If a client wishes to start a new plan that has deferrals and safe harbor match only (does not have an Employer Match or Profit Sharing provision), must the plan have a short plan year  for the first year to accommodate the notice requirement? Or can the plan year begin on 01/01/21 with a special effective date of 04/01/2021 for deferrals and safe harbor, even when the there's no match or profit sharing? I'm trying to avoid having a short plan year for the limitation year and include comp for the entire 12 months of the year. 

We had an issue with some ADP refunds.  Correct amount came out of participant accounts on 3/9 and initial check was issued on 3/11.  But there was an issue with the check request and the initial check was issued for less than the total amount.  Error was realized and 2nd check requests were made that will have a check date of 3/17.

Is the amount issued in the 2nd check considered late?  

We have a 401k plan that was merged into another plan towards the end of the plan year (calendar year).  The merger date was 12/15.  The last 401k contributions were deposited into the new plan as was the full employer contribution for the plan year.

Preparing the final 5500 for the old plan, would you report either that final 401k contribution as part of the overall contributions in the old plan?  Same with the employer PS?

Thanks

Hi

Not a 401k expert. I know of only 7 biz days as a safe harbor deposit dates for any deferrals.

Looking at a plan where I am told that they only can make one deposit per month i.e. their explanation for "administratively feasible" deposit. The owner travels a lot.

The payroll is every 2 weeks.

Is this reasonable? I do not think so but wanted to check.

It is a small plan with 3 participants. 2 HCE's (owner and spouse) and one non-HCE

Thanks

Hi

A 401k plan covering owner/spouse and their children. All HCE/key. All receive one paycheck end of year.

They received the 2020 salaries end of December 2020 with the deferrals reflected on them.

Just found out that, they are depositing the deferrals now.

Do they need the VFCP adjustment? I think they do as I see no exception but not a 401k expert.

Thank you

might be a silly question but the participant dies  with a trust as beneficiary  the check is payable to   jack smith as trustee of the john doe trust  fbo jane doe IRA does the trustee take the check and deposit in the trust or can an IRA be opened and that check be deposited directly?

While work a plan I have notice that Deferral & Match eligibility requirements are follows:

-21 Age, 1 Years of service & Semi Annual

whereas, PS eligibility requirement is immediate (no age or service required) as per plan document. Profit sharing eligibility is more generous compared to deferral requirements.

Usually, I've found relax eligibly for 401k Deferral contribution and little bit tough eligibility to get profit sharing contribution such as - 21 of Age+ 1 Years of service+ 1000 hours, sometimes last day and 1000 hours.

Above scenario is new to me and never dealt with before, I'm totally confused and It supposed to me discrimination not to give deferral opportunity but giving more earlier opportunity to get PS.

Is it allowable to give priority of getting profit sharing contribution rather delay/ hard rules for deferral contribution?

Please share your thoughts on this and provide related laws/regulations/reference (if any) to be sure about this dual eligibility.  

Thanks in advance. 

My client is being asked by its TPA to enter into a new trust agreement with a directed institutional trustee (a trust company) that makes the TPA a party to the trust agreement. Under the proposed trust agreement the TPA, called the "Designated Representative," is responsible for ensuring the timelines and amount of contributions, and the TPA is given authority to authorize distributions and payments on its own, with the trustee being indemnified by the plan sponsor for any losses resulting from following the TPA's directions. These provisions are part of a new standard package designed by the TPA to simplify the plan sponsor's tasks with respect to the plan and lower costs, and it is being urged on all of this TPA's clients, as I understand it.

I am used to trust agreements that allow the trustee to rely on plan sponsor instructions it believes in good faith to be authentic, and to provisions in which the plan sponsor indemnifies the trustee for everything short of willful malfeasance or some other low standard. We push back on those with mixed success, depending on size of the client. But this is the first time I've seen a trust arrangement in which the TPA is a party to the trust and the plan sponsor delegates extensive authority to the TPA. I guess at a minimum this makes the TPA a fiduciary, which they usually don't want to be.

My question is, is this common and I have just not run across it before, or do others think it is unusual and perhaps not well thought out?

Participant X left his job at Company M during 2020. He received a distribution of his remaining 401(k) account balance of $6,000. If X claims the distribution as a Coronavirus-Related Distribution taxable over 3 consecutive years, $2,000 would be taxable during 2020. However, if X contributes $2,000 to an IRA, he has repaid the distribution, resulting in $0 tax for that year. Assuming that X is over 50 years old. How much  may X contribute to a traditional IRA during 2020:  $7,000 or $5,000 ($7,000 - $2,000 recontribution)?

Hi,

Sole proprietor (with employees in plan) elected at age 70.5 to take his RMD based on 100% J&S with 15 years certain annuity. After a few year of taking his annual RMD, he passed away in 2018 and since then his wife (the survivor) has been taking the RMD based on the annuity that her husband elected. She now wants to take a Lump sum, and and after taking the 2021 RMD, will transfer the  lump sum to an IRA. Is a lump sum permissible, or must she continue to take the yearly annuity? Thank you.

Last year we took over TPA work on a medical practice's SH 401(k) with all assets held in pooled Schwab account.

Doctor took out plan loan at the end of 2019, and during 2020 made regular loan payments as deductions from his pay check.

When allocating earnings for 2020, do you allocate the loan interest only to the doctor?  Or is that interest combined with other plan earnings/losses and allocated across the board to all eligible participants the same as other plan investment income or losses?

Thanks!

I swear I've seen something from the IRS that states that a plan does not need to be amended to permit QNECs just to use the standard corrections for missed deferral situations that generally involve a corrective QNEC.  In fact, I thought it was right in the EPCRS Rev. Proc.  However, I can't seem to locate anything that confirms my recollection.  Can anyone point me in the right direction (or, alternatively, discredit my memory)?

I work a hotel job where I receive cash tips, which I self report electronically on my paycheck. My employer's 401k program contributions are pre-tax. When I receive my paycheck the 401k deduction amount (20%) from my total gross earnings is not accurate and neither is the employer match. It appears I am being taxed on the full amount of my gross earnings and the 401k deduction amount is coming from what is left over after taxes, often several hundred dollars less than my calculations. After contacting HR about this, they don't have any real answers for me, only that because my tips are cash there is nothing to actually deduct from the paycheck to contribute to the program. Only after reaching out to them on multiple occasions for an explanation, they have now started to send me e-mails post pay period prompting me to write the hotel personal checks to cover the difference in the amount that was deducted and the amount that should have been deducted. This also does not account for the missing portion of the employer match. Am I missing something? I feel like because the 401k program is pre-tax contributions, the deductions should be coming out of my gross earnings, regardless of whether the earnings are self-reported cash tips. It seems as though not only am I getting taxed higher on my full gross earnings, but I am also losing out on money from the inaccurate employer match while also having to come out of pocket to catch up on the contribution amount. Can someone please help me understand this as my HR department has been unhelpful?    

Due to unexpected W-2 income in 2020, I have excess employer non-elective contributions to my solo traditional 401k. I am a sole proprietor. Any advice on how to handle this situation with the IRS would be appreciated. I have not filed my 2020 taxes yet.

-  2020 tax year 401k excess employer non-elective contributions of $3984

I've read about this but seem to be having a brain freeze so seeking some help here.

My March 2020 my wife made an employee deferral for the year 2019 (which is clearly permitted) in her solo 401k and miscalculated the allowed amount (that was my mistake), then two weeks later we discovered the error, and contacted Fidelity and had the excess ($3k) removed from the solo 401k, still in March 2020.  We reported the correct deferral amount on the 2019 tax return by ignoring the excess.

What are the tax consequences? Are we taxed on the $3k excess deferral just as if it was a withdrawal in 2020 from a retirement account (we are age 61) -- that seems odd to me but perhaps it's the law?

We did get a 1099-R from Fidelity for the $3k stating the amount was taxable in box 2a and stating distribution code as "E" in box 7 which is EPCRS.

Other?

Thank you.

Does covering non-employee directors under an employer-sponsored health plan make the plan a MEWA? Does it make a difference if the plan is fully-insured or self-insured? 

We have a plan that has a short plan year for 2021. A participant exceeded the 415 limit because of the short-plan year.

Would the distribution code be "E" or "8"?

I think it's time for plan documents to update the NRA to something more realistic....such as 66 1/2,  to be more in line with social security retirement ages. 

I represent a labor-management relations fund which is intended to comply with Section 302(c)(9) of the Labor-Management Relations Act, under an amendment adopted by the Labor-Management Cooperation Act of 1978. The DOL has consistently taken the position that since such funds provide neither a pension benefit nor a welfare benefit that they are not subject to ERISA. Ironically, there are a number of court cases in which such funds sue to recover delinquent contributions under ERISA Section 515 which have been accepted by the courts (presumably because the opposing party never raised the ERISA issue as a  defense). Does anyone have a sample or specimen trust agreement that can be used for such an arrangement to the extent it is funded by employer contributions?

A 401(k) plan has 1000 hour and last day requirement to receive match - fails the 401(m) ratio % test for 2020.  In regards to correcting Coverage, the plan document states:

"The Employer Contribution will also be allocated to individual Participants in the order specified until the Plan satisfies the minimum coverage requirements. A Participant, and all similarly situated participants, will be included only if necessary to satisfy those requirements."

It then goes on to say you start with participants that worked the most hours that were still employed on the last day of the year, then work your way down to terminated participants with the most hours...

We need to bring in several NHCE that terminated prior to 12/31/2020 to pass the ratio % test for 401(m).  We have two HCE that are not benefiting under 401(m) because they terminated employment before 12/31/2020 who worked more hours than any of the NHCE we are bringing into the match.  Does the "only if necessary to satisfy those requirements" allow us to ignore those two HCE's?  I sure hope so because we can't pass if we have to include those two HCE.