We are converting a simple 401(k) plan as of January 1, 2021 to a regular 401(k) plan.  If we convert a participant's balance in the Simple to the regular 401(k) plan can we avoid the 25% penalty tax if some of the monies "converted" have not exceeded the 2 year limit for the 25% penalty tax.  We will continue to maintain separate accounts for the Simple 401(k) and the Simple Employer Contribution accounts in the new regular 401(k). 

Both plans (the old Simple and the new 401(k)) will be maintained by the same employer.  

Sources of money in the new 401(k) plan would be Simple 401(K) contributions, Simple Employer Contributions, Employee pre-tax 401(k), Employee Roth 401(k), and Employer Matching Contributions.

FYI, this is not a Simple IRA.  

Hi

Have not dealt with loans for couple of years and now a participant wants one. Loan procedure states prime rate plus 1%. Is this reasonable? I believe 2% is the unofficial safe harbor.

Thank you

Hi 

I am in United States on H1B (work visa) and I am having my health insurance with UnitedHealth Care thru my employer.

My wife is pregnant with due in May 2021. I am worried on what happens to my health insurance if I loose my job and have to change my visa from H1B (work visa) to B2 (visitor visa).

Can you please suggest if I can opt for COBRA insurance (on a visitor visa)

Note: My employer has more than 50+ employees and so COBRA is optable 

I'm a retired employee and have a 403b issue ... I have/had monies in differing employer sponsored 403b plans (same employer) and I would like to transfer from one 403b plan (Empower - the current administrator) to another existing 403b plan (Lincoln Financial - a former administrator) to take advantage of improved fixed interest account rates (3.5%) but my former employer is prohibiting the transfer. Do I have a legal right to challenge my former employer’s rights to prohibit the transfer?

Enrollment forms are often plan specific. If a spinoff plan is created should new enrollment forms be obtained from all employees because the regulations say so or is this more a policy decision that can be established by the plan fiduciary?

A calendar year 401k plan began on January 1 with an enhanced safe harbor match (100% on 4%) with a plan year calculation. Due to Covid, the match was eliminated. Notices were properly sent and the match was funded through the date it was eliminated which was May 31. 

The plan sponsor is in a better position now and wants to fund a match for the entire year as was originally promised. Obviously the safe harbor match cannot come back, but they want to fund a plan year match of 100% on the first 4% for the entire year. The document allows for a discretionary match on the plan year, but my question is this:

If a discretionary match is funded, do we have two match formulas (1) safe harbor from January 1 - May 31 and (2) discretionary match from January 1 - December 31? Is there a doubling effect of the match or can the safe harbor deposit be counted toward the discretionary match formula? We don't want to inadvertently create a doubling of the match from January 1 - May 31. Nor do we want to amend to a fixed match from June - December because participants who maxed out early will be "shorted" match. The document does not seem to address this and the document provider has referred us to outside council. 

Thank you

Two doctors are partners in a medical practice with a 401(k) plan.  The partners are the Drs' personal corporations.  A third doctor with two employees joins the practice as a partner.  The third doctor's personal corp is now the third partner in the ASG.  The two employees have several years of service with the third doctor.  The two employees are now employees of the medical practice owned by the 3 doctors.  

Is the service earned under the new doctor's personal corp automatically considered service under the medical practice 401(k) plan due to now being a related employer in the ASG?  Or does the plan need to amend to permit the prior service?

I'm hoping I explained that correctly, and thanks very much for any assistance.

Anyone have a shareable copy of SSAP No. 92?  Also, SSAP No. 102?  Also SSAP No. 11?

This is the reg my question is in regards to. The quesiton is, does anyone have a template election form that I can "borrow"?   Also, I assume this reg applies to all 403b accounts.  I noticed that the it references only 403b annuity contracts but I presume the reg just pre-tdates 403(b)(7) (allowing custodial accounts).

§1.415(j)-1   Limitation year.

(e) Limitation year for individuals on whose behalf section 403(b) annuity contracts have been purchased. The limitation year of an individual on whose behalf a section 403(b) annuity contract has been purchased by an employer is determined in the following manner.

(1) If the individual is not in control of any employer (within the meaning of §1.415(f)-1(f)(2)(ii)), the limitation year is the calendar year. However, the individual may elect to change the limitation year to another twelve-month period. To do this, the individual must attach a statement to his or her income tax return filed for the taxable year in which the change is made. Any change in the limitation year must comply with the rules set forth in paragraph (d) of this section.

A participant is catch-up eligible and 415 compensation is $16,500. The participant deferred $8,750 and received a match of $8,750.

Does the 415 test pass because $1,000 is re-characterized as catch-up? 

What sort of notice may be required to pay our TPA fees from Plan Assets. We still have not been paid for 2019 services as the client's business has been heavily affected by Covid so a thought about paying our services from Plan Assets came up. Our document allows for this and this seems like an allowable fee to charge to participant accounts but was wondering if I was missing anything about having to let participants know about this. We would likely do the same for 2020 services as well.

Plan sponsor communicates by fax but not email.  Signs 1st page of 5500 form sent by fax.    Will the DOL accept a 5500 form signed by plan sponsor on faxed page.   

We have a cash balance plan with NRA of 62+5 and a 401k plan with NRA of 65+5. For 401a4 testing what NRA do you use? Note that software seems to only allow one NRA assumption. I am inclined to use 62+5 since that would be the least advantageous for NHCEs in the k plan. But technically should you test under both NRAs? Or somehow test using different NRAs for each plan?

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