An employer provides for loan deferment for qualified individuals under the CARES Act. If a participant has already defaulted on their loan but later becomes a qualified individual, does the employer still have to give that participant the option to defer the loan (i.e., reverse the loan default)?

I am curious to see what opinions there are on the following scenario.

A 401(k) plan uses a 3% non-elective safe harbor, that is limited to non-Highly Compensated Employees.

The employer wants to allocate the safe harbor with each payroll.  They realize it goes to everyone, and is not a match.

They may, and likely will, also make a profit sharing contribution, allocated at year end.

Does anyone see a problem with the the NHCEs receiving their 3% throughout the year, and the HCE receiving their profit sharing at a different time?

Worst case scenario (I think), the 3% SH is allocated all year in a terrible market year, and at the end of the year the 3% SH that was allocated is now something less then 3%.

The year ends and the when the market is at it's lowest the Owners (only HCEs) decide to make a 3% profit sharing contribution for themselves, or maybe even 9% if it passes testing.

I like the idea of not having the HCEs receive the non-elective safe harbor, but I'm not sure I'm comfortable with the different allocation timing.  

Thanks for any opinions.

If a participant takes an in-service distribution (not hardship nor RMD) of property from a 401(k) plan, how is the 20% mandatory withholding handled? Does the participant have to also take a cash distribution equal to 20% of the property value so that can be withheld 100% for taxes?

My client that is sponsoring a defined benefit plan is considering an acquisition of another business.   In scenario 1 the purchaser makes 100% cash deal and pays $3,000,000.  In scenario II the purchaser pays $500,000 and covers all employees  of the acquired company in the DB plan granting past service back to original date of hire with the seller.  Lets assume that the value of the accrued benefits one day after the deal is $2,500,000.   How does the Scenario II impact the taxation from both the buyer and the seller perspective?  How is the Form 8594 prepared to report the transaction?  Are there any other considerations?   All the coverage, non-discrim, participations, etc. issues before and after the transaction are non-issue.   Thank you in advance.

Hi all,

When running the Contributions & Benefits test, do you add up all pretax contributions (Ins. premiums, HSA, FSA, DCA, LPFSA) together and then test the HCEs vs. NHCEs, or do you just use a shorter list of contribution types?

Thanks

I apologize if this is not relevant to this group.  I am a software consultant. I work through my LLC. My LLC has a Solo 401K plan in which I contribute $19500 + 25% profit as per the law. Unfortunately, my wife legally cannot contribute to this plan because she doesn't work for this company. But we want to maximize her retirement contribution. So, we are considering to buy a business (thinking to buy a Laundromat at this moment) for her so that she can contribute to the retirement plan. Considering this situation, which type of company should we open to run the business - S-Corp, C-Corp, LLC or partnership ? I understand I need to talk with a CPA, but I want to enhance my knowledge even before talking with a professional. 

One more thing: We have significant medical expenses. We bought health insurance from the marketplace. We have a HSA account where we contribute the maximum. But that is not enough to cover our medical expenses. I have read about HRA. I also learned that in some cases HSA and HRA are compatible. Which business type will be good to open a HRA ? Is there any example for this ?

Please advise considering both the situations.

How do you calculate the owner's comp in a short plan year?

Doctor gets Schedule C, but is terminating Safe Harbor plan on 10/31 and wants to close up the small plan before EOY 2020..

How is her compensation calculated?  Is it zero b/c it's not determined until 12/31?  Or do they have to wait until next year and take 5/6 of the net income?

Hello I just had a quick question in reference to 457 Plans or 401(a) plans. Is the plan's fund lineup required to provide a Stable Value Fund or Money Market Account as one of the options?

Client has a side company - one person S Corp.  He works full-time for another employer where he contributes $10,500 to his 401k plan.  He wants to set up  a 401k PSP  for 2020 if possible for his S Corp.  Would it have to be effective 11/1 or could it be 1/1/2020 but  only defer on compensation paid after 11/1?  I assume he would be limited to $15,500 (he's over 50) ....Does the plan have to be adopted by 12/31 or before in order for him to defer on his w-2 wages from 11/1?   

Defined Benefit Pension Plan non-owner participant is age 75 and terminates on 12/31

Suddenly I'm confused if there is an RMD requirement for year of termination (due by 4/1 of next yr) or if pension payments can simply begin 1/1 of subsequent yr?

Since Code M was recently implemented, what if the TPA did not use code M for loan offsets (the regular codes 1, 2, and 7 were used instead). Should these 1099-Rs be amended to include Code M?

Thank you.

I am a software consultant. I work through my LLC. My LLC has a 2 Solo 401K plans. One Roth and another one traditional. I contribute $19500 to the Roth account and 25% profit to the traditional account. My wife is a housewife and doesn't work. Can she also contribute to any Solo 401K (I will give her money to contribute) ? Do we have any options ?

Please advise.

Claims Admin Caused Breach that affected multiple Covered Entities, including over 500 individuals in totality.

client is one Covered Entity but the breach only affects 20 of its employees.

Does my client need to send out a public notice for the 500+ individual breach? I.e. is the 500 individual notification requirement aggregate all individual affected, even if they are from separate covered entities? 

My ex and I divorced 8 years ago. He never would file QDRO paperwork so I, as alternate payee, could receive my portion of benefit set out by law in divorce decree from Ford directly. Instead he pays me every month for 8 years.  His benefit is reduced when he reaches 62. Finally he begins the process and files paperwork with Ford.  QDRO department tells me my portion is being held aside every month it takes during approval process.  They tell me twice that my funds are there for me.  It's been a year.  Ex stopped paying me when paperwork filed and said my amount was being held aside for me, as QDRO department says.  It finally gets to pension department for the payment and they see employee amount has been reduced since 2019 and it shouldn't have  been and send check to him.  His amount was reduced by virtue of the QDRO process.  Why would pension department change what QDRO department set in motion.  I believe they got dates mixed up.  My amount started accruing for me in Oct 2019 and it's been a year and finally it went through all departments and pension sends MY accrued benefit to my ex...WHAT?  It's like the departments do not talk, but to straighten this out, QDRO needs to communicate with Pension.  Can anyone PLEASE HELP ME???

I know the general rabbi trust template (and many others based on it that I have seen from trust companies) says the trustee will make all distributions to participants and report/withhold. Others say (and in my experience this is what the sponsors often do, regardless of the trust terms) the sponsor may pay the benefits directly and request reimbursement from the trust. 

Sponsors paying directly and requesting reimbursement usually cite the inability for the payroll systems to accurately record a direct payment from the trustee for W-2 reporting.

In the former case, where the trust makes the payment directly, what exactly do they report to the IRS and how does that information get reconciled with the sponsor's payroll system?

Thanks in advance for any insight.

Interesting question - suppose a plan has an eligibility requirement of (x) hours in the first 6 months of employment, and if not met in the first 6 months, the employee becomes subject to the 1 Year of Service requirement.

Now assume the employee works 5 months, then due to Covid economic issues, the employer furloughs this employee (and others) for a period of time - let's say 3 months.

What's your opinion on an employer granting eligibility service while furloughed due to Covid, operationally, and allowing them to enter as soon as reemployed?

P.S. - my point in all this is to see if there is a way around amending plan to use elapsed time. I don't see that the pre-approved document language is flexible enough to handle an amendment to credit hours of service service while furloughed, other than sideways through elapsed time if they aren't furloughed too long. And FWIW, just doing it operationally without appropriate document language, while "nice" of the employer, doesn't seem like an acceptable option.  I suppose it could be submitted under a 5307, and I'd be surprised if the IRS would reject it, but it's a pain, costs more money, and hard to know how long it would take.

I forget if I asked this before, but are Top Heavy contributions subject to coverage if that's the only ER contribution?

Hypotheical:

Plan is 401(k) only.  Does not allow for match or ER discretionary contributions

1 owner, 10 NHCE/non-keys.  Everyone eligible for 401(k) BOY.

4 NHCE quit in summer.

Plan is Top Heavy. 

So, only 6/10 EE's get Top Heavy.

Do I have a coverage issue?  How do you get around that if I do?

Ran across a situation where in order to avoid a 410(b) failure, must make a profit sharing contribution for a terminated participant who is 0% vested.  The plan is top heavy and has never made a profit sharing situation before.  The required contribution is over the $5k involuntary cash-out threshold.  What are the options for how should the plan handle this circumstance?    Hope that the balance falls below $5k so they can force the participant out?  Wait until the plan someday terminates and the funds become 100% vested?  Any ideas are much appreciated. Thanks.

Scenario #1

MEP adopter terminates services with MEP effective 1/1/2020.  Per agreement, once termination occurs, they immediately are no longer eligible to contribute to MEP.  New plan is not effective until 5/1/2020. It is established as a new plan with a short plan year in the document.

Can the employer withhold contributions from 1/1/-5/1/2020?  I am assuming no since there was not a "plan" in place.

If the answer is no, if the employer withheld contributions, what should the ER do with them?

Since there is a gap in the time from leaving the MEP to the new SEP, how does this impact testing?  Would HCE determination be from 5/1/18-4/30/20?  What about prorating the compensation limit?  For top heavy, would the 12/31/20 balance be used for 20 &21?

Scenario #2 

MEP adopter leaves the plan effective 4/30/2020, New Plan is established 5/1/2020.  Document indicates it is a short plan year for the first year.  How does impact testing? HCE determination.

Do we test contributions from 1/1-4/30 under the MEP and only test contributions from 5/1/2020 through 12/31/20? 

If one spouse is eligible for a Retiree HRA and the other spouse for herself or both of them has access to a HDHP with a HSA, if one or both of them uses the HDHP/HSA, must participation in the Retiree HRA be suspended for one of both until such time as neither is participating in the HDHP/HSA or in any HDHP plan year only until such time as the deductible and all required first dollar payments for the HDHP are made through the HSA or other resources?  

Retiree HRA document is being drafted and the drafters are not clear on what is required so your thoughts are eagerly solicited. Thank you!