The 100% owner and only participant is over age 59-1/2.  She has always invested the assets in an account where it was never determined what part constituted deferrals and what part was employer contributions.  Luckily, no withdrawals were ever made before she attained age 59-1/2 or since.  It's unlikely that she will be able to produce the past trust accounting that will enable the establishment of separate balances for each source at this time.  Given her age it would appear that each source would be treated the same in all respects (e.g., distributions, taxation), so as a practical matter would it be acceptable to continue not separating (even just on paper) how much is the deferral balance and how much is not?  As a side note, she will continue to make both types of contributions. 

Ran into a situation where an employer has an existing profit sharing only plan that holds essentially only employer stock.  The company is wanting to add a separate 401k plan to allow their employees to defer their own funds for retirement.  I'm thinking that having 2 separate plans won't work and that their only option is to amend the existing profit sharing plan to allow for 401k contributions.  Am I overthinking this?  Anyone have any ideas on how to do this in the simplest way possible?

Hello Everyone, I have a client that has a mega-wrap ERISA Plan on a January 1 Plan year: multiple benefits are bundled. All except medical are under fully-insured policies or self-funded using general assets. Medical is under a trust, and we have marked "trust "on page 2 of the 5500 (along with insurance and general assets). The trust portion came to an end on April 30, 2019. Everything else remained the same. Is the 5500 to have a final report on April 30th due to the trust and a new Plan going forward. Or do we continue to file with the January 1-December 30th ERISA Plan year? I asked the DOL but have not heard back yet. 

P born February 1944, retired 2012 and died early April, 2015.  Seems, therefore, RBD is April 1, 2015, just before DoD.  No distributions were made prior to DoD or since.

Had P died a week earlier, in March instead of April, I believe plan would have had until 12/31/2021 to distribute the entire account (end of year containing 5-year anniversary of DoD + 1 for 2020 RMD waiver). However, because P died after RBD, I fear we are looking instead at missed RMDs for the 2014 and 2015 distribution calendar years (the year P turned 70-1/2 and the year P died, respectively), and for 2016 - 2019, because distributions to the designated beneficiary (DB) have not begun.  Now that these problems have surfaced, it may yet be a challenge to get a distribution to the DB, currently age 70, whose whereabouts are unknown and who reportedly may be suffering under some incapacity and might require appointment of a guardian.  I believe we at least don't have a 2020 RMD to worry about, thanks to the covid relief legislation.

Does this sound like the right analysis so far, even though the plan says that if the Participant dies before the date distributions begin, the five-year anniversary year payout is available?  P did in fact die before distributions began.  P died after the RBD, is all, never having received a distribution.

If indeed, this is a penalty situation, and a qualification failure, besides, what is the best approach to fix? Six years of missed RMDs from a $150,000 plan account may not be an "insignificant failure" eligible for self-correction.  Is VCP a viable approach to seek both plan correction and penalty relief?  Is penalty relief more likely available through VCP than through a Form 5329 filing?  It's not even clear who would file Form 5329, since P's estate has no interest in the account and we don't even know if DB should, or even can, file, or if we can locate her.

What if the reasons for missed RMDs reflect an absence of sound plan practices and procedures, or even a lack of diligence on the part of plan fiduciaries?  Will IRS collect penalties from the account and require the plan sponsor make the account whole as part of any VCP correction?  Or will it be left to the DB or her heirs to file a suit for breach of fiduciary duty to recover the penalty amounts.

Thanks for any input on these or related issues or solutions you might think of!

I participate as a retiree in my former employer's retiree medical plan, which is a Medicare Advantage PPO. As such, it includes Part D for prescription drugs, including the doughnut hole. I know that the ACA had provisions designed to ameliorate the doughnut hole.  I was informed that I could not enroll in any other medicare supplement plan (including for prescription drugs) or I would lose my coverage. I therefore have the following questions: (1) were the ACA provisions which were intended to lessen the impact of the doughnut hole ever implemented or put into effect? (2) if (1) is yes, are they still in effect? (3) If (1) or (2) is No, can my former employer design the prescription drug portion so as to lessen the severity of the doughnut hole provision?

Thank you!

401(k) plan has terminated, (August 15th term date, small plan!) and all assets have been distributed. But the plan is still going to be restated. Here's my question:

New pre-approved plans do not include the Trust document - the Trust document is now separate from the plan document. Since all assets have already been distributed, is it really necessary to execute a Trust document? I can't, offhand, think of any reason, other than at some later date a dividend or mutual fund settlement or something is suddenly distributed to the plan. Thoughts? It probably isn't a big deal to get this client to sign the Trust document, but it seems like a waste of time.

We have sort of a hodge podge of different versions of Adobe in the office.  Its working but some are getting outdated, etc.

What are others using?  I kind of like the Office 365 approach where you pay a subscription and everyone always has the same and most recent version of office.  Is there such a subscription based model so you don;t always have the office on old versions?

Definitely relying on these pdf tools more in a paperless age.  But not as much as we rely on money of course, which is why Adobe is not in the running!  I'm sure Adobe must do something amazing to justify the price, it's just not anything I need.

Just wondering -

If the plan isn't going to actually file a 5500-EZ because the assets are less than 250,000,  does the Schedule SB still have any 7/31 or 10/15 signature deadline for the actuary?

The 5500-EZ and 5500 (Schedule SB) instructions don't actually seem to indicate that affirmatively.  Only that it be retained by the plan administrator.

Thanks....

-bri

Some states are paying certain front-line employees a "grant" or "extra payment" or whatever you might want to call it. This comes from the state/federal funds, and it is run through the employer as TAXABLE wages. The employer doesn't pay this out of their own pocket.

Is this considered eligible compensation for deferrals/profit sharing/whatever? The "simple" answer is that the plan in question defines compensation as W-2, so it would seem that as long as this is being reported/taxed on the W-2, it should be eligible compensation for plan purposes.

But since nothing is normal this year, I thought I'd see if anyone has different opinions?

As a TPA I'm being asked by a CPA whether paying employees Sick and Family Leave constitutes compensation for purposes of any 401(k) Safe-Harbor contribution.

Any thoughts?

Plan used to be hubby & wife pooled account.

Then daughter joined the company in 2016. 

Plan was amended to participant-directed effective 1/1/16.  Daughter opened her own account.

However, the husband and wife contributed to utilize the pooled accounts (there were two, now there's three!).

What kind of problems am I looking at with the pooled account for the parents, but an individual account for the daughter?

(No other employees)

Is it still accurate that if a Plan has less than $250,000 in assets they don't have to file a Form 5500?  I know I've heard it before, but I don't see it in the instructions for the forms.

Thanks in advance!

I have a plan that did not make their 2018 profit sharing contribution until September 15, 2019.  Under the correction methods they are allowed to make that contribution but they have to  make sure that the 415 limits for 2019 still pass including the 2018 profit sharing amounts.  I have one person who terminated in 2018 so does not have any 2019 compensation so their 415 limit would be exceed for 2019.  Since this is a new comparability formula with everyone in their own class and their contribution was necessary to pass the test in 2018.  Can this money be removed from this participant and put in suspense or reallocated?

Participant takes a COVID loan on 9/1/20, and defers payments. Question is, when this is re-amortized for payments to begin after 1/1/21, does the loan ending date become 12/31/2025? The participant seems to think that he can go to 12/31/2026, but, truthfully, after reading the literature on COVID loans, I can safely say I have no idea. 

Thanks for any replies.

If a firm is structured as an LLP, there are no shares.  Can an LLP convert to a C Corporation?  

If an LLP owns a company, and they want to sell 30% to the employees via an ESOP, can they "convert" the LLP to a C Corp so the owners can use a 1042?  Is there any way to enable the owners to get 1042 treatment?

We have a DB plan for a Sole Proprietor.  His net Schedule C after FICA deductions but before deduction for contribution was $10,000.  The contribution for 2019 was $9,293.  Is this okay?

Is it too late to decide to exclude pre-1/1/09 contracts?  Taking over a new client approaching the audit and they have 10 or 15 pre 1/1/09 contracts.

I would just report them as a distribution I guess (if it is doable).

So, my ex-employer from 5+ years ago just sent me a letter asking for the return of $6400 that it says was distributed from my old 401K plan, in a nutshell that the amount wasn't vested.

I left in 2015, and officially rolled over my 401K balances/funds into a Rollover IRA in 2018.  

This is official text of letter...

Quote

"...we discovered you have an overpayment from your account in the XXX 401K Plan....we determined the vested amount in your 401K plan account was overstated when we processed your distribution request.  As a result the overpayment is not eligible to be distributed because it is not vested"

"The overpayment is $6426.10 and must be returned to the plan excluding any additional interest"

"In addition the Plan must notify you that the overpayment amount was not an eligible rollover distribution if your distribution was rolled over into a qualified retirement plan or IRA...you may request that the plan administrator or your IRA trustee transfer the overpayment funds back to the plan"

"You will receive updated 1099's for the original tax year of the overpayment by the end of November"

Soo...questions.  What should I do with this?  I figure that at the very least I'm going to owe the IRS an early distribution penalty on that $6400?  But isn't that admitting that I made a mistake in fact when this was the error of the 401K plan?  Do I need to pay back this amount?  Any advice is appreciated   Thank You

In our adoption agreement we exclude for deferral, match and employer discretionary contributions "all fringe benefits (cash and non-cash) . reimbursements or other expense allowances, moving expenses, deferred compensation, and welfare benefits.

I am new having just started in July and working with auditor- they have picked a sample who was paid short term disability for about half the year (2019) and are questioning why she did not get a match true-up. We are self insured and pay the employee STD through payroll. She did have  401(k) deferrals withheld on the STD pay and the plan was amended 1/1/2019 to exclude this from all plan contribution types;i.e 401(k), match and employer discretionary. The employer discretionary did include the STD pay for compensation purposes as well

What is meant by "welfare benefits"? Would employer paid STD pay be included in this welfare benefit exclusion? 

Much thanks!

Alexa

ps. 1 follow-up : we do exclude in another section of plan compensation "long term disability payments" but STD is not mentioned here

Hi

I was asked the following by one of my CPA's for 2019.

"I have a client whom who has two W-2s and whom who is allowed to make catch-up contributions on her 401(K) contributions.  On one W-2, she has made traditional contributions of $25,000 and on the other W-2, she has made Roth contributions of $25,000.  Since she is limited to the $25,000, can she just have the money distributed to her in 2020 and have a 1099-R prepared"

Since one is deductible and the other is after taxes, how is this handled/corrected? I believe it is all for 2020 but which deferral is to be corrected?

Thank you for your comments.