So a last minute client would like to set up a safe harbor 3% in order to make deferrals for 2020.  

If we set up a plan with a plan year end of 11/30/2021, when can it be amended to a calendar year plan.

Can it be amended 3/1/2021 for a short plan year to 12/31/2021, thus providing for a 3 month initial plan year.

Or does the first plan year need to run for 12 months before a short plan year can be created, meaning a short plan year starting 12/1/2021 and ending 12/31/2021, and the calendar year plan starting 1/1/2022?

Thank you.

Assuming the compensation-ratio test is passed, can a plan exclude non-U.S. source income? For example, a U.S. citizen employed by (and getting paid by) a U.S. employer but who spends working time in and out of the US during a plan year. Can the plan allow deferrals from, and/or base allocations (including SHNEC) on, only U.S. source income?

Hi

I was approached to do a termination for an overfunded db plan (non PBGC)..

Unfortunately, the provisions require that the excess to be distributed to the participants (always a bad choice, at least in my opinion).

To confirm my understanding, this is a protected provision and cannot be amended to "revert to company" prior to termination date. The idea is to transfer the excess to a QRP.

Also, there are 2 terminated participants. If the excess distributed to the participants, do the terminees get additional allocation?

Assume no 415 issues.

Thank you for your comments.

One plan of a controlled group fails the safe harbor percentage test of the ABT but meets the unsafe harbor percentage.  It would seem to meet much of the "Facts and Circumstances" criteria of 1.410(b)-(4)(c)(3) but that is uncertain unless "the Commissioner finds...." that it passes.

Am I correct that a Determination Letter still cannot be requested on this issue for an on-going plan?   What if an options exist, a Private Letter ruling?   Is that practical?

I have told these people that they have a controlled group. They keep balking at me.  Just confirm for me so I know I am not going crazy...

FACT:  Bob and Betty are husband and wife

Bob & Sons Excavating

1. Bob is sole owner.

Bob's Pipe & Supply

1. Bob is sole owner

Bob & Sons Gravel

1. Bob is sole owner

Betty's Enterprises 

1. Betty (Bob's wife) is sole owner, sole proprietor.
2. Bob receives W-2
3. Betty's Enterprises performs management services for all of Bob's businesses

Because Betty's Enterprises earns money off of Bob's businesses we must include all 4  businesses ... correct?  Attribution?

Bob wants to setup a Simple IRA because he thinks it would be cheaper than a 401(k)  (because his businesses have employees).  Bob and betty want to setup a 401(k) for Betty's Enterprises because it is just the 2 of them... no rank and file employees. 

Thoughts?

Thanks

Plan calls for mandatory distributions under $5,000.  It says it will be done without participant consent.

Do they have to send out distribution forms to those they want to force out first? 

If so, what is the cite?

When computing the cushion amount for 404(o), you are allowed to include the amount by which the funding target would increase if future compensation increases were taken into account. Does this include the expected increase in the participant's 415 limit due to the increase in the high 3-year average compensation?

For example, say a participant's high 3-year average comp is $60,000/year(=$5,000/month) and their accrued benefit under the plan's formula before applying the 415 limit is $8,000/month. However the actuary reasonably expects the participant to earn $120,000/year for the next 3 years. Can increase in the funding target due to the extra $3,000 be included in the cushion?

Is the answer different depending on whether the plan is covered by PBGC? I know PBGC plans are permitted to assume increases in the 415 dollar limit for this purpose. I am not sure if that also applies to increases in 415 due to the 100% of pay limit.

Just received email from CCA on 2021 EA meeting. Something seems to be afoot between AAA and CCA. 

"Due to current uncertainty related to the availability of the Marriott Wardman Park as well as uncertainty about the requirements that Washington DC will impose on large gatherings, the format and specific dates of CCA's Enrolled Actuaries Conference have not yet been determined.

The CCA and the American Academy of Actuaries (Academy) have had fundamental differences that we have been unable to resolve regarding the manner in which the Enrolled Actuaries Meeting should be run in the future. As a result, there will no longer be a jointly sponsored Enrolled Actuaries Meeting, and we thank the Academy for their partnership with the CCA in the past."

What are y'all naming your trusts?  I was thinking if the name of the plan is ABC 401(k) Plan the trust would be named ABC 401(k) Plan Trust (as in the trust established for the aforementioned plan).

Relius just sent us a notification that the trust name can be the same as the Plan name but that just felt awkward.  Things that are different should have different names!

Can the spouse of a 1/3 owner of a company service as the broker for a 401k plan?

Hi

A PS plan in existence as of 1/1/2020.

Adding a 401k provision now.

Can they add non-elective SH for 2020?

I do not believe so as the 401k feature was not in existence for 3 months?

Just checking.

Thank you

Is the Auto Enrollment Tax Credit ($500 per year for 3 years under SECURE Act) available to ALL EACA's, or just EACA's that cover ALL employees (i.e., an EACA that includes a sweep of existing eligible employees).

A lot of EACA's only apply to those who become newly eligible. 

Hi

If the plan adopts the 2020 non-elective SH between 12/1 and 12/31/2020 i.e. 4%, what needs to be done/when to switch to 3% for 2021?

Thank you

I have a plan that terminated and 2020 is the last plan year.  It’s a short plan year.  Do you have to file a Form 8955-SSA to report the short plan year as the final year even if there is no one to report on the form? 

It appears that there is a penalty if you don’t report the plan termination. I see no actual field to report that information on the Form SSA.  Following is from the penalty section of the Form SSA instructions:  

“In the case of a failure to file a notification of a change in the status of the plan (such as a change in the plan name or a termination of the plan), or a change in the name or address of the plan administrator, section 6652(d)(2) imposes a penalty of $10 for each day during which such failure occurs. The penalty, up to a maximum of $10,000, is imposed on the person failing to so file unless it is shown the failure is due to reasonable cause.”

Any clarification here is appreciated.

Suppose an employer has a plan with 100 otherwise eligible employees, including 10 H2A employees. Can the employer exclude the H-2A employees as a class (will easily pass coverage testing). I'm seeing conflicting information on this - some indicating that under IRCA you cannot exclude them as a class, other information indicating you can. Anyone have any experience with this issue?

We have an individual who wants to rollover their SIMPLE IRA from a previous employer into our 401(k) plan.  I do not see anything which would prohibit this, but want to check.  A SIMPLE IRA is treated like any other IRA for distribution purposes - so as long as the SIMPLE IRA has satisfied the 2-year requirement, it appears to be ok, but I'm afraid I'm missing something.  Does anybody have any other information?

I am not sure whether this forum would be helpful to my situation or even appropriate for me to ask here. It looks like most people are professionals here and I am definitely not. I looked through many places for insight into my situation. Unfortunately, I did not find much public information so far. So I hope to have better luck here. 

I am self-employed and I have a solo 401k opened in 2019. I opened a defined benefit cash balance plan and a regular 401k this week with a third party administrator. The intention is to roll over the solo 401k fund into the regular 401k and contribute to the DB plan as well for year 2020. 

I just realized that there will be excessive profit sharing for year 2020, because the profit sharing is reduced to 6% due to the cash balance plan. I wonder what options that I have right now to correct the mistake. The solo 401k is at Vanguard and I am told by Vanguard excessive profit sharing is usually treated as contribution for future years. I also need to file Form 5330 and a pay 10% penalty. 

Does it mean I can not close this solo 401k and rollover the fund into the new regular 401k this year, until the excessive profit sharing is resolved? My understanding is the excessive amount may take two more years, given my expected income. At this point, both the DB plan and the solo 401k were already filed with IRS by the third party administrator, but no accounts have been opened anywhere and no money has been contributed. 

Any insight is greatly appreciated. 

We have an ex-Exec started severance in Feb 2020 for net 3 years(before my time). She is having Roth 401k deductions taken out of her ongoing severance pay. Is that ok?

It was my understanding our system is setup to stop 401k deferrals on severance pay and it seems to be for other employees. But perhaps since Roth is after-tax?

Thanks

Lexy

Ok....  On line 6(f) of the 2019 5500 (total participant count) we reported 26,988 participants, which is correct.  BUT on line 6(g) (participants with account balances) we reported 988.  Obviously a brain freeze on the part of the filer.  It is not a small plan and it has over $1 billion in assets.   We have a difference of opinion--it is worth amending?  I think it is a red flag to have such a discrepancy between participants and the number of account balances.

Is there a compensation limit on a Simple Plan for calcuation purposes?  Is it the same as 401k Plan?

Thank  you.