A client intended for their 401(k) plan to exclude bonuses from the definition of compensation for purposes of both deferrals and matching contributions. The plan document includes bonuses. The client wants to amend the plan's definition of compensation effective 1/1/2020. It is a calendar year plan. It is not a safe harbor plan. Can the amendment be retroactive to the start of the plan year? I do not think so but the client received advice to the contrary. 

Any thoughts appreciated. Thanks. 

Just looking for discussion.

We have a client that has a Solo-K  (Larry, don't yell at me, I'm using the term for clarity.)

No contributions since 2013, the last year an EZ was filed. (under 250k since then).

We find out today that he retired and took his money out in February.

Do I really need to terminate the plan?  What's the harm in leaving it "open"?  He will file a final EZ.

Assume that I do the three-year spread of my CRD. I understand that Notice 2020-50 (the carryback option) allows me to amend my 2020 tax return if I repay more than 1/3 of my CRD before timely filing of my 2021 return. In that case, the first 1/3 is applied to 2021 income.

But what if do the three-year spread but decide, after filing my 2020 return, that I want to reduce my 2020 taxable income -- not my 2021 income. Notice 2020- 50 doesn't seem to say that I can apply repayment to 2020 and amend my 2020 return in that situation. It seems to require that repayment be applied to 2021. Or, am I missing something?

Also, what happens if I repay more than 2/3 of my CRD before the timely filing of my 2021 return. I assume the first 1/3 of the repayment is automatically applied to 2021. For the remainder, can I allocate it any way I want between a 2020 carryback and a 2022 carryforward?

Thanks for your help.

We took over a 401k plan that has an adoption agreement that shows plan number 001.  However, the 5500 filing shows the plan as having plan number 002.  Apparently 001 was an old DB plan that is now terminated.  This goes back many years - at least as far back as 2008 I can see that the document and the 5500 have not had the same plan number.  The 5500s are correct - the plan document is incorrect.  How do we correct for the wrong plan number on the document?  We can fix the plan number on the upcoming Cycle 3 restatement - do I have to go back and correct for prior documents?  This plan started in 1990, I don't know if the document has always been wrong or what...   Thanks!

I have an employer spinning off from an existing company effective 10/24/2020.  They want to set up a plan for 2020.  They want to implement a SH match for 2020.  Can the employer set up the plan to be effective prior to the company being effective - i.e. an effective date of 10/01/2020 so they can cover the 3 month period?

A business with a SEP terminates its only employee in June 2020. The business has made no 2020 SEP contributions. The business terminates the SEP as of July 31, 2020. Can the owner open a solo 401k in August 2020 and make a 2020 contribution to the solo 401k?

Hi

This is a silly question, given the amounts but wanted to see opinions out there.

The owner's spouse's RMD for 2019 was $168 in total but $230 was taken out (initially took out $3,200 but refunded $2,970 prior to 12/31/19).

What issues are they facing and what are the correction requirement, if any?

Thank you

Is only the contributions what get taxed when withdrawing? Like if I put 20 thousand of my money in that made 5 thousand, can I withdraw 20,000 without a penalty?

Also, is it best to put the full contribution limit at the beginning of every year?

Thanks

After a lot of research, I've chosen to invest in Charles and begin a Roth IRA. I've chosen my four investments and put money into them. My question is should I put the full contribution amount into the account at the beginning of the year every year? Also if any of you has important advice about Roth IRAs then please share.

Thanks

Forgive me if this topic has been covered.

Assume I receive a $75,000 CRD in 2020 and spread income over 3 years. Then I decide to recontribute $25,000 of the CRD.

Notice 2020-5, in Section 4E, says that if I make the repayment before the due date (plus extensions) for the 2020 tax return , I can wipe out the $25,000 for 2020.  The same would be true for the 2021 and 2022 returns.

But if I make the repayment after the 2020 tax return deadline (but within 3 years), can't I still have the 2020 income wiped out by filing an amended 2020 return? Or is it too late?

The Notice doesn't address this. And the fact that the IRS does specifically address amended returns in Section 4D (when the CRD is all included in 2020) gives me pause.

Any thoughts?

I have one small organization, Company A, that merged with 4 other organizations for a new controlled group company NewCo effective 2/1/2020. Company A has a cash balance plan, and as of 12/31/2020, Company As cash balance plan will be terminated, and NewCo will have a CB plan for the whole CG as of 1/1/2021.

Company A would like a full accrual for 2020, resulting in a 120k contribution. They are doing their 1/1-2/1 short tax year filing now, and wanted to know how to put the contribution on there if it hasn't been made yet. My thought is on the final 2020 filing, they change the plan sponsor to NewCo on Line 4, put all of the 2020 PY contributions on the SB, Company A pays all of the contributions, and NewCo allocates the deductions to them within their financials. Does that sound accurate? If they've made any contributions to date, could those be deducted on the short tax year filing?

Thanks for any help!

"What you need is a third-party administrator."

-- "A what?"

"A TPA."

-- "I'm still clueless. I have an investments guy and a mutual funds company that says they'll keep track of where my company's retirement contributions go. What's a TPA?"

=====

Wouldn't it be great for business development, and more appreciation by plan sponsors, if there were a better name for TPAs than "TPA"?

On your marks, get set ... GO.

I'm working on a plan with 109 employees. Among 109 employees only 48 employees entered into the plan (Plan Requirements:- 21 Year age, 1 Year of service) and received Safe Harbor Non Elective Contribution. 

Should i use Form 5500-SF or 5500 Large? What is the parameter for this plan 48 eligible employees or 109 employees?

Can anyone explain 100 participants rule for 5500-SF filling, i'm confused?

Thanks in advanced. 

I generally see two schools of thought on this topic:

1. Process the conversion as a distribution and a rollover.

2. Process as a transfer and it is just a wash so no 5500 reporting.

Does anyone know of any formal or informal guidance on either of these?  I haven't been able to find anything.

is there anything in the guidance about outstanding loans that are not current. i know loans that are current can be suspended under CARES. can loans that were not current benefit from suspension?

This is on the IRS website at: https://www.irs.gov/retirement-plans/file-your-one-participant-plans-electronically-using-form-5500-ez

• Effective for plan years beginning after 2019, a one-participant plan can file Form 5500-EZ electronically using the EFAST2 filing system. Form 5500-SF is no longer used by a one-participant plan in place of Form 5500-EZ. Information for a one-participant plan filed electronically with EFAST2 filing system” will not be available to the public on DOL’s website.
• A one-participant plan covers only a business owner and his or her spouse, or cover only one or more partners or partners and their spouses in a business partnership (treating 2% shareholder of an S corporation, as defined in IRC Section 1372(b), as a partner).
•  A one-participant plan can file Form 5500-EZ electronically with the Department of Labor’s EFAST2 filing system, or completing and mailing a paper Form 5500-EZ (PDF) to IRS.
• However, a filer must file the Form 5500-EZ electronically using the EFAST2 filing system if the filer is required to file at least 250 returns of any type with the IRS.

I added emphasis in bold for the 2% S Corp shareholder, which was part of the Pension Protection Act. Does this mean an S Corp with only 4 employees, each owning 25%, can file a Form 5500-EZ? Doesn't ERISA still apply, requiring the normal Form 5500-SF?

Can a client remove Roth from a safe harbor plan mid-year?  I don't see any rules precluding this.  Only 30 days notice as Annual Contribution notice is affected.  Your thoughts?

Plan Sponsor wants to verify processing of Form 5500EZ. 

Correct procedure to verify?

One person sole proprietor adopted Keogh 401k ( profit sharing /money purchase) in 2005 at fidelity then advised by advisor at fidelity to change to SEP IRA for simplicity in 2015.Based on my income I realize now I would have been able to contribute more had I stayed with Keogh.Never filed 5500 although the balance didn't reach 250,000 until 2012 and was not aware I was suppose to terminate Keogh upon opening SEP IRA.Keogh ( profit sharing /money purchase) has not been funded since opening SEP IRA in 2015.Also I mistakenly since did back door Roth for tax year 2015 to 2018 thinking there would be no tax consequence but realize now there is since I have a SEP IRA..

My CPA does not want to help with this so looking for guidance on who to call for help with this.I assume I need a TPA but wondering if I will be able to find one to help me if I do not have an ongoing relationship.Can anybody recommend a TPA in 32207 zip code area( jax,fl) or one that would be will be able to help remotely.

What are my chances of getting a favorable decision with these issues using the VCP/SCP ? Hopefully I can connect with a TPA to help me soon but if not should I file a 5500 before the 7/31/deadline even if I will be asking for a retroactive termination of Keogh back to 2015 when the VCP is filed.

I took an extension and have not funded my SEP IRA for 2020 .Based on my income and age I would be able to contribute about 10k more to a 401k vs. a SEP IRA for 2020 but wondering if it would be a bad idea to adopt a new 401k for 2020 while  still sorting through the mess with my old Keogh?