200,000 in their accounts an option to take a distribution of at least 50% of their vested account balance in the form of a protected lifetime income solution.”

House Committee to consider requiring employer-sponsored retirement plans | Pensions & Investments (pionline.com)

What do BenefitsLink mavens think about this?

Hello,

Some background:

I had a sole-prop some time back and had a self-employed 401k plan with Fidelity with EIN of sole-prop

Then I created a s-corp and just used the same plan - changed EIN to S-corp, Name to a generic name - MKK-Plan. 

All good, no issues. I was thinking of shutting down the sole-prop but never did. 

Now, one of my clients (for whom I do most of my work) has changed their policy and want me to handle task based on sole-prop and NOT through my s-corp. 

Since I own both entities - S-corp and sole-prop, I'm assuming this becomes a control group and I can make contributions and profit share based on sole-prop earnings to the MKK_Plan as well. 

When making contributions, Fidelity asks for Employer Name and EIN and I assume, I'll still put in the S-corp name and EIN since that entity is Plan Sponsor, is that correct?

Where on 5500 do I indicate that this is a control group?

5500 instructions suggest that I'm still a Single-Employer plan, is that right?

Thanks for your assistance.

Hi

DB plan terminates and provides all participants their benefits, some rolled over into IRA's and some to the existing 401k/PS plan.

The residue i.e. overfunded portion, is transferred to the QRP under the terms of the plan and it will be allocated as profit sharing to all participants.

Upon distribution, is the portion under QRP subject to QJSA? If it is, best if all assets are subject to it otherwise nightmare to keep track of the assets.

Thank you

Hi,

The owner (active) of a corp took his RMD from his Profit Sharing Plan (his prior year end assets divided by age factor). Since this is an RMD, and he is not electing a benefit etc,  is an executed distribution election form  not required? Thank you.

I have a client (Company ABC) that is in the processes of purchasing another company (Company XYZ). It is a Stock Sale set to close on 9/30/21

Company XYZ has a plan but they are terminating before the sale. Company ABC has a plan but it excludes HCEs (except for age 50 for catch-up only) due to failing ADP test. Since it is a Stock Sale, are the HCEs of XYZ, HCEs from day one in ABC?

I would think yes since it is a Stock Sale, the employees of XYZ are treated as though they were always employees of ABC. Is there some grace period for those employees?

The client is wondering if the HCEs of XYZ would be able to participate in the 401k until 12/31/21.

Additionally, if the HCEs from XYZ are HCE after the sale, would they be allowed to roll money into the ABC plan even if they are not 50? The plan does permit rollovers for eligible employees or foreseeably eligible employees. Could we draft an amendment that would allow the under 50 HCEs to roll their retirement into the ABC plan?

We've had several deaths (post-SECURE Act) in different defined benefit plans, unfortunately, by participants who did not have designated beneficiaries on file.  Our defined benefit plan (volume submitter master) document identifies the following hierarchy for distributions to non-designated beneficiaries:

• surviving Spouse;
• children, per stirpes;
• surviving parents, in equal shares;
• estate.

My overall question is - under current regulations, is a defined benefit plan permitted to make a distribution to an Inherited IRA (via direct transfer) to a non-designated beneficiary?

If yes or maybe, does it matter who the non-designated beneficiary is?  We have the following true scenarios to deal with:

1. Terminated Participant A (died age 64 before NRA) has a surviving Spouse, and the distribution amount is over $5000.  Also, the plan is terminating.
2. Active Participant B (died age 32) only has one minor child, and the distribution amount is under $1000.  The plan is ongoing.
3. Active Participant C (died age 56) only has surviving parents (both older than age 72), and the distribution amount for each parent is between $1000 - $5000.  The plan is ongoing.
4. Terminated Participant D (died age 64 before NRA) has no Spouse, no children, nor any surviving parents, so his estate will receive the distribution; and the distribution amount is between $1000-$5000.  Also, the plan is terminating.

All participants were 100% vested at termination or at death.  NRA = Normal Retirement Age as defined by the plan.

In addition, these participants were also in 401(k) plans sponsored by the same Plan Sponsors as the defined benefit plans.  Does your answer to any scenario change depending on the plan type?

I think the answer for all four scenarios for both plan types is: No, none of these non-designated beneficiaries can elect to direct transfer their distributions to an Inherited IRA.

If I'm reading the Inherited IRA rules and plan document correctly, the reason none of these scenarios can result in a direct transfer to an Inherited IRA is because none of the beneficiaries were designated as beneficiaries by the Participants.  However, I rarely need to handle distributions due to death, so I am seeking input from more knowledgeable retirement plan practitioners.  Thank you for your help.  

There is a 401k plan that allowed for rollover contributions. It was restated & amended about 7 years ago and the permitted rollovers was switched to “no” but every year since then there have been rollovers into the plan. Can a retroactive amendment be done for this or does it need to go through VCP or self correction?

Good morning everyone!  I'm getting a question from someone regarding getting a Plan it's own TIN.

I know for the EIN, generally we use the employers to file the Form 5500 with the IRS.  Is there a need to get each plan it's own individual TIN, however?  And if there are two plans (i.e. a 401(k) and a Cash Balance), would each Plan need it's own individual TIN?

Thanks in advance for your help!  I believe they are looking for a TIN in order to open the pooled account for the Profit Sharing and Cash Balance Plans (not a 401(k)).

We file all our calendar year extension for 2020 in May, equesting extension  to 10/15/21.

More than one client recently faxed an IRS extension approval dated 8/30/21 aporoving the extension to 8/15/21, which assumes a PYE 5/31/20, which obviously is an incorrect extension for our plan.

Since the IRS wait time averages 30-60 minutes, I faxed a letter to Ogden, attaching our extension to 10/15 as well as their incorrect extension to 8/16/21 and a note to please change their records. 

Anyone else run into this??

I don't dabble too often in the education assistance world, but I am not 100% clear on whether a sole proprietor (no other employees) can sponsor his own Section 127 plan to take advantage of the recently modified rules on Section 127 plan and student loan repayments.  Does the nondiscrimination rule effectively make this unavailable? 

Participant P is fired sometime mid year in 2020, does not meet last day requirement for profit sharing contribution. 

In 2021, participant is awarded (by a hearing officer for the company) back pay for lost wages and his/her termination is deemed a wrongful termination. Participant is reinstated as an employee and is a participant in the Plan once again. 

Is participant eligible for the 2020 profit sharing contribution he/she missed due to wrongful termination? 

Does the Plan Sponsor have a correction to make re the 2020 deferrals the participant should have been able to make with respect to the back pay?