Employer ( controlled group)  has three  plans

403(b) and 401(a) for the not for profit entity

401(k)  Safe Harbor for the for profit entity

The for profit entity will move to a not for profit status  late  in September. The employees in the 401(k) will be enrolled into the 403(b) Plan. They are paid by the employer of the 403(b) Plan.

They want to merge the 401(k) into the 401(a) Plan.

1. Can 401(k)  plan merge mid year since it is s Safe Harbor Plan?

2. Does the 401(k) lose its Safe Harbor status for 2020 since the contributions stop as of 9/1?

3. If the merger is not permitted, does it remain "frozen" for new contribution until it can transfer on 1/1/2021? Again does it lose it's Safe Harbor status in this event?

thanks

Our company announced our plan was being  amended for CARES over the next few weeks and participants can expect the changes to be adopted. 
 

just curious if anyone knows what balances are typically available with these things as standard (I realize there not one necessarily). Vested/invested, employee/r contributions, etc. 

never knew there were so many categories for a 401k balance. I’m fully vested and mostly wondering what categories might be unavailable when the plan is rolled out. For example, the available for a “hardship withdrawl” currently is only $44k buy vested balance is significantly higher than that. 
 

thanks for any advice/help 

Most IRS offices are closed.  I have a few DB plans for which we will need to file a Form 5307 application.  The IRS website says they "continue to process determinations for employees plans," but it's not entirely clear what that means.  (https://www.irs.gov/newsroom/irs-operations-during-covid-19-mission-critical-functions-continue)

Obviously, I will push the application submission dates off as far as possible, but does anyone know if U.S. Mail and/or FedEx/UPS packages are currently being delivered/accepted?

Thank you!

Pre-SECURE Act rule inquiry (based on a fictitious couple):

participant dies at age 90 (after starting RMD's). 

surviving spouse who is the sole designated beneficiary is age 99 in year of death.

ULT factor in year of death for participant is 11.4

SLT factor in year after death for surviving spouse is 2.9

So factor in year after death is max(11.4-1, 2.9) or 10.4, which is then subracted by 1 each year thereafter?

A client of mine, company A, recently purchased company B; it was a stock purchase. Company B was a subsidiary of a big conglomerate and participated in their 401k, which included Roth contributions.

Company A's plan does not allow Roth, and they'd like to keep it that way. They don't even want the Roth rollovers coming into their plan.

Employees of B were not given distribution options. They were told that all funds would be transferred to company A's 401k (before A had considered the Roth issue). However, if they could bring all assets EXCEPT Roth, they would much prefer that. But is that allowed in a merger? Can the merger instrument state that only non-Roth assets will be merged? And Roth assets will need to remain where they are?

I saw the great discussion on the PPP earlier in the week, which pertaining mainly to prefunding 2020 contributions.

Are 2019 contributions eligible for consideration in the PPP.  For example, employer was planning to fund a 2019 profit sharing contribution by their 2019 extended tax filing deadline, and makes the deposit during the 8-week window?

Thank you.

I know there are discussions about this.

Have an employer who terminated 35% of participants. If this coronavirus situation improves by November, they may hire half of the terminees back. Apparently there is no special coronavirus exception to the partial plan termination rules.

This is a plan year determination so we really do not need to determine whether a partial plan termination has occurred until after 12/31/2020 in this case.The employees where all laid off on March 28.

Since these days most former employees want their distributions immediately, how are others handling this? My thought is if someone is 40% vested, they get paid their vested benefit now and if it is later determined that a partial plan termination has taken place, they subsequently get paid their remaining 60%. Does this seem reasonable?

What if it is later determined a partial plan termination has occurred and their remaining 60% was worth $20,000 when they received their distribution, but it turned into $10,000 by the time they received their subsequent distribution due to plan investment losses. )?

Thanks!

Even in years with no disaster or public-health emergency, many administrators of employee-benefit plans—whether acting directly, or by some agent—routinely extend a Form 5500 due date from July 31 to October 15.

If the Labor department doesn’t grant a coronavirus delay, is there a practical consequence beyond the make-work of completing and sending an extension form?

I ask because BenefitsLink writers often school me about gaps in my knowledge or experience.

Has there been any relief measures put into place for Safe Harbor Match Plans that are also Top Heavy?  Company is looking for ways to manage their costs during this time.

TIA

Question on SEP IRA - Self employed individual has had a SEP for several years, no employees to begin with.  Eventually hires an employee but fails to make contributions for them for the first two years they were eligible - 2016 and 2017 but made contributions for himself at 20% of his net SE income.  So, we know that the employees contributions plus earnings need to be put into the plan ASAP.   They will be deposited by the end of the month.  My question is can the make up contributions be deducted on the 2019 or 2020 business returns?  If no other contributions are made for the 2019 return other than what is being contributed to fix the error can we apply an amount equal to 25% of the employees 2019 wage as a deductible 2019 contribution and apply the balance of the correction contribution as a deductible 2020 contribution when we file for 2020?  Does the entire deduction get lost?  Does it apply as a 2019 contribution and an excise tax place on the excess for 2019 for any amount over the 25% limit, or if not 2019 then the same situation for 2020 if the whole thing becomes a 2020 contribution?  Any guidance would be greatly appreciated!

Are people using the special extension box now for this COVID 19 extension on (for example)  a 6/30/19 plan year end?

And are you just typing in COVID-19 or coronavirus or what?  HAve they told us what to write?

When I am eligible for diversification, can I choose a percentage rate lower than the maximum 25%? When using the formula (EOY shares + previously diversified shares) x % - previously diversified shares, differing percentages from year to year give a negative result. Say I want to diversify 15% in the first year of the five year period. The result is 255 shares if my starting balance is 1700 shares. In year 2, I receive an additional 100 shares so my share balance is now 1545 shares (1700 - 255 + 100). If I want to diversify 6% in year two, the result when using the above formula is -147 shares. Am I missing something?

A CPA asked me to review a client's ADP testing.  They left one TPA for another TPA in 2018.  The plan passed testing in the past because it used the "Top Paid Group" election.  The new TPA omitted the "Top Paid Group" election in the plan document starting in 2018 and elected to use prior testing year's results.  For 2018, the plan passed since it was using 2017 testing results.  March of this year, the TPA refunded ALL deferrals for 2019 stating the plan failed ADP testing and the client did not know the checks were being issued.  The checks were just issued and sent out.  There was no discussion regarding QNEC or anything else.  This might be a stretch - but under EPCRS (Rev. Proc. 2019-19), Section 6.02, is it possible to change the method that was used to correct the testing for 2019?  Stating the principal to keep money in the plan?  We'd ask for all the refunded money returned and the client would put in the $2,759.71 QNEC to the one NHCE who did not defer based on testing not using the "Top Paid Group" election.  That would be $69,000 put back in to restore the accounts and the HCEs keeping their tax savings.  We are definitely changing the Plan to have safe harbor in 2020 & 2021 forward.  No one ever explained Safe Harbor to them - they are interested.

Looking for your superior knowledge.  Client, Comp A, has sponsored a safe harbor 401k (w/Basic SH Match) since 1999.  Owners of Comp A purchased another business, Comp B, back in 2010, and never let us, the TPA, know.  Comp B has sponsored a traditional 401k (w/ 50% of 5% discretionary match) since 2003.  Comp A and Comp B are a Controlled Group.  Plans DO NOT pass 410b independently on their own so I need to test them together.  What recommendations do you have for me to fix the situation?  I appreciate your excellent insight.

I was associated with a 100% ESOP company that was sold for 200% of its recent third party evaluation. Is that premium a red-flag that the third party evaluation was unrealistically low? I ask as I was a 30-year employee that retire just a moment too soon and missed the buyout price. Should i look deeper into the whole process or just accept it as horrible timing? Were are talking serious money here.

A Plan provides for a Plan-Year-based discretionary match with a year-end true up.  There are no allocation conditions on the match.  The sponsor is currently not making a discretionary matching contribution.  Can the Plan be amended prospectively, but during the current plan year, to a per-payroll match with no true up?  Or does this violate the anti-cutback rule?

For example: it is now April 2020.  The sponsor is interested in beginning a per-payroll discretionary match in June 2020, with no year-end true up.  Can we amend the match from plan year to per payroll, effective June 1, 2020?  Or does this constitute a cutback because employees will not receive a match on deferrals made earlier in the year?

Thank you in advance for any insight!

I've got a participant who is confident that they will be brought back from furlough in "three of four months" and wants to start making repayments when they come back.  It sounds like they will be at reduced pay: enough to make the weekly loan repayment, but not enough to 'double up' and catch-up on the missed ones, at least not right away.  Can the CARES suspension period be used for less than a year?  So we'd add a few months of interest accrual and reamortize from the date he came back, but it's not the "1 year" as CARES 2202(B)(2) says.  It seems reasonable...

Good afternoon,

I appreciate your time, as I typed quite a bit.

I'm in the process of setting up a traditional IRA with a Financial adviser I unfortunately found through my credit union. The fees associated with the account, or for him are 0.8000%. Is this rate about right? the amount accidentally rolled over was $14000

This whole ordeal has been a nightmare for me but I'm slowly but surely learning more about finances so I dont make another mistake in the future

Back story, I'll try to be swift. I had an esop for 7 years from a previous employer, I wanted to rollover $45,000 and keep $14,000. I knew 20% was going to be held from the $14,000.

Well the documents sent to my employer were incorrectly filled out by my financial adviser. And I signed it so I was slow too. I was sent a huge check I didnt want, and the bank was sent $14000. $9000 was sent to the irs for federal and nothing can be done about that. I may get it back next year but doubt.

Lastly I still have this check I havent decided what to do with, my financial adviser has been trying to get that too I just want other options.

I have received a referral client from a CPA friend of mine.  Client had not filed Forms 5500 for several years.  When the CPA became involved he prepared and filed 5 years worth of Forms 5500 but not through the Delinquent Filer Program.  Client has now received notices from IRS wanting lots of money.  And it appears that this is probably not the first time the client has been delinquent (many years ago).

Has anyone been successful with "after the fact" going through the delinquent filer program?  Or does anyone have any suggestions?

Thanks in advance.

Hello, 

I am a TPA looking to outsource our current DB/CB Plans to an Actuary.  About 20  Plans.  Having alot of issues with current company we work with.  Thank you.