My understanding is that the deadline for a participant to elect voluntary after-tax contributions is the due date for the employer's tax return (as opposed to traditional or Roth elective deferrals, which must still be elected by December 31 (even though they can be funded later).  Can anyone point me to authority either supporting or correcting that understanding? 

(Note:  I'm specifically asking in the context of a solo 401(k) plan for a sole proprietor.)

Thanks!

I’m an advisor creating a 401k plan with individual brokerage accounts that each have a unique portfolio of stocks (not as an SDBA- these managed accounts would be considered plan assets), and haven’t been able to find platforms that can support this. I’m building out the participant and plan sponsor web portals to get the needed inputs and convey the investment choices, and have direct API communication with the custodian, but need to outsource the administrative functions. Anyone with experience in this?

I have a question about how to report the transferred participants on the SSA when the same company created a new plan and transferred some of the participants to that plan.

So, the same company is sponsoring both plans. The first plan (Plan Number 001) transferred some participants to the second plan by the same employer (to Plan Number 002). The SSA instructions seem to indicate that the transferred participant must be terminated to be included for the SSA purposes (here's the language from the SSA instructions: "When the benefit of a separated participant with deferred vested benefits is transferred from one plan to the plan of a new employer"). Since these participants are not terminated (they are still employed by the same company, but are now with the other 401k plan by the same employer, would they need to be included in the SSA?

Thanks!

Good afternoon to all,

We are setting up a new plan for a controlled group of 5 companies that will probably have 2,000 participants when it's all done.  By design, HCEs and Keys are excluded from participating.  There will never be a test failure such as ADP, ACP, 410(b), Top Heavy.  That's not the issue.

The issue is that the owner (one man owns all of it) wants to pick and choose select groups or individuals to whom he will give a discretionary match and/or a discretionary profit sharing contribution according to his pleasure.  His idea is that since there are no applicable tests to fail, why not?

We feel uneasy about this but can't find anything to hang our hat on.  Is this really permissible?

Thanks for your thoughts on this.

Client had late deferrals in october 2020 that were quickly corrected in November 2020.  I am preparing a Form 5330.  The lost earnings were not posted to the plan until June 2021.

I am preparing the 5330 for 2020.  Do I also have to prepare a 5330 for 2021?  I'm unclear on what triggers multiple filings. In my case only the earnings were deposited in the following year so I'm not sure if that requires an other 5330 for 2021..

thanks!

Any other Relius users have this issue? I'm wondering if I have a setting in Plan Specs not marked correctly. 

When I run the 410(b) Coverage test, Relius is including Terminated Participants with <500 hours as eligible for the test. However I know this group of participants is allowed to be excluded from the test. Am I missing something? 

this is not a life changing question, more of a curiosity.

So 5500 deadline falls on a weekend and so is actually due 8/2.  Would that make filers (without an extension) have an SAR due date of 10/2 instead of 9/30?

In the scope of a VCP filing, we are including some non-amender failures for the last two restatements. Has anyone had the experience of the IRS asking the plan to produce documents prior to the ones included in the VCP filing? Is there a rule that an employer must retain a copy of each and every restatement and amendment?

ERISA Section 209 says that the employer must "maintain records with respect to each of his employees sufficient to determine the benefits due or which may become due to such employees. " For a profit sharing plan that only provides discretionary employer contributions, should we assume that the IRS can expect the employer to maintain a copy of each plan document that was in effect when any current employee participated in the Plan? 

(And it is a long story as to why we would not just include all missing documents in the filing.)

I read another post relating to a QDRO that said there was no limit on how much of a former spouse's retirement can be awarded in divorce. But it seems that the FERS/CSRS regulations limit the award to 50-55%. Am I correct?

Thanks.

Could a sponsor add a match that varies with compensation?  Something like:

Comp $1 to $30,000 match 100% deferrals

Comp $30,001 to $50,000 match 80% of deferrals

$50k to $100k 70% match

$100k+  50% match

And maybe cap some of the higher tiers, like 70% of deferrals up to max match of $10,000.

As service providers get more experience with choices users of IRS-preapproved documents make in using those documents, here’s two questions I’d like to crowd-source:

What percentage of users add an “administrative” provision beyond what’s in the standard documents?

What percentage of users add an arbitration provision?

Background:

IRC 401(a)(9)(B)(II) provides that the 5 year rule applies where the employee dies before the distribution of the employee's interest has begun (no later than December 31st of the fifth year after the calendar year in which the employee died). 

IRC 401(a)(9)(H) provides a special rule for "certain defined contribution plans" - "... if an employee dies before the distribution of the employee’s entire interest—
(i)In general.—Except in the case of a beneficiary who is not a designated beneficiary, subparagraph (B)(ii)—
(I)shall be applied by substituting “10 years” for “5 years”, and
(II)shall apply whether or not distributions of the employee’s interests have begun in accordance with subparagraph (A).

Treasury Regulation § 1.401(a)(9)-5 - Required minimum distributions from defined contribution plans. 

Q-5. For required minimum distributions after an employee's death, what is the applicable distribution period?

A-5.

(a) Death on or after the employee's required beginning date. " ... the applicable distribution period ... (is) the longer of - the remaining life expectancy of the employee's designated beneficiary and the remaining life expectancy of the employee or ... If the employee does not have a designated beneficiary ... the remaining life expectancy of the employee ..."

(b) Death before an employee's required beginning date. "... the applicable distribution period ... Nonspouse designated beneficiary. ...  the applicable distribution period measured by the beneficiary's remaining life expectancy is determined using the beneficiary's age ... "

So, a couple of simple questions which may have simple answers that I am missing:

Is the 5 year rule optional for tax-qualified, employer-sponsored, individual account plans, like the 401(k) plan?

Does the plan have a choice of applying a 5 year or 10 year period? 

Do the Plan Aggregation Rules of 409A apply to employee benefit plans not subject to 409A?  I think the answer is no, however after reading the regulations it does not appear immediately clear.

does the election between 1) excess asset revert & 2) excess assets are to be reallocated impact the ability to transfer an excess to a QRP?

Hello, can you provide me with some guidance on the "relaxed deadlines" in the "out-break period" when an employee fails to verify their dependents. The dependent was removed from the plan in May.  But they are now providing documentation and asking for reinstatement. Under normal circumstances we do not allow the dependent to be re-enrolled until Open Enrollment. 

In California, are there penalties for a sponsor with existing qualified plan but failed to opt out by the applicable deadline?

I've got a NFP that is terminating their 403b plan and starting up a 401k plan (for many reasons).  Most of the active participants are expected to roll their 403b plan balances into the new 401k plan.  Of course, we never had to worry about top heavy in the 403b plan... but what about these rollovers in the 401k plan?  It's the same entity sponsoring the plan, so they seem to be related rollovers, and they are participant-initiated.  But since they are from a 403b plan, do they retain the characteristic of not being subject to top heavy (so therefore I can treat them as non-related rollovers for the purpose of testing)?  Thanks.

The sole proprietor's 2020 personal tax returns are on extension.  The sole proprietor will currently adopt a new defined benefit plan for 2020 effective 1/1/2020.  The plan's benefit formula will be 10% of average monthly compensation x years of participation.  The participant's accrued benefit as of December 31, 2020 is equal to $1,916.67 (or 1/10 of the 2020 IRS dollar limit).

Can the plan be designed with a $2,000.00 maximum monthly benefit and not run afoul of any IRS rules?  The objective is to limit the 2021 accruals such that the required minimum contribution for 2021 is $0 or a very small amount.

A year of benefit accrual service is based on 1,000 hours of service.  The sole proprietor has already worked 1,000 hours during 2021.  Does limiting the 2021 benefit accrual through the use of a $2,000 maximum monthly benefit violate the anti-cutback accrual rules or anything else?

Plan had 103 participants at 12/31/2019.    Eligibility is 1 year of service, for deferrals enter on 1/1 or 7/1 following meeting eligibility requirements.   Profit Sharing is one year and enter on 1/1 preceding meeting eligibility.    

My question is this.  at 12/31/2019 there were 103 participants.    as of 1/1/2020 there were 14 additional participants eligible for the deferral portion of the plan bringing the total to 117, still under 120 to require an audit.    BUT, there were 12 additional participants that became eligible for the profit sharing portion on 1/1/2020 as well but not eligible for the deferral part of the plan.   (So hired 2nd half of 2019.)     So counting them the total at beginning of year is 129 and would require an audit for 2020.   

I'm fairly certain those employees all have to be counted in the beginning of year count, but is there anyway not to count them since at 1/1/2020 they were technically not eligible yet and didn't become eligible till they had their 12 months of service for eligibility?   as an example, date of hire is 12/01/2019, had 1 year 12/01/2020, date of participation for p/s is 1/1/2020.   

Thanks for your response. 

Question - a plan is class-allocated for 2020 and has allocation conditions (1000 hours and last day of the year employment) for profit sharing.  That obviously means someone who did not meet the allocation conditions will not receive profit sharing contribution.  But is the reverse true?  Does someone who did meet the allocation conditions have to receive a profit sharing contribution? Seems the employer could choose not to contribute to that "class" (one employee in the class.)  In other words, the class allocation funding decision comes first.  The plan is not top-heavy and includes a safe harbor match.

The reason I am asking - the profit sharing decision is being made now for 2020 and several employees who met allocation conditions for PS for 2020 terminated employment in 2021.

Comments?  And thank you!

(We are removing allocation conditions and pretty much making all plans class-allocated with Cycle 3.)

Tom