The following formula is provided for computing interest rate for Form 5500:

i = 2 x I/( A+B-I),

where i= effective rate of return, I= total interest or net gain/loss  A=Beginning Balance, B=Ending Balance.

It seems to work fairly well but can't find the source or prove it myself. Has anyone else looked into this?

EE gross comp is $2000. They contribute $1900.

What is their ADP rate using net comp? Is it 1900/$100?

Group:

Wasn't sure which section to post so I apologize in advance for duplicate posts. 

Is Ft Williams the best (or just one of a few) in marketplace to help create esop plan documents? Are they owned by Wolters Kluwer? 

I'm looking for a resource (or service provider. Ie attorney/TPA) familiar with esop plan document design and plans with participants in excess of 100. Along with knowledge in participant notice requirements for material changes. 

Not looking for freebies. And willing to pay to consult. 

Thank you in advance. 

Hi

Not thinking straight.

DB/DC combo - top heavy plans.

DC is 3% non-elective safe harbor, PS requires 1000 hours+last day rule

DB required 1000 hours for accrual

Top heavy requirement is under the DC plan i.e. DB is not required.

Gateway is 7.5% i.e. 3% of safe harbor plus 4.5% of PS

Participant works 750 hours during the year and employed as of end of year.

Does not get a DB accrual though covered.

Needs to get 4.5% of PS as must satisfy gateway, correct?

Thanks

Please excuse my ignorance, but I'm looking at a life insurance annuity inside of a 412e plan that has an account value that exceeds its guaranteed cash value because more than just the premium payments have been paid to it it over the years. Is this a cause of concern?

Hello. I have a client with an existing SEP Plan (prototype w/ TD).  I know we can still make a 2020 contribution of course, but not sure on this:  Can a 2020 contribution be made to the SEP, we then terminate the SEP, and finally establish a Simple for 2021?  If so, does the SEP termination need to be retro to 12/31/2020, and is that even possible?

Thank you in advance.

A small employer sponsors a PSP that allocates contributions on a comp-to-comp basis - everyone gets the same percentage of pay.  There are 2 HCEs (owner and daughter) and 1 NHCE.  The owner would like to allocate 25% to both herself and her long-time NHCE.  However, since she only has a specific amount to contribute, her daughter would be left getting only 15% of pay - which is OK with the owner, as the daughter just entered the plan and will not be staying long.  Having the daughter waive participation is not an option - the owner wants her to get the remaining allocation.  How much of an issue do you think this would be if the plan were audited since it's the owner's kid who was shortchanged?  Would they likely assess penalties for not following the terms of the document even though no NHCEs were affected? 

Hello, thank you in advance for your help with this. 

Situation: Company A, Owner A has 100% ownership. Company B, same Owner A has 85% ownership. Both companies have around 10 employees.

Company A has offered a 401k since 2017, converted to SH 401k in 2019.

Company B does not have any 401k

Am I correct that Company A and B are in a controlled group and the 401k should have been offered to Company B since inception? If so, what is the mechanism to correct this? Would company B employees be due the SH contributions over the last 2 years?

Thank you

One of the participant rolled the funds to an IRA ( since the plan terminated) the rollover occurred in Feb 2021, now since the acquiring company will be setting up a 401K plan the participant wants to rollover the funds from IRA to the new 401K that will be set up in April, I believe the participant can rollover to the 401K plan however I believe the tax record may needs to be corrected - Correct? 

Good morning everyone!  I just wanted to confirm what people use for the definition of compensation for plans.  Generally we use W-2 compensation, but we have a case (about 35-40 participants) where the owner is being taken off W-2 and instead will simply be paid by a draw whenever the company profits allow it.  Obviously he still wants to remain a part of the plan.

Thanks in advance!

The Rescue Plan Act was passed by the House today and is expected to be signed by the president on Friday. The bill adjusts (increases) the segment rates for minimum funding starting in 2020, and (optionally for plan years starting in 2019, 2020, and 2021, and starting for everyone in 2022) replaces the 7-year shortfall amortization with a 15-year amortization.

How are you planning to handle the changes? Hopefully most of us have our 1/1/2020 valuations finished by now, are you contacting all your clients and letting them know they should expect a new minimum contribution calc? Are you going to discuss the shortfall amortization option with them, or just opt them all in (or out)? Or wait until your software supports it before even bringing it up?

Any other ideas or concerns about the new law?

Due to a failed coverage test, I need to prepare an 11 (g) amendment.    Our firm does not prepare the plan document, can I still prepare the amendment?   

I was looking over some correspondence that a national carrier put together for sponsors to send HCEs before they get ADP refunds.

One of the blurbs says that Roth excess contributions are not taxable, and pre-tax contributions are taxable.

But it also says that the earnings on BOTH Roth and pre-tax contributions are always taxable.

Is that true?  Even if the Roth account is eligible for a qualified distribution (ie the 5-yr rule was satisfied)?

Excess deferrals due to 402(g) limit are paid out by 4/15.

Question is the 1099-R with Code P generated for the prior year in which it is taxable, or for the current year it is distributed, even though it is taxable in prior year?

I'm a little confused by this. So let's say you have a plan with a Health FSA, that has a rollover provision, but NOT a grace period. It does have a 30 day "runout" period to submit claims for prior year.

Now assume they executed a CARES amendment, which states, to paraphrase, that the plan's claims procedures and other statutory deadlines are temporarily extended by the "outbreak period" , and the outbreak period extends until 60 days after the end of the National Emergency, etc...

We of course are not past the end of the National Emergency.

So, would you interpret this as allowing the 30 day "runout" period to be extended, for submission of 2020 claims?

I know there is a 10% limit for the first year, and a 15% limit for all subsequent years, on automatic contributions under a QACA.  However, if you have just a straight auto enrollment/auto escalation (not an EACA or QACA), are there any legal limits on how high the level of contributions can be?  I'm not finding any, but proving a negative is always hard.

There's a deceased participant ("wife") whose estate is producing an executed Separation and Settlement Agreement that says, after going on at length about the husband's State retirement benefits and how that will be split, that "each party hereby waives any legal or equitable interest which he or she has or may have in and to the value of any Retirement Plan owned by the other party.  The term "Retirement Plan", as used herein, shall include, but not be limited to, any Pension Plan, Profit Sharing Plan, Keogh Plan, 401(k) Plan, deferred compensation plan, or Individual Retirement Account titled in the name of either party.  Upon the execution of this Agreement, any such Retirement Plan shall become the separate property of the party in whose name the Plan is titled."  This was executed in 2019 (the deceased had been a participant since 2000), and it was signed by a Notary Public (two, in fact).  Fine, this is a 403(b) plan, but I'm willing to say that falls under the "not be limited to" provision (though, really, she had been there for 19 years at that point - they couldn't have added that in or gotten that right?).

So... does this count for plan purposes?  It's not a typical QDRO, and it was never submitted to the plan sponsor before.  Can the plan honor this?  Does this remove the separated husband as the deceased wife's beneficiary under the plan?

For calendar year 2020, if a plan covers only 1 individual and that individual is not the owner or spouse, would they file a 5500(S/F) or a 5500-EZ?

Thank you

Hello, 

I am working on a new plan for 2020 that has 4 employees, husband and wife and 2 NHCEs.  I received the census and there were no deferrals in Box 12 and Boxes 1, 3 and 5 are the same (telling me that no deferrals were deducted).  Roth is not permitted in the plan. 

When I received the brokerage statements, I noticed a large deposits and when I questioned the employer, he said that was $19,500 for both he and his wife. 

I am going to call the CPA and discuss with him.  I think I remember something about that even if it's not on the W-2, they can report it on their 1040 and still deduct it?  I want to make sure before I tell the CPA that they have to file corrected W-2s. 

Thanks!