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.

Greetings - Plan Sponsor (and plan name) was changed effective 1/1/2019 via a plan amendment. 

We need to file a 5558 extension for the 5500, for plan year ending 12/31/10. We have changed who the plan sponsor is since the last 5500, so I am not sure if the old or the new plan sponsor should file the extension. While Form 5500 has a place to provide for a chance in plan name, Form 5558 does not

My gut tells me to file Form 5558 under the current (new) Plan Sponsor and check the box under #1 that this is the first Form 5500 for the plan listed above. 

As an aside, would the new plan sponsor also need to file Form 8822-B to Report Change in Identity of Responsible Party?

Seems like a simple issue, but one that I can see the IRS having an issue with. 

Thank you!

My client is setting up a safe harbor 401(k) plan with a SH matching contribution and wants to implement dual eligibility, that is, allow participants to defer immediately into the plan but require one year of service in order to receive the match? Is there any concern in having dual eligibility?”    How would you test these dual eligibility groups each year?  What complications would you see in implementing a plan like this?

401(k) plan has SHNE plus profit sharing. General test. I year eligibility

New entrant leaves after 3 months of participation. Profit sharing is 0% vested under 6 year vesting schedule.

Does the profit sharing piece have to be vested to count in the general test?

This is related to QDRO- I need to know understand what the “date of valuation for distribution to the Alternate Payee” means.  Is it the date funds are deposited to the Alternate Payee account?  Also, I would like to know what would be the time frame between the date of segregation and the date of valuation for distribution to the Alternate Payee.

Let's say a participant has $80,000 in their 401k. He also has a $40,000 loan. The participant is terminated due to COVID and would like to take a full distribution. He's under 59 1/2. Since the limit for COVID distribution is $100,000, how would you process this request? The participant chose to have no taxes withheld on the COVID distribution and my understanding is that Code "2" is used for COVID distributions if the participant is under 59 1/2.

So, I'm thinking we process the request as follows:

The loan Offset of $40,000 is processed under Code 2.

$60,000 of the distribution amount is processed under Code 2 (with no Federal Tax withholding)

The remaining $20,000 of the distribution amount is processed under Code 1 (with Federal Tax withholding) because the $100,000 limit has been reached.

Would you agree?

If the employer chose to stop their discretionary match mid year, would the compensation for determining ACP testing also only be for the period of time the match occurred during the year or is full Plan Year compensation always used?  

I seem to be having the hardest time being able to confirm this.  

Is it okay for one employees deferral to be processed outside of regular payroll (appx. a week after everyone else's)? This was an HCE who decided to max out their deferrals at the beginning of 2020 for the 2019 plan year.

Since I have virtually no information to go on, this question may not make any sense. A governmental employer who has a "deferred compensation" plan - I'm guessing a 457(b)??? is apparently either changing or terminating the plan, whatever the plan is. We got a call out of the blue asking how they notify the IRS that the TIN will be "inactive."

I don't work with governmental 457 plans, or any other governmental "deferred compensation" plans for that matter, if there are such things.

Does anyone have any idea if there is a required notification to the IRS of such a TIN becoming inactive? I believe if a corporation terminates/dissolves there is a notification process involving the corporate EIN, but that's a different matter.

Thanks in advance, if you know anything about this.

A controlled group is made up of two entities and one of the entities would like to revoke Safe Harbor mid year. 

All the HCEs are in the entity that is revoking Safe Harbor.

How would the 2020 Coverage Test be performed for the 401(m) portion?  Are all the NHCEs considered as benefitting due to the Safe Harbor for the partial year?

Any feedback is appreciated!

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