A participant takes a $100,000 COVID distribution. 

The participant is rehired in July and is able to repay $75,000 of the $100,000 by the end of 2020.  Assume he does not make any additional repayments in 2021 or 2022.

Is his $100,000 still divided by 3, for a taxable distribution amount of $33,333 in 2020, 2021, and 2022, and uses the $75,000 to reduce each year's liability, (so $0 in 2020, 0 in 2021, and $25,000 in 2022)?

Or is the entire $100,000 reduced to $25,000 in 2020 and he pays $8,333 in 2020, 2021, and 2022?

The first way does not seem to make much sense unless you consider that if it is handled in that manner than if he does make additional payments in 2021 he would not need to amend his 2020 tax return since he would not have paid any taxes on the distribution in that year, whereas in the second method he would need to amend his 2020 return to recoup the taxes paid on the $8,333.

I hope this is not a ridiculous question.

Thanks.

We have recently taken over a plan from another TPA.  Client has notified TPA and asked the transaction be handled as smoothly as possible.  Client can not find some documents and the prior TPA is charging him a fee to copy the documents from TPAs file.

We have run into this situation very few times, the last time I believe Circular 230 had been mentioned, and the client told the request for a duplication fee is prohibited under Circular 230.

I can not find the exact reference in Circular 230.

Hi all

Taking over a combo plan for 2019.

Received information on 2018 so that I can check the 2018 test and based on my calculations, does not pass. I have questioned this and waiting for an explanation.

However, if there is a failure on 401a4, is this a self correction and if it is where can I find it? May be late in the day, just cannot find it.

The failure is to provide the minimum gateway. It would have been thru additional profit sharing allocation as DB allocation is set.

If the gateway was provided correctly, 401(a)(4) would have passed with no issues.

Thank you

The Maryland State mandatory tax withholding has been 7.75% as long as I can remember. However, we recently were notified that the mandatory percentage is now higher for 401k withdrawals. Does anyone know what the new state withholding for Maryland is?

Thank you.

Do any TPAs list themselves as Trustee in their client's plan document if they provide Administrative "trustee" services, such as benchmarking fees, confirming deposit of contributions in the plan, signing off on distributions, etc.? This is not 3(16) services. If there is a service agreement in place with such services indicated, what is the benefit of putting the information in the plan document? 

Hi all

PS plan is utilized as a QRP and has both the QRP assets as well as PS assets. Let's say balance are 50/50. All assets are comingled and pooled so no individual accounts.

Clients pays x amount annual fees from the plan assets.

Can the fee be split 50/50 i.e. 50% deducted from the QRP balances and 50% deducted from the PS balances?

Thank you

Could an Qualified Individual take a CARES Act distribution from a governmental 457 plan and repay that distribution over the next 3 years to the same governmental entity's defined benefit plan rather than the 457 plan? I believe so based on the language below, but want to see if anyone has any different thoughts.

(A) IN GENERAL.—Any individual who receives a coronavirus-related distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received, make 1 or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16), of the Internal Revenue Code of 1986, as the case may be.

We have a former participant who left our client for non-COVID-19 related reasons and started working for another employer.  That employer just laid her off.  Can she now seek a distribution from her former employer's plan because she's been laid off from her current employer?

Plan makes a 3% SHNEC contribution-all ees receive contribution

Plan makes a 4% ER PS contribution-this contribution has a last day/hours requirement.  Not all EEs receive.

For 410(b), it is my understanding that all ER contributions must be tested together.  Since all ees are not receiving the same allocation rate (due to last day/hours), this triggers the need for a 401(a)(4) rate group test.  In reading through the EOB, it seems that if you can pass 410(b) on each source separately, then you are ok.    What is the best approach to solving this?  You need to run the 410b on an aggregated basis, but then run separately to satisfy the rate group?  Or do you aggregate and go to rate group testing?

How do these rules come into plan when you have a ER PS allocation and a Top Heavy minimum? 

Example:  ER has 1000 hours/ last day.  Employee is employed on last day, but does not met hours.  This EE receives a Top Heavy min contribution of 3%, but not the ER allocation is 4%.  Does the same logic apply to this situation as it does to the SHNEC/ER allocation?

I'm embarrassed to even be asking this question, but I've managed to twist myself around on a very simple question. Profit sharing plan, forfeitures can pay expenses or be used to reduce employer's contribution. Forfeitures are NOT reallocated.

Participant terminates in 2020, receives full distribution, so forfeiture occurs during 2020, for the 2020 plan year. Can this forfeiture be used to reduce the 2019 plan year profit sharing contribution deposit that is made in 2020?

Looking out at the snow blowing by the window is freezing my brain.

Here's a text of the Senate-passed bill.

Paycheck Protection Program and Health Care Enhancement Act bill.pdf

Has anyone heard that 5498-SA filing deadline has been pushed to August 31?  The only thing I know if that Notice 2020-23 extending the filing and contribution date to 7.15.  We have an HSA sponsoring saying their filing deadline was extended to August 31.

Due to current economic hardships, plan sponsor would like to not make safe harbor contributions for the HCE's (all family member owners) for the prior plan year. Is this actually possible? They'd also like to stop current year to date safe harbor contributions to themselves.

Forgive me if this has been covered.

The SECURE Act allows employees with 401(k) annuities the opportunity to preserve the annuity if the plan sponsor changes providers or eliminates the option altogether.

Employees can do a direct transfer to an IRA or another plan that accepts the annuity.  Or, it can do an in-kind distribution.

The first option would be tax-free, but what about the second?

Appreciate any insight.

The FAQs issued on April 11th by the DOL state that health plans will be required to cover COVID-19 testing with no cost-sharing, etc. during the current declared public health emergency relating to COVID-19.  A footnote states that this declared public health emergency is scheduled to end on April 25, 2020 unless extended.  I have been unable to locate any information about an extension.  Am I correct that, absent an extension, health plans may stop covering COVID-19 testing with no cost-sharing on April 26th?

Hello, I have a client who owns a Foreign Entity in Australia.     The Employer is Australian, but owns a residence and lives in Manhattan.   The employer does Not have a US Resident Alien SSN.   How can they not have one of these, but have a US Payroll bank account?  

The Employer has 2 US Citizens and would like to establish a 401k plan for their US Citizens to participate in.  Over then next 12 months, they will be hiring 30-40 more US Employees.     So we are having a difficult time finding a platform for this type of client from a Trustee perspective.   Does anyone know what investment platform would allow for a Foreign Entity, with a US Residence obtain approval as Plan Trustee?

Charged tips will be paid via W-2 wages. Participants are able to defer on these tips.

The employer makes a Safe Harbor Match Contribution- They want to exclude tips from the definition of compensation for the safe harbor match.

1. Can tips be excluded from compensation for the Safe Harbor Match?

2. If yes, since the plan is safe harbor, this mid year amendment to change formula and definition of compensation is not allowed for 2020?

3. Since this would not meet the safe harbor definition of compensation, the plan would need to pass compensation test at year end ? 

4. Not a Top Heavy Plan.

Thanks

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I'm reviewing a GAAP valuation report whose signature block for years states that the actuary is an EA. There's nothing wrong with that- after all, some of my best friends are an EA.  On checking the credentials I found that the person is also an ASA (with other related and very impressive credentials) .What I am struggling  with is why the signor doesn't include the ASA designation in the signature block.  (The person is still active and in good standing).

Any ideas or suggestions as to be on the lookout for hidden landmines? 

Has anyone seen anything about plan audit relief?  I have a client that cannot afford their plan audit right now.  Restaurant group.  I haven't seen anything yet. May tell them to work with their auditors for some relief.

Thanks!