Would everyone agree that, in the case of a VEBA maintained by a tax-exempt entity, 419A(d) does not require the entity to establish separate accounts for key employees?  Since 419A(d)(1) states that it applies to the first taxable year for which a reserve is taken into account under 419A(c)(2), I assume that no separate accounts would be required.  Obviously, these employers aren't concerned with the general deduction limitations of 419 and 419A.  However, I want to make sure these amounts don't need to be taken into account for 415(c) purposes under 419A(d)(2) and that no excise tax is triggered under 4976(b)(1)(A).

Thanks in advance!

I have a client that has historically been a 5500 SF filer, consisting of a husband and wife, and one employee.  The employee left the firm in 2017 (was not replaced) and moved their money of the plan in early 2018.  In 2018, they filed a 5500 SF as a Single Employer plan because the terminated employee still had money in the plan for a portion of the year, and the plan was still covered by a fidelity bond.  For 2019, should I have them file the 5500 SF as a One Participant plan (dropping the bond requirement) or should I continue to file them as a Single Employer plan?  I still think it's easiest to have them continue to file an SF as opposed to switching to an EZ.  It's a fairly simple situation. anyone see any issues either way?

Hi all, I'm new to this world, so please bear with me.  I'm hoping I can get insight from this Board regarding the following scenario:

Large government employer (~550 employees) currently offers a cafeteria plan which employees can use to pay premiums for medical, dental, life, and to make contributions to FSA and HSA.  Employees must elect one of the medical policies offered, but otherwise they can take the rest as cash if they make no other elections/contributions.

Employer is considering allowing employees to opt out of medical coverage if they can show that they are covered under their spouse's medical.  This would mean that employees may get all the cash from the cafeteria plan if they make no elections/contributions.

Depending on which union the employee belongs to, the employee will have a different total cap on his/her cafeteria plan.

What issues do you see?  

Good morning all

Looking into designing pension plan for a financial planner. Owns 100% of X, Inc. and has employees.

Checked the website and see that other names were listed other than the employees.

After questioning the additional names, the following response was provided:

I own 100% of X, Inc. but affiliated with Y, Inc. (also a financial form) and have access to Y, Inc.'s people. No common ownership or shared employees.

What am not asking here to determine any issues?

Thank you

PS PBGC coverage is another issue - any thoughts?

Plan had a hard cap on a discretionary match.  It is $250 in the document, but for the past couple years, they have been contributing up to $350 to those who qualify.

Can we do a retroactive amendment to change it starting in 2018 when they made the change?  ACP test passes no problemo.

Mostly union people.  I guess I should ask if the union docs got updated....

John Hancock Sch C Report showing RIA information.  Compensation paid to the RIA has been reported on Sch H as a plan expense.  Do you list the RIA on the Sch C?  Do you contact the advisor to be sure you are correctly referencing this is Direct, Indirect, EID etc?  I doubt the advisor will have any ideas but I want to be sure I am properly including this and feel like I'm not 100% positive I'm doing this part correctly.

Thanks for any input.

What are your thoughts on this; a firm has audited a 401(k) plan for many years. A new auditor was recently assigned this year and has brought up a potential issue that has existed since the plan was established. Is it fair to ask why they never caught the issue earlier? Does the firm have any culpability in this case?

Does anyone use this site?  It had a pretty robust community.  Seems to have vanished...

Cafeteria plan permits all changes in election addressed in Notice 2020-29 including dropping deferrals towards premiums under employer sponsored group health plan (pursuant to affidavit of other coverage), and dialing health FSA deferrals down to zero.  Question - an individual who is no longer deferring under the plan in any way still a participant in the plan or does participation terminate?  Regulations re: FMLA leave are as close as existing guidance gets, but does not provide a clear answer.  Comments appreciated.

Prop. Reg. 1.125-5(k)(2) provides that a plan can be designed to cover less than 213(d). But it dates back to 2009 (pre-ACA). Now that the CARES Act eliminated the prescription requirement for OTC, can a Health FSA not be amended and remain covering only OTC with prescription under 1.125-5(k)(2)?

Plan lost 1M in investment value in 2019.   Company deposited 1.25M in September of 2020  which would meets requirements for deduction for 2019.

Now the Company wants to count the 1.25M deposit in 2020 partially for 2019, 2020 and 2021.   I know it can be used for 2019 and 2020 but what about 2021 for both deductions and minimum funding requirements.

A 501(c)(3) organization forms a 100% wholly owned for-profit subsidiary. The CEO of the 501(c)(3) is retiring 12/31/20, but they want to sign him to a part-time contract with the for-profit to help get it launched effective 1/1/21. His services would be provided exclusively to the for-profit gong forward, and he would be paid from its payroll and not the 501(c)(3)'s. The services would be meaningful/substantial - probably more than 20% of full-time, but less than 40%. They want to pay a meaningful signing bonus up front, but they could be convinced to spread it out over a longer period built into the part-time salary. The contract would be for 12 to 24 months.

A couple of questions/issues come to mind:

• Would the arrangement in any way implicate section 457 by virtue of the fact that the for-profit is 100% controlled by the 501(c)(3)?
• Would the arrangement in any way implicate section 457 by virtue of the fact that the individual previously was employed by/CEO of the non-profit parent?
• Any other issues spring to mind?

Thanks for any thoughts you might have.

Hi

New client. A partnership, 2 partners, each making over 500k. deducted full 56k profit sharing for 2019. Now I am told that they have been making IRA contributions as well for many years in addition to maximizing profit sharing.

Can IRA be in addition to the maximum 415(c) limit?

Thank you

An employer is part of a Multiple ER plan.  They decide to leave MEP plan and establish there own SEP plan.  Would the SEP plan be considered a "new" plan? 

Additional Questions:

1) If new plan is established with an effective date of 5/1/2020, can the contributions/compensation be combined in the new plan for the entire year?  (assume 12/31 PYE for both)

2)  Does it matter if it is a Safe Harbor plan?

Plan has a fixed match 50% up to 4%

Effective 10/15 the match was changed to discretionary - the employer will match 50% up to 6% - funded each payroll for the remainder of 2020. In addition, the employer added the true up feature as of 10/15/2020 for the 2020 plan year. 

Questions. On 12/31/2020 when the true up is calculated , is the match contribution based on the formula in place as of 12/31? Therefore, even though  the match was 50% up to 4% for the first 10 months, you use the total wages and deferrals as of  12/31 and determine the true up base on the 50% up to 6% formula. 

Thanks

The plan sponsor maintains a top-hat NQDC plan with Rabbi Trust (in addition to its 401(k) plan) which includes employee deferrals and employer match.  The plan uses a 3-year cliff vesting schedule for the match.  A participant is being terminated, and the plan sponsor wants to fully vest his match account ($175,000).  I suggested that they apply the vesting schedule as is, follow the plan's provisions to forfeit the $175,000 which the plan sponsor can use towards its future match contributions.  The plan sponsor would then pay him a severance/bonus of the $175,000 so that the financial effect on the plan sponsor is the same.  For various reasons, they don't want to pay him the severance/bonus from the company.

Is there any problem with amending the plan to provide for 100% vesting for this one participant, other than possibly triggering FICA tax?  The plan also has a risk of forfeiture in the event of termination due to theft or violation of a covenant not to compete.

Thanks for your input.

I have a partnership.  For 2018 the partners were going to defer $18,000 in 2019 for the 2018 plan year.  The plan is a safe harbor basic match.  I provided them the safe harbor match amount based on the $18,000 each they were supposed to deposit.  The problem is they had some changes to their accounting group and they forgot to deposit the 401k deferrals even though they did fund the safe harbor match.  The match was like $14,000.  

What are the possible corrective options for this?  Can they forfeit the match and use it to offset their 2019 match?  Or do they have to allocate that ineligible match as a profit sharing contribution for 2018?  Any other ideas?  It was just an oversight on the part of the accounting group.

I'm retired and so this does not involve my present client experience, but I am reading quite a bit these days on ESG investing and this apparent growing interest by employees and other clients. For this I've got a couple of questions others may be able to address.

1. Holding or not holding a stock or fund holding that stock has nothing to do with the ability of the company to be profitable, yet I never see this addressed in the articles I'm reading on ESG qualifying stocks. I can certainly understand that there may be 'feel-good' component to this on the part of the client and perhaps some virtue signaling. But it would seem logical to me that in the client discussion would be a paragraph on how ownership/non-ownership does not affect the company's performance and instead, the buying of the company's products/services does this.

2. What constitutes an ESG qualifying company? Other than broad qualitative factors, what would an IA use as quantifiable selection criteria if individual stocks were used rather than ESG funds?

Thanks for any information on this

Hardship Withdrawal - Can this be done without directly involving my employer? 

I'm in immediate need for hardship withdrawal, I can also go with a loan, but I incline towards withdrawal, as with a loan, I will have to pay it immediately if my employer will let me go for any reason.

How does this process work? Who do I send documentation to? Will my employer be notified / examine my documentation, or are there protection laws where I don't have to fully disclose the situation?

Thanks!

Client did not deduct the 2018 employer profit sharing contribution and will be deducting on 2019 return.  Does this amount get used in the calcuation of the max employer contribution 25% rule for the 2019 employer calculation?  Thank  you.