I was wondering if anyone would mind sharing their thoughts on how to handle CRDs with respect to top heavy determinations.

I'm assuming that a CRD for an active employee would be considered as an in-service distribution for top heavy determination.

If that is correct, what happens if the employee rolls the CRD back into the plan?

Is the original distribution still considered an in-service distribution, and the rollover treated as an unrelated rollover?  I wouldn't think you would treat it as both an inservice distribution and a related rollover.

Or is the inservice distribution replaced by the rollover for top heavy determination?

What if the employee took a $100,000 CRD.  Without a rollover back to the plan I would think that would be an inservice distribution for 5 plan years.  That is a static amount for a limited period of time.

If instead the rollover replaces the inservice as a related rollover, that then becomes a fluctuating amount for an indefinite period of time.

One step further, what if the employee only rolls $50,000 of the $100,000 back to the plan.  Is there than a $50,000 inservice distribution for 5 years, and a $50,000 related rollover?

Thanks very much.

Hi

I was asked the following (not sure if a DC plan or 403(b)).

Not sure if the deceased was already receiving RMD and do not know the ages of the beneficiaries.

Assuming that the sisters get the amounts this year and rollover into their IRA's

Q1: I do not think they need to get an RMD for 2020, correct?

Q2: They need to distribute the IRAs and taxed on within 5 or 10 years?

Q3: When will year 1 start?

Thank you

Hi

CB plan with 0/0/100 vesting. This is the second year. (Plan year is 7/1/2020 to 6/30/2021)

Currently 5 eligible employees, 1 owner, 1 non-owner HCE and 3 non-HCE

2 non-HCEs are leaving (or fired - do not know yet).

The only new hire is is from beginning of plan year and he is the spouse of the owner.

Does not look like additional new employees to be hired for the next 6 to 12 months.

Do I have a partial termination issue? Does it matter if the employees are terminating before or after 1000 hour accrual?

Thank you

Hoping someone can point me in the right direction here please. 

There is a controlled group of 2 entities. Both entities have an existing basic solo 401k plan with a brokerage firm. The goal is to restate those plans into one custom solo 401k plan that either entity can contribute to as part of the controlled group. The new plan document lists the original effective dates for both plans, specifies that it is restating a previously-adopted plan and creates a new trust for the plan effective in 2020. The plan administrator/sponsor is the 1st entity. The plan also states that members of a controlled group can contribute to it. 

I know the new plan will need to file a 5500-EZ for 2020 because the assets will be over $250k. I believe that both entities need to sign a resolution to adopt the plan. 

Is there anything else that needs to be done? Particularly for the 2nd entity because its own plan is basically going away and merging into the new plan under the name of the 1st entity? 

If you use one, what type of workflow tracking software do you use to manage your firm's caseload?

Pension Pro?

Pension Pal?

Other software?

In-house database/spreadsheet?

We are looking to alternatives to what we do now.  I've used Pension Pro, and it may be too robust for us.  I'm not sure if there is a scaled-down version, but at the one company I worked for that used it, it seemed a bit complicated with all the task assigning and stuff...

Hi

Cannot think straight on this issue so need to ask.

Sponsor FY is 7/1/2020 to 6/30/2021 and the DC+CB plans are the same period.

Working with a DC person and set up a CB plan for 7/30/2020 year end and did not need to aggregate the plans for testing. For the 6/30/2020 year end, the compensation was FY of the corporation under the CB plan. It just worked.

I just got a copy of the updated document for the DC plan (signed 12/1/2020) and noticed that the compensation is checked as calendar year ending within the FY.

So I have 2 plans to test but 2 different compensation definitions. I must aggregate the plans for this year, do not have a choice.

Any suggestions on what to do? I am trying to have them change the definition of compensation (may also need the HCE determination but this is another story).

How can I test 2 different compensation definition?

Thank you

We have a plan with 3 vendors, and there is going to be a fund replacement scheduled for only one of the vendors. How does the Plan go about providing a 30-day notice? Does the notice need to go to all active and terminated participants, no matter who the vendor? I'm assuming most recordkeepers won't distribute notices on behalf of another. Does the Plan need to handle the distribution themselves?
 

This is a two part question regarding these amendments.  At first we (our TPA firm) were thinking that the CARES Act amendment would not be required for those plans that did not offer the distributions or loan provisions in the Act.  However, because there is a provision in the ACT allowing suspension of RMD's for 2020 and all our documents include RMD language,  we are thinking that we should adopt the amendment for all our plans as the most prudent option, even if there are no participants in the Plan in RMD status.  Agreed?

We are behind in our amendments so have not amended yet for the HBBA 2018.  We were just going to wait until after 2021 tax season (early August) to amend for both.  Is there any reason why we shouldn't? 

Hi

Newly established db plan 7/1/2020 to 6/30/2021.

The owner's spouse was an employee in the past and part of a terminated db plan, 10+ years ago. I believe he may have been a part owner back then, no information on that.

He has been working for the company but did not receive any salaries for the past 10 years. Does it matter if working less than 501 hours or even less than 1000 hours?

They want to include him in the new plan and he will start taking salary as of 1/1/2021 i.e. mid year.

Does the plan need a special eligibility amendment or he is assumed to have had employment for eligibility in the past? I believe yes.

As he had nonforfeitable rights in the old db plan, if I understand correctly, rule of parity does not pay a role here??

Thank you

I've got a non-profit that is terminating their 403b plan effective 12/31/20 (and is going to be able to pay everyone out) and starting up a new 401k plan effective 1/1/21 because they are getting close to the audit threshold and need to put in eligibility requirements (even the 20 hours/week is problematic).  They are impatient about the 2020 employer contribution, though - the question asked is if that can be made to the 401k plan so that they can pay out the current accounts now instead of waiting for them to get us census, etc. which could mean the distributions won't happen until mid-2021.  Which isn't a problem legally, except that it incurs plan-level fees that they are trying to avoid.

My immediate response was "no"... but is there anything I'm overlooking?  Thanks.

Client wants to start a new plan for 2020 then wants to amend to a safe harbor for 2021. Can he amend to have a safe harbor non-elective plan for 2021 this late in the game? Haven't familiarized myself with the new Secure Act provisions yet.

Thanks!

Employer provides tuition reimbursement for employees. When reimbursement payments are processed, taxes will be withheld, however employer does not wish to have it be subject to 401k deferral contributions. How do we characterize this payment so that it is not subject to deferral contributions?  

Document defines compensation as 3401(a) - Are tuition reimbursement payments part of Code §3401(a)?

What are their best options here?

I have searched around and see that Taxable Fringe Benefits such as certain tuition reimbursements are included in 3401(a) - but I don't know what "certain type" means.  Not sure what question to ask.
 

I am with a small TPA firm and have found that the only February year-end plan that we have was not placed on extension for the PYE 2/29/20.  The explanation from our tech (who we employ) who developed our tracking system was that the plan was 'disregarded' by the system due to its failure to accept the extra day of the leap year (this was the first leap year since the system was implemented).  I can't say we've ever neglected to file an extension, so this is something new for us. 

It would appear that using the DFVCP would be in order, but first I wanted to see if there were any other options that should be considered.  It's tempting to file normally asap and attach a letter describing the above reason in order to ask for the penalties to be waived since the plan has never had any problems before, but I am concerned that if the IRS doesn't consider it a reasonable cause that  the DFVCP will be off the table and the plan will be assessed the typical unreduced penalties.   Are there better options to consider?

A plan has filed their 5500 for the last 8 years using 001, but their plan document has always listed 101 as the plan number.

Would the world stop revolving and life cease to exist if we simply retroactively changed the plan number to reflect what was submitted on the 5500?

I should also add that this is a large plan filer.

Thanks!

If an employee who his 66 years old and on Medicare retires on Jan. 1, and his spouse is not yet eligible for Medicare wants to carry COBRA, how long can the spouse carry COBRA?

Our client has maintained a SHNE 401K as he has made discretionary profit sharing contributions.  

On November 1st, the client asked to change from SHNE to SHM effective 1/1/2021 as he is not intent on making a profit sharing contribution for quite awhile.  A Safe Harbor Notice of Matching contributions was delivered to the participants prior to November 30th.

Question is, the participants that received the SHNE in the past, would they be due any employer safe harbor?

Can a participant request a loan today, 1st payment due 12/15/2020, suspend the loan payment under CARES until January, 2021, and also reamortize for essentially a six year loan?

Thanks.

I'm fairly certain this is fine, but any input would be appreciated.

Client had a SIMPLE IRA but exceeded 100 employees for several years beyond the grace period. Per EPCRS, the correction is to stop all contributions immediately and submit through VCP. Nothing requires (or permits) the SIMPLE to last throughout the rest of the year as would otherwise be required. The correction is simply to stop all contributions mid-year. 

Client also wants to start a 401(k) to replace the SIMPLE beginning 1/1/21. Generally we would be past the 60-day notice period to terminate the SIMPLE at 12/31/20, but presumably if VCP requires ceasing contributions before then, we would not have to follow the typical 60-day period.

In that case, we can "terminate" (via VCP) the SIMPLE during December 2020 and start a new 401(k) on 1/1/21, correct?

I have a client whose home was destroyed in March by tornado.  With the cost of lumber going up so much - they need to take a distribution from their 401k to pay the additional expense to rebuild that insurance did not cover.  Could that be a reason for a hardship withdrawal or just an inservice with 20% withholding?  Rebuilding on the same lot.  Thanks!

Not-for-profit client adopted a SEP on a Merrill Lynch SEP document (not IRS form) with a fiscal year end of 9/30.  Can a SEP have a fiscal year?  I have seen only calendar-year SEPs.

Thanks.