Granted, should know by now, but has been awhile.

Received a call from an accountant on Friday, who files 5500s for his clients, asking whether 5500s due on the 31st if 31st is a weekend.

Possibly, he was looking at today as the due date as 1040 is due the following business day, isn 't this the case for any IRS tax return.

Not 100% certain, I advised file 5558 on the 31st to be safe. 

You know what "they" say about "assuming", though!

Corporation A has a calendar year profit sharing plan (elective deferrals not permitted) using ftwilliam nonstandardized plan document, which does not automatically include controlled group members and says controlled group members "must adopt" plan with approval of plan sponsor in order to participate. A became a member of a controlled group with B in 2020. B has no plan and A's plan will fail 410(b) for 2020 without including some of B's employees. If A adopts resolutions approving B's adoption of A's plan, and then B adopts it and B's employees share in allocations with A's, is that a 1.401(a)(4)-11(g) amendment? I'm thinking yes, but wanted to poll others on the topic. I don't know whether B extended its 2020 return, but I guess if it did SECURE Act addition of 401(b)(2) would also apply.

I posted this originally in the plan corrections board but have not received any response there yet so thought I might post here as well.

I have a client who started a SIMPLE with less than 100 employees.  They have grown over the years and have exceeded the 100-employee threshold for a few years (beyond grace period).  I see the IRS permits "correction" of this ineligible employer issue via EPCRS VCP -- 

https://www.irs.gov/retirement-plans/simple-ira-plan-fix-it-guide-you-have-more-than-100-employees-who-earned-5000-or-more-in-compensation-for-the-prior-year

by stopping all contributions to the SIMPLE and making the required VCP filing and sinning no more.

Question:  If we make this correction now per VCP, can the client start a new 401(k) Plan to permit contributions for the remainder of 2021?  There does not seem to be any discussion in the EPCRS corrections literature regarding possible establishment of new plan going forward.  I'm concerned because of the general prohibition on making contributions under a SIMPLE for a calendar year if it maintains a qualified plan during the same year.

For a bit of a wrinkle on this, what if the company is being acquired and buyer sponsors an existing 401(k) Plan and demands the SIMPLE be terminated prior to closing.  Can seller's employees participate in buyer's 401(k) post-closing in 2021?  Maybe special transition rules would permit this even if the seller couldn't start their own new 401(k) in the same year?

Thanks for any thoughts.

One of the 25 highest paid restricted HCE in a DB plan wants payment of his benefits as a lump sum. He does not want to deposit funds into an escrow.

Can anybody recommend an insurer that would sell a bond to cover his restricted benefit?

Greatly appreciated.

A public company client is thinking of adding employer stock to its plan. It would match in employer stock. The employer stock received would be sold and invested according to the employee's wishes unless the participant affirmatively elected to keep the stock. No participant could elect to purchase any employer stock with their own funds. In these circumstances, there would not be an investment decision on the part of the participant (even the election to get stock or cash). So, no S-8 would be required, but the participants and the plan would hold "restricted securities" that must be sold in accordance with Rule 144 or some other exemption. Anyone hear of a company actually do this? If so, how do they handle resales of the unregistered shares?

If a plan is terminating effective 8/31/2021, does the pre-approved document still need to be restated for Cycle 3?  I know that it would need to be amended for CARES/SECURE, but is the restatement required?

Many small-business 401(k) plans allow an owner’s young children as participants.

To support contributions, the child must be capable of, and actually perform, real work that is useful to the business.  Likewise, the business must pay no more than reasonable compensation for that work.

Sometimes, the facts call into question how real the child’s job or pay is.  For example, some might wonder whether a six-year-old (who presumably attends school during about 80% of a year) does enough work to earn $24,000, or even $20,000, in a year’s wages.

Which facts are bad enough that you would suggest a client needs advice about whether the IRS would see the child’s wages as a sham?

If the business does no advertising (or uses none in which a model’s image would appear), is there an age that is too young for an owner’s child to be a worker?

We divorced almost 10 years ago in California. My ex was rewarded part of my deferred comp. She hasn't filed a qrdo yet and has been putting it off every time I mention it.  I haven't been able to do anything with my account since and it has cost me thousands I would have earned in the account. I'm not sure what my options are. What can I legally do?

A DB plan was not administered for a few years. They came to us to bring them up to date (valuations , filings etc.). There were no AFTAPS since 2017. Do we take the AFTAP percentage  that was prepared for 2017 and subtract 10% for each year until we reach  the current year? Thank you.

Our company is small and deals with small plans.  Are there other TPAs out there that have non-participant directed funds that need the new lifetime income disclosure coming up in September?  We also have fiscal plan year ends, and I have several 9/30 plans.   What type of solution have you found for this or are you already using a product that will produce this disclosure?  Thanks for your help!

Here's the situation: Company A sponsors Plan X, a multiemployer defined contribution plan. The plan allows in-service hardship withdrawals under a more liberal definition than the one used in IRS regulations applicable to 401(k) plans until recently. The plan's primary form of distribution is an annuity, with the ability to elect a lump sum, with spousal consent. Service Provider M filed an application for a determination letter with the IRS and checked that the plan was a money purchase plan. The IRS issued the letter with a caveat that the letter was conditioned upon adopting a plan amendment characterizing the plan as a money purchase plan. The plan has been consistently operated as a profit sharing plan. Company A proposes to file a VCP application with the IRS permitting the plan to be amended to be characterized as a profit sharing plan from its inception. In effect, the plan is correcting the error by plan amendment to conform to its operation. There are no additional qualification errors.  Is the IRS likely to approve the proposed correction?

Employee level question -

Employee elected maximum allowed into employer's Health FSA plan.

Employee is terminating and has 2 questions:

1. Is employee required to submit FSA claims prior to last day of employment (ie mid month), or last day of coverage (ie last day of month), taking COBRA out of the picture
2. Can employee then elect any FSA amount with new employer, regardless of how much was either put into the account of first employer or reimbursed/used at first employer?

Hi

I just did the calculations and the participant gets $3.25. They will make the deposit into the account for late deposits.

@15%, the penalty is 49 cents.

Is there any requirement to file 5330?

This seems so ridiculous.

We found out recently that when we changed plans we did not provide the blackout notice to non-employee participants (i.e. former employees). By the time we corrected the error the new plan was up and running.

Does anyone have experience with this or recommend any steps to take? I've seen the $131/day penalty which gets a little pricey when there were ~40 people who didn't get the notice. Appreciate any help. 

Company A sponsors a traditional calendar year 401k plan. Employee A contributes $19,500 during 2021 (not catch up eligible) to said plan. Company A goes out of business and terminates their plan May 2021. The plan fails the 2021 ADP test and Employee A receives a refund of $9,500. 

Employee A is hired by unrelated Company B. Employee A contributes $9,500 to Company B's 401k plan during 2021. 

Question - can the $9,500 ADP test refund be considered a return of excess deferrals and therefore the 402g failure has been corrected? 

Thank you

I have client who started SIMPLE with less than 100 employees.  They have grown over the years and have exceeded the 100-employee threshold for a few years (beyond grace period).  I see the IRS permits "correction" of this issue via EPCRS VCP -- 

https://www.irs.gov/retirement-plans/simple-ira-plan-fix-it-guide-you-have-more-than-100-employees-who-earned-5000-or-more-in-compensation-for-the-prior-year

by stopping all contributions to the SIMPLE and making the required VCP filing and sinning no more.

Question:  If we make this correction now per VCP, can the client start a new 401(k) Plan to permit contributions for the remainder of 2021?  There does not seem to be any discussion in the EPCRS corrections literature regarding possible establishment of new plan going forward.  For a bit of a wrinkle on this, what if the company is being acquired and buyer sponsors an existing 401(k) Plan and demands the SIMPLE be terminated prior to closing.  Can seller's employees participate in buyer's 401(k) post-closing in 2021?

Thanks

Hi, 

What scenario will fall under the QPLO. 

1. Plan is Terminated, Participants are Terminated On or After that Plan Term Date; Loans are Offset as part of plan action to close out the assets on the plan (within one year of part’s term date):  When participant defaults on the loan after termination but less than one year from termination  is it a QPLO? Can Defaulted loan be a QPLO? I though only active/current loan can be a QPLO.  

     2. Plan is Terminated but not Frozen; Participants are Active and able to Contribute and Make Payments on Loan:  If the participants are able to continue to make loan payments after           the plan has terminated, a resulting default will not be a QPLO because the participant had the ability to make payments but did not, is that correct? 

Thanks

Employer prefunds non-elective contributions for all employees (HCEs and NHCEs) to an EExEE cross-tested plan.  These prefunded contributions are allocated to the accounts of individual participants at the time of contribution, and the participants have investment control of the funds.  The Plan does not have a PYE employment requirement.  Employer adopted a policy saying that allocations for HCEs that leave before year end are at the sole discretion of the employer.  An HCE terminated mid-year.  The HCE had received pre-funded allocations before termination.  After year end, Employer exercised its discretion not to make any contributions to the terminated HCE, and withdrew those contributions from the HCEs account, allocating them to the accounts of other participants.  Can the Employer do that?  What does the Plan need to say to allow it, and what regulations apply?

Thanks in advance.

Employer sponsors a welfare benefit plan – the 2018 Form 5500 was filed with code 4R.  For 2019 the plan was under 100 participants and a Form 5500 was not filed.  The participant count in 2020 was below 100 but the employer was purchased by another company during 2020.  Do we need to file a Final form 5500 for 2020?

Hi, this is my first post here.

Here is the situation. EE received a small paycheck due to working less hours. The Paycheck was for $700 dollars (enough to cover premiums). $200 taken out for Medical insurance ($500 left in paycheck), then a $320 HSA deduction came out ($180 left in paycheck), then a Dependent FSA deduction of $192 was next in the hierarchy order to come out, but because there was only $180 left in the paycheck, the $192 Dep. FSA deduction did not come out (it is coded as all or nothing). Because there was not enough funds for the Dep. FSA deduction to come out, all further deductions stop including her 5% 401(k) election which was next in line to come out.

My question is, did we needed to take out the 5% 401(k) out of the remaining $180 paycheck? (jumping the Dep. FSA deduction), or should we taken out a partial $180 Dependent FSA deduction and no 5% deduction (because the paycheck is down to zero)? Or, is it okay not to pull the 5% deduction and not Dep. FSA deduction and pay the EE the remaining $180 (which is what we did).

I appreciate any help with this.