Does anyone use this site?  It had a pretty robust community.  Seems to have vanished...

Cafeteria plan permits all changes in election addressed in Notice 2020-29 including dropping deferrals towards premiums under employer sponsored group health plan (pursuant to affidavit of other coverage), and dialing health FSA deferrals down to zero.  Question - an individual who is no longer deferring under the plan in any way still a participant in the plan or does participation terminate?  Regulations re: FMLA leave are as close as existing guidance gets, but does not provide a clear answer.  Comments appreciated.

Prop. Reg. 1.125-5(k)(2) provides that a plan can be designed to cover less than 213(d). But it dates back to 2009 (pre-ACA). Now that the CARES Act eliminated the prescription requirement for OTC, can a Health FSA not be amended and remain covering only OTC with prescription under 1.125-5(k)(2)?

Plan lost 1M in investment value in 2019.   Company deposited 1.25M in September of 2020  which would meets requirements for deduction for 2019.

Now the Company wants to count the 1.25M deposit in 2020 partially for 2019, 2020 and 2021.   I know it can be used for 2019 and 2020 but what about 2021 for both deductions and minimum funding requirements.

A 501(c)(3) organization forms a 100% wholly owned for-profit subsidiary. The CEO of the 501(c)(3) is retiring 12/31/20, but they want to sign him to a part-time contract with the for-profit to help get it launched effective 1/1/21. His services would be provided exclusively to the for-profit gong forward, and he would be paid from its payroll and not the 501(c)(3)'s. The services would be meaningful/substantial - probably more than 20% of full-time, but less than 40%. They want to pay a meaningful signing bonus up front, but they could be convinced to spread it out over a longer period built into the part-time salary. The contract would be for 12 to 24 months.

A couple of questions/issues come to mind:

• Would the arrangement in any way implicate section 457 by virtue of the fact that the for-profit is 100% controlled by the 501(c)(3)?
• Would the arrangement in any way implicate section 457 by virtue of the fact that the individual previously was employed by/CEO of the non-profit parent?
• Any other issues spring to mind?

Thanks for any thoughts you might have.

Hi

New client. A partnership, 2 partners, each making over 500k. deducted full 56k profit sharing for 2019. Now I am told that they have been making IRA contributions as well for many years in addition to maximizing profit sharing.

Can IRA be in addition to the maximum 415(c) limit?

Thank you

An employer is part of a Multiple ER plan.  They decide to leave MEP plan and establish there own SEP plan.  Would the SEP plan be considered a "new" plan? 

Additional Questions:

1) If new plan is established with an effective date of 5/1/2020, can the contributions/compensation be combined in the new plan for the entire year?  (assume 12/31 PYE for both)

2)  Does it matter if it is a Safe Harbor plan?

Plan has a fixed match 50% up to 4%

Effective 10/15 the match was changed to discretionary - the employer will match 50% up to 6% - funded each payroll for the remainder of 2020. In addition, the employer added the true up feature as of 10/15/2020 for the 2020 plan year. 

Questions. On 12/31/2020 when the true up is calculated , is the match contribution based on the formula in place as of 12/31? Therefore, even though  the match was 50% up to 4% for the first 10 months, you use the total wages and deferrals as of  12/31 and determine the true up base on the 50% up to 6% formula. 

Thanks

The plan sponsor maintains a top-hat NQDC plan with Rabbi Trust (in addition to its 401(k) plan) which includes employee deferrals and employer match.  The plan uses a 3-year cliff vesting schedule for the match.  A participant is being terminated, and the plan sponsor wants to fully vest his match account ($175,000).  I suggested that they apply the vesting schedule as is, follow the plan's provisions to forfeit the $175,000 which the plan sponsor can use towards its future match contributions.  The plan sponsor would then pay him a severance/bonus of the $175,000 so that the financial effect on the plan sponsor is the same.  For various reasons, they don't want to pay him the severance/bonus from the company.

Is there any problem with amending the plan to provide for 100% vesting for this one participant, other than possibly triggering FICA tax?  The plan also has a risk of forfeiture in the event of termination due to theft or violation of a covenant not to compete.

Thanks for your input.

I have a partnership.  For 2018 the partners were going to defer $18,000 in 2019 for the 2018 plan year.  The plan is a safe harbor basic match.  I provided them the safe harbor match amount based on the $18,000 each they were supposed to deposit.  The problem is they had some changes to their accounting group and they forgot to deposit the 401k deferrals even though they did fund the safe harbor match.  The match was like $14,000.  

What are the possible corrective options for this?  Can they forfeit the match and use it to offset their 2019 match?  Or do they have to allocate that ineligible match as a profit sharing contribution for 2018?  Any other ideas?  It was just an oversight on the part of the accounting group.

I'm retired and so this does not involve my present client experience, but I am reading quite a bit these days on ESG investing and this apparent growing interest by employees and other clients. For this I've got a couple of questions others may be able to address.

1. Holding or not holding a stock or fund holding that stock has nothing to do with the ability of the company to be profitable, yet I never see this addressed in the articles I'm reading on ESG qualifying stocks. I can certainly understand that there may be 'feel-good' component to this on the part of the client and perhaps some virtue signaling. But it would seem logical to me that in the client discussion would be a paragraph on how ownership/non-ownership does not affect the company's performance and instead, the buying of the company's products/services does this.

2. What constitutes an ESG qualifying company? Other than broad qualitative factors, what would an IA use as quantifiable selection criteria if individual stocks were used rather than ESG funds?

Thanks for any information on this

Hardship Withdrawal - Can this be done without directly involving my employer? 

I'm in immediate need for hardship withdrawal, I can also go with a loan, but I incline towards withdrawal, as with a loan, I will have to pay it immediately if my employer will let me go for any reason.

How does this process work? Who do I send documentation to? Will my employer be notified / examine my documentation, or are there protection laws where I don't have to fully disclose the situation?

Thanks!

Client did not deduct the 2018 employer profit sharing contribution and will be deducting on 2019 return.  Does this amount get used in the calcuation of the max employer contribution 25% rule for the 2019 employer calculation?  Thank  you.

Under a defined benefit plan (pension), are there circumstances under which a non-profit employer may credit an Highly Compensated Employee (HCE) years of service toward the pension benefit?   For example, having reached 33 years of service, can they credit 7 YOS so when the employee reaches normal retirement age they receive the same amount they would have if they had worked the 7 years (excluding potential raises).  The reasoning would be it saving the company money by taking the higher salary off the books.

We live in a time of transition, an uneasy era which may endure for years.  During the period, we may be tempted to abandon some of the time-honored principles and commitments which have been proven during the difficult times of past generations.  We must never yield to this temptation.  Our American values are not luxuries, but necessities - not the salt in our bread, but the bread itself.

Grey divorce (both over 59 1/2 ), Roth IRA has aged 5 years, Roth IRA balance is divided incident to divorce and spouse's "new" Roth IRA is the transferee of the Roth distribution.  Does the spouse's Roth IRA start the 5-year clock anew or does it benefit from the 5-year maturity of the source Roth IRA?

I am not surprised the the regulations under IRC 408 and IRS publications do not address this, but I do not find much secondary material venturing an answer.  One that does appears to go with the spouse Roth having the benefit of the age of the original Roth, drawing from the rules relating to dividing basis in an IRA transfer. 

Why would a church elect to have it's plan subject to ERISA and subject the plan to all sorts of qualifications?

We have a church plan that was established way back in the 90's.  The initial plan document says the plan is "Not Subject to ERISA."

However, they've been filing 5500's throughout.

What's not clear is if they ever formally elected (as an attachment tot he 5500) to be subject to ERISA (or filed for a determination letter with that attachment).

So, what if they are not subject to ERISA?  Can they just stop filing 5500's and when the "where's your filing" letter comes just write back and say "we don't have to file b/c we aren't subject to ERISA"?

I understand that if they ever elected to be covered by ERISA that it's irrevocable.

Like most of you, I'm in the mainland U.S. and seldom work on plans (either dual-qualified or stand-alone) that cover employees from Puerto Rico.  However, I occasionally need to answer questions about those plans, especially regarding coverage and non-discrimination testing.

Are there any good resources available?  From 2018, I'm aware of this document:  https://documents.popular.com/pdfs/PFS/02_Puerto_Rico_Qualified_Plan_Discrimination_Testing_and_Reporting.pdf

Hi,

Thank you all , as always, for all the insights. I have seen those that have stated on this forum that an EZ Filer that answers yes to having participant loans is a flag. On the 5500 -schedule I there is a question if the plan held a part of the assets in real estate. If you answer yes to this question, is this a flag as well. And if this is indeed a flag, is it advisable to stay away from investing (DB Plan assets) in real estate to avoid this (even though clearly legal to invest a portion of the assets in Real Estate-with diversification, less than 20% of the assets etc.). Thank you,