Does anyone else use YEDC? If so have you been having a lot of issues with the 2020 questionnaire. The website has been going up and down every day for us.

Company A sponsors a 401(k) plan and purchases unrelated Company B in 2017, forming a controlled group.  In 2018 Company B adopts its own 401(k) plan.

The entire time through 2020 the controlled group has been relying on the coverage transition rules.

It seems to me that Company A would have reliance, but Company B should not have had reliance since the Plan started after the transaction and during the transition period.

If that is correct, and assuming the two plans could not satisfy coverage separately, would the correction be to retest both plans together starting with the 2018 plan year?

Thank you very much.

I probably know the answer to this but will ask anyway...employer has a SIMPLE IRA and only owners are contributing in 2020.  If we start a 401(k) in 2021, and we cover NHCEs, do we get the credit?  (NHCEs were eligible in 2020 but none were contributing.)

Hello, new to the forum and new to the concept of a backdoor Roth.

Over 50 years old with a combined household income of over $203K. Already maxing out our 401K's and was looking at catching up more on retirement funding (better late than never). Was suggested by Fidelity to try a backdoor Roth. Told it only takes two days for the funds to secure and then can perform the rollover, so waited until Dec. 28th to fund the Traditional IRA with $7K. Still in time to complete the conversion before the end of the year, I believed. But Fidelity took over a week before allowing the conversion, pushing the conversion into 2021. 

Question #1: The Traditional IRA was my only Traditional IRA and was funded with after-tax dollars. We make too much too attempt to try to deduct the contribution from our taxes, instead the desire is just to build up the Roth IRA over the next several years using the back door method. The Traditional IRA was only funded for a week and made no money so only the base $7K was converted to a Roth IRA. During the conversion, I was asked if I want to pay taxes on the money now (withhold) or later. I chose not to withhold. I am assuming that the withholding and paying of taxes is only for people who have either made a profit on the investment or have previously deducted this on their taxes. Is this correct thinking? 

Question #2: As I said, I want to contribute the maximum ($7K) every year into the backdoor Roth. What are my options for 2021? What is the important date here?

Question #2B: In other words, what it the difference between two people, one who both contributes to a Traditional IRA and completes the backdoor conversion to a Roth IRA in December, and another person (me) who contributes to a Traditional IRA in December, but fails to convert it to the Roth until January? Are both people able to wait until, say late February,  and refund the Traditional IRA with another $7K and convert it a week later in early March and have the December/January transaction count toward 2020 and the February/March one count as 2021? 

Question 3: Form 8086. Is this form needed now every time I file taxes so that I don't have to pay taxes on the $7K that I used to fund the Traditional IRA with after tax dollars?

Thank you in advance for any help. I searched for this exact situation in the forum, but couldn't locate the same question.

Paul

I just received in the mail a check from my 401k from my previous employer ~$400. I had only been with the company for a very short period of time before quitting. I'd estimate it was only about 4-5 months. 

My question is. Is it possible to still rollover this cash into an IRA? It says that the distribution type on the statement attached to the check is "Termination Benefit", and the Distribution Category Code is 1. It shows that there was Federal withholding  taken on the total amount but no state withholding.

if a plan has an early retirement age of 50 and 10 years of service in the plan and they have an active participant who wants to default their outstanding loan and pay the taxes and penalty which is all in the employee 401k source.  Would they be able to default the loan and pay taxes this calendar year and not keep the interest continuing until termination with this option seeing this would be a distributable event for them

Does the exemption to the DB/DC combined 25% deduction limit where the employer contribution to the DC plan is limited to 6% of compensation apply to the plans sponsored by a single employer regardless if the employer is part of a controlled group & there is a DC plan sponsored by another member of the group? Specifically, can a sole proprietor who operates two separate businesses sponsor a cash balance & profit sharing plan (limited to 6%) for one entity & a separate profit sharing plan for the second entity & contribute 25% of compensation?

I know the cut-off date for relief for Coronavirus related distributions under CARES is 12/31/20. The situation is the participant requested the distribution before that date (instructions received on 12/29), however it was not actually processed until January. Could this qualify as a CRD? 

With SECURE, can an existing plan add Safe Harbor mid-year? 

A plan is effective for the first time on 8/1/2020. When determining Key status for Officers and greater than 1% owners for the initial plan year, what compensation is used? 

1/1/2020 - 12/31/2020, or 8/1/2020 - 12/31/2020?  

 

Happy New Year everyone!  We are doing a DFVC filing for a return that requires an 8955-SSA.  We've done DFVC filings before but they've never involved an 8955.  The DFVC page of the IRS website refers to Notice 2014-35 with a link to the Notice, which states that the 8955 must be filed no later than December 1, 2014.  I haven't been able to find any evidence, on the IRS website or anywhere else, that this deadline has been extended.  I would have guessed that this would've become a permanent relief program for the 8955, much like how the pilot DFVC program for the 5500-EZ became permanent.  Can anyone verify that this deadline has been eliminated and that one can currently get penalty relief for a delinquent 8955 if a paper copy is filed after a DVFC filing is made for the accompanying 5500-SF?  If a cite can be provided, that would be great! 

Can I amend a 3% Safe Harbor Plan to exclude different items of compensation prospectively mid-year?  I cant find anything on point but it feels like a back door reduction in the SHNEC, the consequence of which of course is to blow my safe harbor for the year.

Has this been addressed anywhere? I'm just surprised that no one ever wrote in one of these articles "Be careful!  If you amend to reduce eligible comp that is a de facto reduction the contribution formula!"

We have a plan that was established 1/1/2020.  It allows prevailing wage and profit sharing contributions as of 1/1 but the effective date of the deferral provision is 4/1/2020.  Should the compensation used for the ADP test be for the time period the deferral was effective, so 4/1 - 12/31/2020?  We normally use prevailing wage as a QNEC in the ADP test so it seemed like we would need to use full year compensation if we used the QNEC.

I have been a TPA for very small clients for many years.  I took a *wonderful* class taught by Norm Levinrad at NIPA a couple years ago, and I STILL refer to my copious notes.  I have relied on my software (Datair) to calculate everything for me, and I have more than a general idea of how New Comp works.  HOWEVER, I want to fully understand New Comp.  I have a couple plans that I spend hours on each year, moving peas (ee's) under nutshells (alloc groups) to pass the tests.  But if I fully understood this stuff, I'd feel so much better.  

Is there a webinar, a class, a tutorial, a book - that would explain the basics of New Comp??  A "New Comp for Dummies", if you will.  I feel like a dummy.  I'm willing to pay for this "class" (within reason).

I want to know things like: (1) WHY does a participant who worked 150 hours have to get an allocation?  (2) WHY does the allocation have to go on full year comp, when a participant entered on July 1? (3) How do I calculate (by hand) EBARs?  etc etc etc  Norm's classes were great, believe me, but it was like drinking from a fire hose and I'm still soaked!

Thanks for anyone taking their time to point me in a good direction.  (Maybe there are others who feel the same way?  Maybe we could do a zoom class???)

Should plan numbers 001,002 etc. be by ein or ultimate parent within a controlled group? It would seem the same ein should not have two plans with the same number. Does it matter though  if two separate eins within the controlled group both have a plan 001 or is more proper to name them 001 and 002?

Hello, in 1994 my ex husband agreed to a QDRO (Total number of months during marriage which participant participated in (*** retirement account) to wit: 123 months / over/ Total number of months of participants active participation in (***) as of the date of retirement or termination from service X.50 X Gross amount of monthly income

Recently his attorney sent me a modification to sign.  The company filed for bankruptcy in 2015 and the QDRO was replaced with a different benefit plan.  The new amendment states "shall not apply to any special termination program benefits which the participant is or may become eligible to receive under *** Appendix S"

Should I be entitled to those benefits as well? My attorney is not replying and I need to decide how to proceed = any help advice is appreciated.

Three companies were members of a control group with employees from all three entities participating in the 401(k) plan. The company that originally set up the plan was sold in a 100% stock sale effective 12/31. The buyer requested the plan be terminated effective 12/30 and the BOD passed a resolution to that effect. The remaining two companies of the control group want to set up a new 401(k) plan with the same structure as the prior plan but only the employees of the two remaining entities. Does this trigger any successor plan issues? Thanks!

hello -

I have a client where the payroll dept allowed an employee defer into the plan prior to meeting eligibility.  The Trustee does not want the participant in early.  Therefore, i need to distribute the mistaken deferrals.  

It does appear that a correction method is to have the investment company return the deferrals adjusted for gains or loss.  There is no mandatory withholding.

I've read that some have done it as EPCRS or as a 402g.  Which is correct way to complete? 

Thank you!

When client severs their relationship with MEP provider and wants to set-up their own plan, should that plan be a "restate" of an existing plan for that employer or the establishment of a new plan? My understanding is that a spinoff from a MEP is a continuation of an existing plan. Is that correct?

Employer has a health plan, and a VEBA.  The VEBA permits use of VEBA assets to fund health benefits.  However, the health plan is not insured.  Rather, a vendor requires that a reserve fund be set up.  That fund is used for health benefits, and must be replenished as it is used for that purpose.

The vendor will only accept amounts sent by wire transfer.  However, the bank that holds the VEBA account will only send money by checks. (This strikes me as odd, but that's the facts we have.)

Employer would like to have the VEBA write a check to the employer, and the employer would immediately contribute the funds to the reserve fund by wire transfer.  However, for some brief period of time, the money would be in the employer's hands.  Has anyone seen the IRS argue that this is an impermissible inurement?