Husband and wife are 50/50 owners of Company A that sponsors the Company A 401(k) Plan.  Husband dies in December 2019 at the age of 70.5.  Wife is age 58 and is sole beneficiary.  The required beginning date would have been April 1, 2020 but the 2019 RMD was not taken when CARES was enacted so no 2019 RMD has been distributed.

Wife wants to rollover Husband's 401(k) account balance into her 401(k) account.  Can she do this and avoid RMD's until she reaches age 72?  I don't see why not but the RMD rules with a deceased participant always trip me up.

My spouse and I are getting divorced and they are working for an ESOP. in there plan the own shares and they have a yearly evaluation. What are my best options for splitting the asset. 

Hi

Sponsor has a client who was supposed to pay directly to the sponsor's business fees in stocks. Instead of the monies going to the sponsor's business, they deposited 1000 shares of the stock to each plan and the price of the stock at that time was $50. All happened in 2018.

In the DB plan, client sold 500 shares and made a long term gain of $5,000 and never withdrew the money (as far as I know, no taxes were paid for the gain). Remaining 500 shares were later taken out of the DB plan and transferred to sponsor's business account (no cash transaction but I believe the value at the time of transfer was less than $50/share). All in happened in 2018.

In the 401k plan, similar situation happened i.e. transferred 900 shares back to the business (not sure if the stock price was over/under $50) and sold the remaining100 shares in the plan but at a loss of $5,000 and never withdrew the money.

I never had to deal with this and what is the corrective steps to take?

Never a dull moment, best not to check statements!

Thank you,

Revisiting my catchup issues with an off calendar year plan and ADP catchup.

Plan year ends 4/30/2020.  The only deferrals made to the plan for a participant are made in December, 2019, in the amount of $23,300.  No deferrals prior in 2019, and no deferrals in 2020 before 5/1/2020.

My admin system is treating $4300 of the deferrals as catchup for 2019, and using $19,000 in the 4/30/2020 ADP test.  So far so good.

Plan fails the 4/30/2020 ADP test and the participant needs a refund of $9,000.

The admin system is treating all of the $9,000 as a distribution.

The EOB has an example that says it is not directly from the regs but is an extrapolation of the rules.  (Ch 11, Section 11 Part C.1.e). 

This example has a plan year ending 10/31/2016.  Participant defers $22,000 from 11/1/2015 to 12/31/2015.  $0 from 1/1/2016 to 10/31/2016.  $18,000 used in the 10/31/2016 ADP test, with $4,000 catchup for 2015.  10/31/2016 ADP fails and participant needs an $1800 refund.  EOB says to treat the $1800 as catchup for 2016 even though no 2016 deferrals were made for the plan year.  This then reduces the total amount the participant can defer in 2016 after 10/31/2016 by $1800.  The EOB says the total would be $22,000 but I think it might be $22,200.

So going back to my 4/30/2020 plan, I'm thinking $6500 can be used to reduce the $9,000 refund and be treated as catchup for 2020?  And the participant could defer no more than $19,500 for the rest of 2020?

Has anyone treated catchups in this manner?

Thanks very much.

I was one of many employees who had their contributions corrected over an 8 year time span.  Our boss did not inform anyone of the SIMPLE IRA and had to correct 5 employees and make them right.  Now I'm in need of some of those funds (not Covid related) and was curious if there was any stipulation or exception for my scenario concerning the normal 25% early withdrawl penalty (vs. 10% after two years) due to my circumstances

Since I normally would've been "vested" or whatever the proper term would be as of 2015, do I fall into the 25% penalty regardless since my contributions were finally deposited in March of this year or do I potentially get an exception for my case?

Thanks!

We have a defined benefit plan that terminated in 2018 and was underfunded at the time of termination. The plan sponsor wants to fund the shortfall now and then pay out the benefits. Is this permitted since the plan terminated or would the funding need to have occurred in 2018?

Calendar year plan, integrated pooled PS only.  Client forgot to deposit the 2018 profit sharing until sometime in January 2020 (still tracking down date to see if it was "in transit" by 12/31/19).  Let's say it was sufficiently late in the month so that argument doesn't hold water (if it even can in the first place).

I had a vaguely-related question a couple of years ago (link), and @Tom Poje was great enough to find some IRS language from a 2010 ASPPA Q&A:
 

Quote

Contributions made after the Section 415 timing date of 30 days after the tax return due date are considered to be annual additions for the following year. However, if consider the contribution a self-correction under EPCRS, it is permissible to relate this back to the earlier year. If the contribution is made after 12/31, you are clearly under EPCRS. [One of the exceptions to the 415 timing rule is an erroneous failure to allocate. See Treas. Reg. 1.415(c)-1(b)(6)(ii)(A). EPCRS clearly treats post-415-period deposits that relate back to a prior plan year as an annual addition for the year to which it is meant to be paid, but EPCRS applies only after the 12/31/09 deadline. Therefore, there is a lack of guidance for the period between 30 days after the tax return due date and the end of the 12-month regulatory correction period.]

Does this mean we get to treat this as a correction under EPCRS now?  That seems almost too easy.  Here's Treas. Reg. 1.415(c)-1(b)(6)(ii)(A):
 

Quote

(ii) Special timing rules -

(A) Corrective contributions. For purposes of this section, if, in a particular limitation year, an employer allocates an amount to a participant's account because of an erroneous forfeiture in a prior limitation year, or because of an erroneous failure to allocate amounts in a prior limitation year, the corrective allocation will not be considered an annual addition with respect to the participant for that particular limitation year, but will be considered an annual addition for the prior limitation year to which it relates. An example of a situation in which an employer contribution might occur under the circumstances described in the preceding sentence is a retroactive crediting of service for an employee under 29 CFR 2530.200b-2(a)(3) in accordance with an award of back pay. For purposes of this paragraph (b)(6)(ii), if the amount so contributed in the particular limitation year takes into account actual investment gains attributable to the period subsequent to the year to which the contribution relates, the portion of the total contribution that consists of such gains is not considered as an annual addition for any limitation year.

Does it seem to be a generous interpretation of this Treasury Reg that seems to be looking at more extraordinary circumstances to stretch it to cover a situation like this?  Is there any other way out?  Or is the doctor, who was of course maximized for 2018, doomed to a $1,000 allocation for 2019?  Thanks.

If someone under the age of 59.5 wishes to take a withdrawal based on the CARES Act, are they still restricted on money type(s)?  In other words, can they withdraw their Safe Harbor money?

I haven't had anyone ask for a withdrawal until now, surprisingly.  And I have searched for an answer, and can't find it.  I swear I've read this somewhere, so forgive me if it's been answered. 

Thanks!

So if the minimum funding deadline's been bumped to 1/1/2021 instead of 9/15/2020, how would Schedule SB be prepared for a client who makes their deposit in November?  Show $0 made on the 5500 due 10/15 and simply amend the filing when the date's confirmed?

(Or are we expecting any sort of ruling providing an extension on just the SB part of the 5500 filing, perhaps?)

--bri

I swear my brain is turning into mush these days.....did the SECURE Act extend the deadline to adopt a DB plan until the date of the tax filing as well?  Meaning, if I have a company that has a 6/30/2020 plan year end, do I have until the tax deadline to adopt a plan or must it still be signed by 6/30/2020?

Several of our clients have been approached by vendors to offer telemedicine products outside of their group health plans (e.g., to part-time employee groups who are not eligible for medical coverage). It has always been my understanding that telemedicine benefits would constitute a group health plan and be subject to Affordable Care Act requirements (preventive services, etc.) that would be functionally impossible for a telemedicine benefit to meet (e.g., the requirement to offer immunizations). I have seen some vendors make the argument that the telemedicine benefits could fall under the excepted benefits rules, as EAPs. However, in order for an EAP to be an excepted benefit, it cannot offer significant benefits in the nature of medical care. I find it hard to believe a telemedicine benefit could meet that requirement. 

Are you guys also seeing these products becoming very common? Is there some rule I am missing that is allowing employers to offer standalone telemedicine benefits to their employees? TIA for any thoughts!

Plan wants to add a SH NEC via the Secure Act provisions.  This gives them ADP SH but not ACP.  The plan typically only passes ACP using borrowing.  Can they still borrow from the ADP if it is SH?  Also, testing method was prior...I assume they should amend to current for the ACP portion?

I'm back in the retirement plan field after many years of being out of it. Can anyone give me an idea of what materials or firms provide good participant education materials? I'm looking for both printed and possibly video delivery. In the past, there used to be a company called Newkirk where you could order customized materials from but they appear to be out of business. The firm I'm with has been preparing materials in house and they appear outdated and unprofessional. Any ideas would be greatly appreciated.

I was looking back in the volumes of CARES Act webinars and other material on discontinuing safe harbor match mid year and I think I know the answer to this one, but just want to double check that I did not miss something along the way. 

If a plan discontinues the safe harbor match mid year due to financial downturn, can they amend before the year to a safe harbor non-elective (as permitted under the SECURE Act).  The information that I have from when the CARES Act first came out was that this was not permitted, but again, there have been so many updates I just want to be sure this is still a "No".

Thanks very much.

Company went out of business, terminated its plan and all assets are liquidated.

Problem is, the 2019 3% SH was never deposited.

What do they do if the owner cannot afford the $32,000 3% Safe Harbor?

Am I thinking this one through correctly?

Company A is owned 45% Husband, 45% Wife, 10% adult child.

Company B is owned 100% by adult child.

If I attribute the mom's ownership to the adult child, then adult child owns more than 50%, so would then be attributed Dad's ownership, therefore being 100% owner of Company A?

Adult child now has 100% common ownership and 100% identical ownership so Company A and Company B are a controlled group?

Thanks very much.

So I have a plan that terminated and their final Form 5500-SF and Form 8955-SSA are due 6/30/20.  We are waiting for them to pay our final bill before filing.  Because of the automatic extension, if I filed it between 7/1 and 7/15/20, do I have to check any box on the form?  Or just send it in like normal?

Thanks for your help!

If an employer improperly provides an incentive to a Medicare-entitled employee to waive employer-based coverage or otherwise violates the Medicare Secondary Payer rules with respect to that employee and Medicare learns of this, is there any potential adverse consequences to the employee for such violation?

I am looking for TPA to partner with. I am a CPA and looking to grow the TPA side of my business. Please message me directly if interested.

Thanks

Hi

Having a bit of brain freeze.

Looking into adding a DB to an existing 401k plan.

Sponsor FYE is 6/30 however the 401k plan is a calendar plan. Definition of compensation is plan year. Not designed by me, takeover.

If a DB is designed the same way i.e. effective 1/1/2020 and plan year compensation will be used, can the deduction be taken for 6/30/2020 corporate year end? Of course, we will have to wait next year until the salaries are established. The design is important both plan are going to be tested together.

In the past I have always used the salary paid for the FYE within the PYE, never salary paid for the plan year in with FY ends.

What am I missing/not seeing here?

Thank you,