I have a plan sponsor who has an employee requesting a CARES Act withdrawal. The employee has disclosed in an email that he hasn't had a negative financial impact from Covid. He just wants the money to invest outside of the plan. The withdrawal paperwork requires trustee signoff. The question is, should the trustee sign off on the withdrawal knowing that the employee has admitted that he hasn't had a financial setback?

Thoughts?

Hi all-

We have a church plan where the previous custodian, when distributions were made for housing allowance, would put $0 in box 2a and mark "Taxable Amount not Determined".  Is this correct or should the taxable amount match the gross distribution and we should mark "Taxable Amount not Determined"?  Wondering how other custodians file their 1099R

Hi All,

Plan has made only safe harbor contributions prior to amending plan 1/1/2019 off of safe harbor matching and instituting a 3 year cliff vesting schedule for matching and all other employer contributions.  The only employer contributions prior to the amendment were safe harbor matching contributions.  Prior to amendment all employer contribution sources were listed as 100% vested, though the employer never made any other than safe harbor matching.

Employee is rehired who previously worked from Feb 2017 to Nov 2018.  Participant maintained account balances and has been rehired Feb 2020.  

Question, would new cliff vesting apply since no prior employer contributions were made, or would they fall under 100% vested as that was the schedule for all contributions at the time even though no contributions were ever made other than those under the safe harbor matching provision?

client is looking to do a QDIA reset/ACA reenrollment mid year- the plan currently uses EACA and it can't be amended to the new reset deferral percentage mid year - anyone every opt out of EACA mid year? is it a problem to drop the EACA protections mid year and use a standard ACA/auto escalation for a mid year reenrollment. plan is not safe harbor. Any help would be appreciated. 

Participant elected to contribute 10% of pay. Whoops, typo, client enters 12% for contribution on payroll.  Very very strict recordkeeper says "OK the correction here is to pay the extra 2% of pay out to the participant as a taxable distribution, code 8, no excise tax, etc."

probably more strict than I would be in this situation but I certainly cannot disagree with them. As far as I know ECPRS has nothing on this kind of an error. Has anyone heard of an alternative way to correct this that would allow the participant to leave the money in the plan?

I have already suggested that the participant can just contribute more in future pay dates to put the money back into the plan. Just curious if there is a way to just leave the money in the plan as is.  

How would you process a Roth direct distribution due to disability? My original thought was that it should be code "B" and "3", but the 1099-R instructions state that code 3 can only be used with one other code ("D").

Thank you.

So typically when a flat dollar elections exceeds pay, the whole paycheck less taxes would be deferred. if the plan deferral limit is say 80%, would the deferral on pay be the whole paycheck or just up to that limit? Obviously its a plan year limit - so I would still think the whole check would be deferred as long as it didn't make that individual's deferral percentage greater than 80% on the year. Thoughts?

Several BenefitsLink discussions describe uncertainties about how to interpret the Paycheck Protection Program.

Now that the Paycheck Protection Program Flexibility Act of 2020 seems soon to be enacted, which issues does it solve, and which does it leave behind?

https://www.congress.gov/116/bills/hr7010/BILLS-116hr7010eh.pdf

Plan is a annually valued trustee directed 401k safe harbor match/cross tested profit sharing plan.  The participant gets an annual statement each year after the plan has been valued following the plan year end.

Other than the Summary Annual Report - what other mandatory annual participant notices must the plan sponsor provide to the employee?  

Are there any notices that are only provided upon request of the participant?  

I understand that cash balance plan should follow 401(a)(9) rules (DB rules) to calculate RMD amount. My question is: do I need to adjust the hypothetical account balance to reflect RMD withdrawal? If we adjust the balance and the plan is frozen, it would result in accrued benefit decreasing, which in turn reduces the next RMD amount. Shouldn't the DB RMD with Life Annuity payment be level? 

I saw some new articles saying the case was being settled. 

https://www.planadviser.com/parties-lawsuit-401k-account-fraud-agree-settle/

Does anyone know any of the details? I'm curious to hear how it worked out. Considering it seems the plan administrator couldn't even provide a summary plan description when asked I didn't have a lot of confidence it would settle without a lot of conflict. 

If an employee received a match before they were eligible in the year prior (so before they met the 1 year requirement), can this be corrected?  I'm not seeing anywhere details on this type of correction. Can it be put into a "suspense account" still even though it's crossed calendar years?

I have a 403(b) plan who calculates their matching contribution each year using compensation as of their fiscal year (e.g. this year's match calculated on comp from 7/1/2019 - 6/30/2020).  Their plan year is 1/1 - 12/31.   They have done this  since before I came on board.  Is there anything wrong with doing this? 

The document does not address other than to say the matching contribution shall be determined by the employer with respect to each plan year.  Compensation is W2 wages increased by elective deferrals for all contributions/no exclusions.  

Hi - 

Thought that I'd share some opportunities to rack up some free CE hours online:

1.  CPA Academy - lots of free courses, as well as some that you can pay for.  In addition to some retirement plan topics, ethics, and retirement planning there are a lot of other interesting presentations - https://education.cpaacademy.org/.

2.  IRS webcasts - there are general IRS topics as well as retirement plan topics and ethics.  I realize that this late notice, but tomorrow (6/4), there's a free 2 hour ethics webcast on Circ. 230 - perfect for ERPA's and Enrolled Agents - see https://www.irs.gov/businesses/small-businesses-self-employed/webinars-for-tax-practitioners

A partnership, owned 50/50 by two separate individual S Corp owners, sponsors a 401(k) plan. The partnership's guaranteed payments are reported to and included in each corporation's K-1 from the partnership and therefore included as gross income on the S Corp tax return. The retirement contributions are then deducted on the S Corp’s tax return also. At that point, the reporting of the income and deductions for the S Corp owners and individual partners are the same. The only difference is that the guaranteed payments from the partnership are no longer subject to self-employment tax on the S Corp tax return. Should the S Corp W-2 that each partner receives be reduced by the 401(k) contributions since the entire amount of 401 (k) contributions is already being deducted on the S Corp return, which is then included in the S Corp K-1?

We have a Plan that is Top Heavy and utilizes a Safe Harbor Match.  In prior years they've made Profit Sharing Contributions, and therefore have made the necessary Top Heavy Minimum contributions.  Due to the economic climate this year they are likely not going to make a Profit Sharing Contribution for 2019.

I know that the rule is if there are no additional contribution/forfeiture allocations there is no Top Heavy Minimum.  I just wanted to make sure that it was a year-to-year decision, and that they were still exempt of the Top Heavy minimum if there was no Profit Sharing made for that year.

Thanks in advance!

We have a client that has terminated his DB plan in May 2020

It is a calendar year plan with sole owner as only participant 

2019 minimum funding has not been made and there are no funds to make it 

CARES Act appears to delay 2019 minimum funding until January 1, 2021

Query:

1. How to complete 2019 Schedule SB: show minimum funding as $0?

2. Since the owner executed a majority owner’s waiver of accrued benefits to match the remaining assets, and the 2020 minimum funding is $0, does the 2019 contribution ever have to be made?

A puzzlement for sure

All suggestions are welcome except jumping off a bridge 

Stan

Hi

Any practical suggestions for responding to line 19, which requires submission of proof that any rollovers or asset transfers received by the plan applying for the determination letter were from a qualified plan or IRA?  For instance, is it sufficient to describe the plan's rollover process in general?  Or is the IRS looking for something more particularized for each rollover accepted?

Thx

We recently discovered that our client/owner didn't have any eligible plan compensation but has funded the maximum 415 limit to both DB and DC plans for years.  

Thoughts on how to correct aside from basically removing all contributions and amending the company's tax returns?  

We were asked to assist a client who had a 403(b) plan since 2004 but never formally adopted a plan document or filed a Form 5500. 

If the client adopts  the plan document before the June 30 deadline, are we in compliance, or do we need to file a VCP for the plan document issue? Is the June 30 deadline only for defects to an existing plan document or can we use it for a plan that never had a plan document?

For the late 5500, the client will filed under DFVCP.

Thank you.