My client (P.C.) was reading an article that mentions utilizing the PPP loan to fund defined benefit pension contribution

"CARES Act 2020: Paycheck Protection Loans as Funding for Defined Benefit Pension Plans Sponsored by Small Businesses"

I don't see anything either in CARES Act or PPP Information Sheet that would lead someone to come to this conclusion

Can the same accounting firm have an Audit & Assurance Service line that provides Audit Support to Larger 401(k) Plans, the financials etc. and also have a TPA Service Line perform the TPA services for those same client?   Different Service Lines, different employees, but same Firm.

I hear mixed comments on this all the time, so I'm curious what this board has to say about it?

Our ESOP plan document has the typical provision regarding distributions to terminated participants:  last day of plan year following later of reaching age 65, fifth plan year following plan year in which termination occurs, or 10th year of participation.  (There is no outstanding stock loan.)  Distributions to participants with a balance greater than $5,000 take their distributions in equal installments over five years.  We have a window of time following receipt and approval of the valuation for participants to request a distribution.

An issue I've never been able to figure out is what do you do with participants who are entitled to receive an installment distribution, but do not send in paperwork during the window?  We have ex-employees who want to leave their account open because they think the value of the stock is going to go up, which it has in the past.  However,  we also have people who request a distribution one year, but then forget or neglect to do so for subsequent years.  Our recordkeeper/TPA says that their forms are only good for a current distribution, and participants must send in additional paperwork each year to get the subsequent installments.  As you can imagine, this plays havoc with our cash flow projections.  Is this really how it's supposed to work?

Thanks for any guidance out there!

My apologies if I'm not asking this correctly, I'm not an actuary, and don't do a ton with DB plans. If this has been answered elsewhere, please feel free to point me to that thread. 

Calendar year, small PBGC covered plan (maybe 30 people) has a $300,000 FD from 2018. Minimum required contribution for 2019 (including prior year FD) total $400,000. 

What is the funding deadline? I understand that interest is due for any minimum amounts not deposited by 9/15, but can the full minimum be extended? Or just the additional amount, the $100,000?

And the $300,000 has to be deposited by 9/15 to avoid another year of excise taxes?

I know how to figure a Integrate with TWB but for some reason this is confusing me. What percentage do you use for staff when 2 people (1 owner) have compensation in excess of the TWB? 

Hi all. I'm a participant-sided ERISA attorney but not as familiar with ESOPs as other plans. I have a client who owns shares in his company's ESOP. From 1998-2005 he had a Company Stock Account (CSA) and in certain years he also had an "Other Investment Account." The CSA and OIA are defined in the Plan. He left the company in 2005, and at the beginning of 2006 the company moved the value of his CSA (.724) shares ($15k+) into a "Segregated Investment Account." To my knowledge he was not notified of this move nor given investment options. We do not know the SIA investment vehicles. The plan does not mention or define SIAs anywhere, even though balances, investment gain/loss, and distributions/transfers are listed under a section called "Segregated Investments Account" on the year-end stock certificate (or what looks like a stock certificate). The Plan defines an "Undistributed Account" as comprised of the "CSA" and "OIA" of a participant that remains at the end of any year in which the participant has terminated employment. The Plan states that the "Trust shall exchange any cash or other liquid assets held in the OIAs of Participants for the shares of Company Stock held in the UA." The client returned to full-time employment in 2007 but his SIA balance remained in the SIA account, mostly losing money. His CSA share accumulations for employment in 2007 started over from zero, as did his vesting for new CSA shares. The SIA balance was always 100% vested. The company admits he should have been fully vested in his (new) CSA accumulations after he returned to work, but claims no harm was done because he didn't take a distribution and he was fully vested in those shares by 12/31/2010. (In 2010 the company entered a consent decree with DOL related to improperly low share price upon termination of employment and segregation of the terminated employees' account balances to the SIAs and my client received a very small adjustment to his SIA balance as it went into his OIA in 2010.) As noted, the $15k+ balance in his SIA remained there until the end of 2010, when it was moved to the OIA, and then to the CSA (it appears in all 3 categories in varying amounts on his 2010 certificate). As noted above, at the end of 2006 he had CSA of .724 and with the return to work in 2007 the "new" CSA shares started over from zero. The $15k amount the company moved from SIA back to CSA in 2010 had nearly the same value in dollars as it did in 2006 when it was moved from CSA to SIA, but when they moved it back and added it to his "new" 2007-2010 share accumulations, they added it back as .514, not .724. The share price was higher in 2010 than 2006, but it sure seems like he lost a lot between starting his CSA accumulations from work in 2007 all over again, as well as having that SIA balance sitting in SIA until 2010.  The PA responded to my first information request basically saying they had a right to move everything into the SIA when he left in 2005. The company does not have a knowledgeable PA and it is not using an ERISA attorney to respond to our questions, so that is part of the problem. But can anyone advise me as to what further questions to ask at this point? I don't want to spend this client's money spinning my wheels, but it does seem like something isn't right with his accumulations. Thanks in advance for any assistance!

I believe any returns due after 04/01/20 and before 07/15/20 are automatically extended to 07/15/20, and that this includes 5500s.  Hence a plan with 06/30/19 Year-End already on extension to 04/15/20 is now due 07/15/20.

Is this correct?

Some plan sponsors would prefer to adopt, once, a provision that allows whatever loans and distributions can be provided without tax-disqualifying the plan.  Some would like such a provision to include what becomes allowed under future Acts of Congress.

If a sponsor of a prototype or volume-submitter document presented such a provision, would the IRS approve?

If a sponsor of a new individually-designed plan presented such a provision, would the IRS approve?

Assume an employer sponsors 2 defined benefit plan, running concurrently, and the Plan document for Plan A states that "the aggregate 415 limitation for all pension plans shall first be applied to Plan A"; and Plan B also says the aggregate 415 limitation shall first be applied in Plan A". 

Assume further that in Plan A that the computation of the Annual Accrued Benefit, before taking into account the "aggregate 415 limitation", would be X. And in Plan B it would be Y.

The aggregate 415 limitation is  Z, and assume further that X+Y > Z. In preparing the valuation and  benefit computation, including lump sums payable,  my interpretation of this provision is that X is limited to Z-Y. Is this correct? Is there another possible interpretation?

Just processed a wd of $100k and $10k was withheld for federal tax. I am in FL so no state tax. 
 

assuming I had no other income for the year, should I expect any additional taxes next year?

Client is self employed with $204,000 in self employment income. Client claims no need for a pension as a 401k profit sharing will allow $62,000 in contributions because he is over age 50. Client's advisor states the 25% of pay rule does not apply and the client also is allowed $6,000 as the phase -out due to income does not apply. Client files jointly. Is the client and advisor correct. The advisor states also 415 does not apply.. .Hence no need for a pension. No employees except the owner.

I submitted a form 5330 as of 12/31/2018, there were over 12 times that contributions were deposited late in 2018.   They deposited the earnings in 2019 and all deposits are now on time.    When filling out the 5330 for 2019,  do I have to list each late 2018 contribution individually on the 2019 5330 or can I just put one date and use the total.   

Hello, I realize that the 5500 has the special extension authorized by the IRS. The EBSA came out with its special extensions which don't apply to the Form 5500 report. However,  I wondered if the Summary Annual Report of the 5500, the SAR, as a disclosure notice, would have EBSA's Disaster Relief Notice - 2020-01 extension of March 1 - 60 days after the Covid 19 National Emergency has ended. The Office of Regulations and Interpretations has not returned my calls yet on my question. Does anyone else know? 

Also the the EBSA press release said to use a good faith effort to issue disclosures and one of the methods was text messages. When was text messages allowed for electronic disclosures? 

EBSA Disaster Relief Notice 2020-01 extends the time for plan officials to furnish benefit statements, annual funding notices, and other notices and disclosures required by ERISA so long as they make a good faith effort to furnish the documents as soon as administratively practicable. The notice explains that good faith includes the use of electronic alternative means of communicating with plan participants and beneficiaries who the plan fiduciary reasonably believes have effective access to electronic means of communication, including email, text messages, and continuous access websites. 

Can the required matching contributions to a 401(k) be paid with proceeds from a PPP loan? 

Should know this but brain freezing ---- plan wants to max out 3 partners and give 2 other partners $20,000 each.  Staff gets 5%.   Employer $$=Profit sharing only, not a SH plan, no match.  Plan is TH. Two Terminated participants not getting the 5% gateway OR TH allocation  because they were not there on the last day.   401(a)(4) fails unless I give staff 9%.   The scenario is very similar to 2018 and it passed with 5% to staff,   no contribution to 1 term'd participant.  Am I missing something?  

A client we had established a plan in 2018. 

Here are the relevant plan provisions:

1) Plan effective date: 1/1/2018

2) Plan does not exclude comp prior to participant entering plan

3) Eligibility for profit sharing contributions was Age 21, 1000 hours in a 12 month period, entry each 1/1 and 7/1

4) To receive a profit sharing allocation a participant must be employed on the last day of the plan year

5) Method to correct coverage failures for nonelectives is to "Add Just Enough"

6) Profit Sharing formula was discretionary, "New Comp - One Group per Participant"

7) There is no one year hold out rule for eligibility or vesting

8] There is no 5 year rule of parity rule for eligibility or vesting

The client gave us a census with 14 individuals who were employed at some point during 2018. There were 3 eligible HCEs (1 of which was not an owner), and 4 eligible NHCEs. Before the end of the year the sponsor terminated employment of all eligible NHCEs. The termination wasn't nefarious, a large project ended and no longer needed these employees. The owners, of which there were 2 gave themselves each a 30k profit share on 12/31 of that year. There were no other contributions. Using the annual coverage testing method the plan fails coverage and requires pulling back into the allocation several employees who had terminated (because of the employed on the last day rule). General testing required that those employees collectively receive an additional 42k in allocations to pass nondiscrimination. The partial plan termination didn't help the situation either.

If the plan uses the daily testing method for coverage on the last day of the plan year when the allocation was made, it passes coverage because there were no eligible NHCEs on the last day. Because of this there is no nondiscrimination issues. 

Is this allowable or am I missing something?

One of our CPA contacts, for a client NOT located in Arizona, but in Northeastern US., received this form from the Arizona Department of Revenue. We don't administer the plan, but the CPA had never seen such a form, and asked if we knew anything about it. I certainly don't. The plan in question is a Union, and it is a defined benefit plan. Anyway, the form is for a "TPT License" - and says that penalties will apply if you haven't paid.

We told the CPA we knew nothing about it, but for my own information, do any of you out in the Southwest (or anywhere else, for that matter) know anything about this? Is this a "normal" thing that actually applies to a defined benefit or other qualified plan in Arizona, perhaps similar to the (often ignored) loan document fee in Florida?

Hello all. I haven't been out here for years. My job of the last 9 years has made it difficult to stay in touch. As of March 31, I have been retired after being in the industry since 1970 . I was on a securities settlement desk when the DOW first hit 1000. I have thoroughly enjoyed my career and have seen  many changes. I've been privileged to know all of you through these message boards and all of you have been extroardinarily help in my pursuit of knowledge. Stay healthy in this stressful time.  May God bless you all.

I left my employer sponsored ERISA plan over 2 years ago and left my annuity balance there.  I decided in December of 2019 to roll over my annuity into my 401-k plan at my current place of employment and the check sent to my 401-k was dated /7/2020.   I took the balance as of 12/31/18 because the accounts are valued on an annual basis .  The valuations take place in April and I was expecting to receive earnings for the plan year 2019.  When I called the Fund office today I was told I am not eligible for any investment earning because I had to have an annuity balance on the valuation date of April 2020.  I feel I am being robbed a full year of interest and we know that 2019 was a good year for investments.  Does this seem legal?

Can a safe harbor plan change to immediate eligibility and vesting mid-year? I believe they can with notice, since it's increasing benefits. But does that then mean anyone not previously vested would become 100% vested?