Several BenefitsLink discussions describe uncertainties about how to interpret the Paycheck Protection Program.

Now that the Paycheck Protection Program Flexibility Act of 2020 seems soon to be enacted, which issues does it solve, and which does it leave behind?

https://www.congress.gov/116/bills/hr7010/BILLS-116hr7010eh.pdf

Plan is a annually valued trustee directed 401k safe harbor match/cross tested profit sharing plan.  The participant gets an annual statement each year after the plan has been valued following the plan year end.

Other than the Summary Annual Report - what other mandatory annual participant notices must the plan sponsor provide to the employee?  

Are there any notices that are only provided upon request of the participant?  

I understand that cash balance plan should follow 401(a)(9) rules (DB rules) to calculate RMD amount. My question is: do I need to adjust the hypothetical account balance to reflect RMD withdrawal? If we adjust the balance and the plan is frozen, it would result in accrued benefit decreasing, which in turn reduces the next RMD amount. Shouldn't the DB RMD with Life Annuity payment be level? 

I saw some new articles saying the case was being settled. 

https://www.planadviser.com/parties-lawsuit-401k-account-fraud-agree-settle/

Does anyone know any of the details? I'm curious to hear how it worked out. Considering it seems the plan administrator couldn't even provide a summary plan description when asked I didn't have a lot of confidence it would settle without a lot of conflict. 

If an employee received a match before they were eligible in the year prior (so before they met the 1 year requirement), can this be corrected?  I'm not seeing anywhere details on this type of correction. Can it be put into a "suspense account" still even though it's crossed calendar years?

I have a 403(b) plan who calculates their matching contribution each year using compensation as of their fiscal year (e.g. this year's match calculated on comp from 7/1/2019 - 6/30/2020).  Their plan year is 1/1 - 12/31.   They have done this  since before I came on board.  Is there anything wrong with doing this? 

The document does not address other than to say the matching contribution shall be determined by the employer with respect to each plan year.  Compensation is W2 wages increased by elective deferrals for all contributions/no exclusions.  

Hi - 

Thought that I'd share some opportunities to rack up some free CE hours online:

1.  CPA Academy - lots of free courses, as well as some that you can pay for.  In addition to some retirement plan topics, ethics, and retirement planning there are a lot of other interesting presentations - https://education.cpaacademy.org/.

2.  IRS webcasts - there are general IRS topics as well as retirement plan topics and ethics.  I realize that this late notice, but tomorrow (6/4), there's a free 2 hour ethics webcast on Circ. 230 - perfect for ERPA's and Enrolled Agents - see https://www.irs.gov/businesses/small-businesses-self-employed/webinars-for-tax-practitioners

A partnership, owned 50/50 by two separate individual S Corp owners, sponsors a 401(k) plan. The partnership's guaranteed payments are reported to and included in each corporation's K-1 from the partnership and therefore included as gross income on the S Corp tax return. The retirement contributions are then deducted on the S Corp’s tax return also. At that point, the reporting of the income and deductions for the S Corp owners and individual partners are the same. The only difference is that the guaranteed payments from the partnership are no longer subject to self-employment tax on the S Corp tax return. Should the S Corp W-2 that each partner receives be reduced by the 401(k) contributions since the entire amount of 401 (k) contributions is already being deducted on the S Corp return, which is then included in the S Corp K-1?

We have a Plan that is Top Heavy and utilizes a Safe Harbor Match.  In prior years they've made Profit Sharing Contributions, and therefore have made the necessary Top Heavy Minimum contributions.  Due to the economic climate this year they are likely not going to make a Profit Sharing Contribution for 2019.

I know that the rule is if there are no additional contribution/forfeiture allocations there is no Top Heavy Minimum.  I just wanted to make sure that it was a year-to-year decision, and that they were still exempt of the Top Heavy minimum if there was no Profit Sharing made for that year.

Thanks in advance!

We have a client that has terminated his DB plan in May 2020

It is a calendar year plan with sole owner as only participant 

2019 minimum funding has not been made and there are no funds to make it 

CARES Act appears to delay 2019 minimum funding until January 1, 2021

Query:

1. How to complete 2019 Schedule SB: show minimum funding as $0?

2. Since the owner executed a majority owner’s waiver of accrued benefits to match the remaining assets, and the 2020 minimum funding is $0, does the 2019 contribution ever have to be made?

A puzzlement for sure

All suggestions are welcome except jumping off a bridge 

Stan

Hi

Any practical suggestions for responding to line 19, which requires submission of proof that any rollovers or asset transfers received by the plan applying for the determination letter were from a qualified plan or IRA?  For instance, is it sufficient to describe the plan's rollover process in general?  Or is the IRS looking for something more particularized for each rollover accepted?

Thx

We recently discovered that our client/owner didn't have any eligible plan compensation but has funded the maximum 415 limit to both DB and DC plans for years.  

Thoughts on how to correct aside from basically removing all contributions and amending the company's tax returns?  

We were asked to assist a client who had a 403(b) plan since 2004 but never formally adopted a plan document or filed a Form 5500. 

If the client adopts  the plan document before the June 30 deadline, are we in compliance, or do we need to file a VCP for the plan document issue? Is the June 30 deadline only for defects to an existing plan document or can we use it for a plan that never had a plan document?

For the late 5500, the client will filed under DFVCP.

Thank you.

Client wants to take a COVID related loan of 100,000 and also take a $100,000 COVID related distribution. I haven't seen anything about a 100,000 loan and a 100,000 distribution.  I know that the $100,000 COVID distribution limit is from all plans.  But wasn't sure if that includes loans too.

A CPA asked me about this yesterday.  His client has money left over, and has no existing retirement plan.  So rather than return it, he'd like to open a profit sharing plan for his employees and pre-fund it with the PPP money (understanding that at the moment it may not be deductible).  Seems like it would be allowable, if maybe not quite in the spirit of the program...

We have had a 403(b) plan that has been inactive for well over 10 years.  It is a hospital plan that was previously bought out and taken over by a new medical organization.  No new contributions going into the plan past 10 years, just withdrawals.  The plan has never had more than 100 participants and currently have around 50 accounts in it.

Since the plan data is easy to obtain, the new organization has chosen to file 5500s each year even though I do not believe they have been required to.

The deadline for a new 403(b) document is almost here (June 30th).  Even though the plan is frozen and allows no new participants, a new document is still required, is that correct?

Thank you

We're looking to takeover a 401(k), currently the employer is in a MEP with Tri-Net; and set up a cash balance defined benefit for the same employer.

Does the employer "terminate" participation in the MEP?  Would Tri-Net consider this a plan termination (should probably ask them) and the prospect install a 401(k) SHNE as well as the cash balance plan for 2020 minus any deferrals made in 2020 and using full year's W-2 with the Employer as the Sponsor.

Apparently this is an employee-only plan.

Any help is appreciated.

We have a client that moved from one recordkeeper to another.  They were provided with several notices by the new rk and the funds have already been transferred.  Yesterday, we found out the client did not distribute any of the notices.  What are the penalities for something like this and does it require reporting to DOL/IRS?  Thank you.,

This is probably been discussed before and I am just not finding what I want.  Plan has a 25% match on deferrals, but the first 3% aren't matched.  I should know this, but I've never seen that formula.  My understanding is that participants not deferring 3% would still count as benefitting for 410(b) and also count in ACP test.  I think to test for BRF also.  Is that correct and if so do I include those who do not contribute anything as non-benefitting? 

Thanks for any guidance.

I missed my window of eligibility to participate in the DROP (Deferred Retirement Option Plan) plan with the FRS (Florida Retirement System).   I contacted FRS in March 2020 when I was ready to apply for DROP and received an email back telling me that I WAS currently in my window and had until August 2020 to apply.  I applied in May 2020 and received a denial letter saying that my window had actually passed.  I sent a letter of appeal asking them to reconsider as they had misinformed me of my window.  They apologized for the misinformation but told me that they did not have the statutory authority to change their decision.  I have worked under the FRS for over 30 years and had planned for my entire career to participate in DROP for the last 3 years. This will have a rather serious negative effect on my retirement. I cannot believe that there is no one who can override this decision.  I also cannot believe that my retirement system (FRS) does not alert us when we are in our window so that something like this doesn't happen.  Does anyone know anything about this, or how I might be able to get this decision reversed.