We are preparing Form 5500 for our client's 401(k) plan with a plan year ended December 31, 2019. In the course of the plan audit, it was discovered that the client applied an incorrect definition of compensation for deferral & matching contribution purposes. QNECs & additional matching contributions have been calculated & will be deposited to the accounts prior to the end of 2020.

Should the 2019 QNEC/matching contributions be reported as a receivable on the Form 5500 Schedule H?

Does anyone know where I can find the IRS approval letter for a Datair EGTRRA non-standardized prototype?  I have tried contacting Datair and the prior TPA who restated for EGTRRA but am having no luck.

I don't operate in this area so forgive the basic question - there is, or at least was, a rule that if NQDC payments are subject to FICA taxes in, say, the first year of the program, then they are all withheld then, and not subject to FICA later.  I may have stated it poorly but you know what I'm talking about.

An accountant suggested that it can't be done any more; i.e. you'd have to withhold FICA each year.  I'm not aware of any changes - is this true?

Like many of you, I work mostly with 401(k) Plans, but have a few 403(b)s.  I have a very small ERISA 403(b) Plan that currently has one participant.  They are hiring a new employee who will be eligible (of course) and the plan sponsor thought she could use the advisor of her choice because, apparently, the advisor on the existing account was the participant's choice.  I know that the 403(b) plan can offer different investment providers (all options offered to all participants), but can they also have multiple investment advisors?  Seems problematic. 

USERRA is very clear about the make-up rules, coverage/nondiscrimination/deduction/etc. issues for make-up contributions upon qualified reemployment.

What about the year the employee leaves for qualified military service? Example, active participant in a Profit Sharing plan that has a 1,000/last day requirement. Participant leaves for qualified military service in July 2019, having worked 800 hours. So this person does not get an allocation of profit sharing contribution for 2019.

I can't find any dispensation for coverage/nondiscrimination testing for the year the individual terminates employment for qualified military service. However, it "feels" wrong to include this person, to the detriment of testing results. Do you include such an individual in the testing, or just toss them out altogether for 2019? My heart says to toss them out, but my head isn't agreeing.

Interested in any thoughts you might have. Thanks.

An owner, who sponsors, participates in, and is a trustee for a plan that covers NHCEs, wants to form an LLC with a friend in which they will each own 50% of the LLC.  The LLC will totally consist of an interest in an existing, unrelated business.  The owner would like to use plan assets to acquire his 50% share of the LLC.  I am guessing that this would be a PT unless he were to own no more than 10% of the LLC - is this accurate?   

Sorry to bring up this topic again, but 2 questions on the PPP loan forgiveness.

First,  the only employees of an S-Corp are a husband and wife, each 50/50 owner.  They want to prefund a portion of their 2020 DB contribution and use it for PPP loan forgiveness.  Is the max that can be used 2x's $15,385?

Second, and I apologize for losing track, but was the issue of deductibility ever resolved?  I seem to remember that if an expense was used for loan forgiveness it could not be deducted, which causes issues especially for plan contributions.

Thanks very much!

Long time reader - first time post. We have a profit sharing plan that terminated and is in the process of distributing assets. Unsurprisingly, there are several unresponsive participants, as well as one missing participant. We are reviewing options for disposition of those account balances. We have completed the IRS/DOL requirements for searching, sending certified letters, etc. Under the DOL safe harbor, the preferred method of distribution is to roll over account balances to IRAs the employer establishes for the missing/unresponsive participants. In the past, we have used Millenium Trust (MT) for such rollovers. In 2017, the PBGC expanded its missing participants program to include defined contribution plans. We are considering whether this is a good or better option than IRA rollovers and are wondering if anyone has used the PBGC program for a defined contribution plan. If you have used the program, do you have any thoughts on or experience with their process? And why did you choose to use it instead of IRA rollovers? If you haven't used it, did you consider it? What were your reasons for not using it?

Here are some pros and cons we've considered:

IRA rollover -

Pros: well-known and well-used provider, purports to comply with ERISA safe harbor, participant can contact IRA provider and choose among investment alternatives or roll over to another plan/IRA

Cons: must send notice to participants at least 30 days before transfer, not sure how safe the safe harbor is

PBGC program -

Pros: no prior notice required (probably a good idea to notify participants, but not necessarily before transfer)

Cons: program is new and unknown, there's only one investment option for participants (participant would have to take distribution, presumably in cash, and roll over to IRA to invest differently and also come up with the mandatory withholding amount out of the participant's own funds if the participant wanted to roll the entire amount), no rollover option (as far as we can tell)

Another consideration is fees. MT charges fees to the participant, while the PBGC program charges fees to the plan sponsor (and the PBGC fee is lower than the IRA fees). Presumably, a participant could argue that the plan sponsor chose the IRA provider because the plan sponsor didn't have to pay any of the fees. But the plan sponsor could argue that they chose the IRA provider because it satisfied the DOL's safe harbor.

Thoughts on pros and cons?

The 100% owner and only participant is over age 59-1/2.  She has always invested the assets in an account where it was never determined what part constituted deferrals and what part was employer contributions.  Luckily, no withdrawals were ever made before she attained age 59-1/2 or since.  It's unlikely that she will be able to produce the past trust accounting that will enable the establishment of separate balances for each source at this time.  Given her age it would appear that each source would be treated the same in all respects (e.g., distributions, taxation), so as a practical matter would it be acceptable to continue not separating (even just on paper) how much is the deferral balance and how much is not?  As a side note, she will continue to make both types of contributions. 

Ran into a situation where an employer has an existing profit sharing only plan that holds essentially only employer stock.  The company is wanting to add a separate 401k plan to allow their employees to defer their own funds for retirement.  I'm thinking that having 2 separate plans won't work and that their only option is to amend the existing profit sharing plan to allow for 401k contributions.  Am I overthinking this?  Anyone have any ideas on how to do this in the simplest way possible?

Hello Everyone, I have a client that has a mega-wrap ERISA Plan on a January 1 Plan year: multiple benefits are bundled. All except medical are under fully-insured policies or self-funded using general assets. Medical is under a trust, and we have marked "trust "on page 2 of the 5500 (along with insurance and general assets). The trust portion came to an end on April 30, 2019. Everything else remained the same. Is the 5500 to have a final report on April 30th due to the trust and a new Plan going forward. Or do we continue to file with the January 1-December 30th ERISA Plan year? I asked the DOL but have not heard back yet. 

P born February 1944, retired 2012 and died early April, 2015.  Seems, therefore, RBD is April 1, 2015, just before DoD.  No distributions were made prior to DoD or since.

Had P died a week earlier, in March instead of April, I believe plan would have had until 12/31/2021 to distribute the entire account (end of year containing 5-year anniversary of DoD + 1 for 2020 RMD waiver). However, because P died after RBD, I fear we are looking instead at missed RMDs for the 2014 and 2015 distribution calendar years (the year P turned 70-1/2 and the year P died, respectively), and for 2016 - 2019, because distributions to the designated beneficiary (DB) have not begun.  Now that these problems have surfaced, it may yet be a challenge to get a distribution to the DB, currently age 70, whose whereabouts are unknown and who reportedly may be suffering under some incapacity and might require appointment of a guardian.  I believe we at least don't have a 2020 RMD to worry about, thanks to the covid relief legislation.

Does this sound like the right analysis so far, even though the plan says that if the Participant dies before the date distributions begin, the five-year anniversary year payout is available?  P did in fact die before distributions began.  P died after the RBD, is all, never having received a distribution.

If indeed, this is a penalty situation, and a qualification failure, besides, what is the best approach to fix? Six years of missed RMDs from a $150,000 plan account may not be an "insignificant failure" eligible for self-correction.  Is VCP a viable approach to seek both plan correction and penalty relief?  Is penalty relief more likely available through VCP than through a Form 5329 filing?  It's not even clear who would file Form 5329, since P's estate has no interest in the account and we don't even know if DB should, or even can, file, or if we can locate her.

What if the reasons for missed RMDs reflect an absence of sound plan practices and procedures, or even a lack of diligence on the part of plan fiduciaries?  Will IRS collect penalties from the account and require the plan sponsor make the account whole as part of any VCP correction?  Or will it be left to the DB or her heirs to file a suit for breach of fiduciary duty to recover the penalty amounts.

Thanks for any input on these or related issues or solutions you might think of!

I participate as a retiree in my former employer's retiree medical plan, which is a Medicare Advantage PPO. As such, it includes Part D for prescription drugs, including the doughnut hole. I know that the ACA had provisions designed to ameliorate the doughnut hole.  I was informed that I could not enroll in any other medicare supplement plan (including for prescription drugs) or I would lose my coverage. I therefore have the following questions: (1) were the ACA provisions which were intended to lessen the impact of the doughnut hole ever implemented or put into effect? (2) if (1) is yes, are they still in effect? (3) If (1) or (2) is No, can my former employer design the prescription drug portion so as to lessen the severity of the doughnut hole provision?

Thank you!

401(k) plan has terminated, (August 15th term date, small plan!) and all assets have been distributed. But the plan is still going to be restated. Here's my question:

New pre-approved plans do not include the Trust document - the Trust document is now separate from the plan document. Since all assets have already been distributed, is it really necessary to execute a Trust document? I can't, offhand, think of any reason, other than at some later date a dividend or mutual fund settlement or something is suddenly distributed to the plan. Thoughts? It probably isn't a big deal to get this client to sign the Trust document, but it seems like a waste of time.

We have sort of a hodge podge of different versions of Adobe in the office.  Its working but some are getting outdated, etc.

What are others using?  I kind of like the Office 365 approach where you pay a subscription and everyone always has the same and most recent version of office.  Is there such a subscription based model so you don;t always have the office on old versions?

Definitely relying on these pdf tools more in a paperless age.  But not as much as we rely on money of course, which is why Adobe is not in the running!  I'm sure Adobe must do something amazing to justify the price, it's just not anything I need.

Just wondering -

If the plan isn't going to actually file a 5500-EZ because the assets are less than 250,000,  does the Schedule SB still have any 7/31 or 10/15 signature deadline for the actuary?

The 5500-EZ and 5500 (Schedule SB) instructions don't actually seem to indicate that affirmatively.  Only that it be retained by the plan administrator.

Thanks....

-bri

Some states are paying certain front-line employees a "grant" or "extra payment" or whatever you might want to call it. This comes from the state/federal funds, and it is run through the employer as TAXABLE wages. The employer doesn't pay this out of their own pocket.

Is this considered eligible compensation for deferrals/profit sharing/whatever? The "simple" answer is that the plan in question defines compensation as W-2, so it would seem that as long as this is being reported/taxed on the W-2, it should be eligible compensation for plan purposes.

But since nothing is normal this year, I thought I'd see if anyone has different opinions?

As a TPA I'm being asked by a CPA whether paying employees Sick and Family Leave constitutes compensation for purposes of any 401(k) Safe-Harbor contribution.

Any thoughts?

Plan used to be hubby & wife pooled account.

Then daughter joined the company in 2016. 

Plan was amended to participant-directed effective 1/1/16.  Daughter opened her own account.

However, the husband and wife contributed to utilize the pooled accounts (there were two, now there's three!).

What kind of problems am I looking at with the pooled account for the parents, but an individual account for the daughter?

(No other employees)

Is it still accurate that if a Plan has less than $250,000 in assets they don't have to file a Form 5500?  I know I've heard it before, but I don't see it in the instructions for the forms.

Thanks in advance!