Hi

Having a bit of brain freeze.

DB/DC combo, both plan t/h. DB does not provide t/h and also no t/h for key under DC. Plans tested together

I have owner, a non-owner HCE and NHCE, total 3 participants.

Non-owner HCE gets 0.05% in DB for 401(a)(26). NHCE is only covered under DC.

For 2020, gateway requirement is 5%. The owner does not want any PS allocation and will only get 3.5% of compensation as AB in the DB plan.

Under gateway, NHCE gets 5% in DC.

What is the minimum t/h I have to provide to the non-owner HCE under the PS plan?

3% or 3.5% or 5%

Thank you

Does anyone know what the repercussions are for failing to include a Schedule SB? Is it similar to failing to include an auditor's report on an audited plan and the client will receive a letter from the DOL providing 45 days for the client to correct the filing?

Does a 412(e)(3) Plan get an extension to 12/31/20 to make a 2019 Plan contribution, and, if so, does the Plan have to file a 5500 by 10/15 not showing the contribution or is it extended also. 

Thanks all.

Hoping someone out there has also experienced a DB plan termination (covered by PBGC) where the investment firm has refused to cut checks to participants who are on the US Treasury's OFAC (Office of Foreign Access Control) list, presumably due to drugs or terrorists involvement.

In our client's case there are two participants, total lump sum = $110K.  The participants are working with an attorney who has signed distribution election forms on their behalf.  One or both of these individuals are no longer in this country.  They both have elected a lump sum payment.  Not sure that the PBGC missing participant program is a viable option since they are not missing.  In addition, the client is not happy that the cost under the missing participant program = $135K rather than the 110K lump sum amounts.

Does anyone have a suggestion.  The client wants to close out the plan as soon as possible but does not want to end up with a legal nightmare.   

I have a few clients who signed Profit Sharing documents for 2019, but due to COVID opted not to make their contributions and instead plan to start in 2020.  Since there were no contributions in '19 and the assets are $0, is it necessary to file a Form 5500 with $0 assets?

Thanks!

Are you able to freeze a 412(e)(3) Plan that is fully funded with life insurance and annuities?

If so - what about the premiums that are required?

A client just purchased/re-organized various companies so that we now have a controlled group due to family attribution.

                              Company A&B                   Company C

Dad                       51%                                    100%

 Son                      49%

 Currently we have three different plans with different entry dates, all are safe harbor match plans.

A--after 3 months immediate entry at the beginning of the month.

B—immediately upon hire

C--1 year, due entry 

 All companies have roughly the same number of employees—5 to 10.

The client is resisting one plan document with the same entry date for all participants.

 Won’t the different entry dates most likely cause testing to fail?  Which tests will most likely fail? 

 Am I required to have only one plan document?

Thanks

Hi,

Can anyone tell me if the increased loan limits under the CARES Act has been extended past September 27? 2020?

Thanks.

Takeover 401k PS plan - never had a TPA apparently.  There has never been tracking of balances by money source (401k & PS only). Terminated participant wants to take a full distribution. For tax purposes upon distribution only, does it matter that there are no defined balances between sources?

Does anyone know if DFVCP filling fees can be paid to the DOL from plan assets (ideally, forfeitures), or do they have to be paid directly by the plan sponsor?

I haven't seen a lot of discussion of this issue. That's likely because of at least two reasons: first, in DC plans where most people terminate and take a full distribution on or before NRD, there are thankfully relatively few death distributions, and second, Covid has thrown everything into a tizzy this year.

At any rate, recordkeepers are beginning to send out their "default" provisions - so it seems like a good time to think about the subject in more detail.

My own preference, from a plan admin point of view, and for most of our clients, is the desire to get such amounts paid out of the plan sooner rather than later. Beneficiaries GENERALLY want the full lump sum amounts ASAP (whether in cash or rolled to an IRA) so I'm really talking about a limited number of situations. Do you plan to allow the full range of allowable distribution options, or restrict it to a lesser time period (for example, the current 5-year limit)?

I have seen some auditors attach to the 5500 as the audit report a letter that basically says "hey. we're working on the audit."

The benefit of this approach (which is what I don;t like about it) as the filing will be accepted without error.  I happen to think it is a little disingenuous because though it looks like you are "doing the right thing" by disclosing the fact that you are working on the audit it has the effect of hiding the fact that you haven't done the audit.

Do others recommend in favor of or against this approach?

Giving out the SAR today for the 2019 plan year.

Who gets it?

All current eligibles as of today and former ee's with a balance as of today?  New participants in 2020 will get it.

All current eligibles as of 12/31/19 and former ee's with a balance as of today? New participants in 2020 do not get it.

As I understand it, former ee's with no account balance at the time of distribution of the SAR do not get it.

Client neglected to mention that the ownership for their company had changed to 50/50 between Owner A and Owner B. Further, Owner B owns another company 100% and the plan's census has "always" included comp from this other company in calculating allocations. I don't think there is a controlled group, because identical ownership isn't greater than 50%; however, I think it wasn't appropriate to include comp from, essentially, an unrelated company (until 2019). I *think* what I need to do is amend their plan to include the other company as a participating employer back to at least 1/1/2019 and/or amend the plan to allow employees to participate through the comp from the other company.

Your thoughts?

The Internal Revenue Manual describes a method for a plan’s administrator to decide a claim for a hardship distribution using only the participant’s written statements, including some that “summarize” an expense incurred.  Under this method, the administrator need not read, nor even immediately collect, a source document that shows the claimed hardship expense. 

https://www.irs.gov/irm/part4/irm_04-072-002#idm140377115475856

How many of your clients use this method and do not ask for any source document?

How many of your clients require a source document?

Do your clients’ methods vary with the plan’s recordkeeper?

Filings for 2016, 17 & 18 did not have the Sponsor's phone number entered.

Client insists she wants it that way.

5500 software validates all the way without it.

Is the phone # somehow optional?

R ally quickly, sole spouse is the beneficiary of a qualified plan. Participant passes, the sole spouse wants to keep the funds in the plan (spoke with Plan Admin and they are okay with solo spouse staying in the plan). We are updating the titling to John Doe deceased FBO Jane Doe (she doesn't want to do an assumption b/c she is under 59.5). Here's the question, if we are re-titling the account as a decedent account, it's still considered a rollover and we have to report it on a 1099-R with a tax code "G" or maybe "G4"? Because she rolled it over to an IRA, 1099-R would be issued.

Husband and wife were divorced ten years ago and a QDRO was issued awarding the wife 50% of husband's account. Wife, as the alternate payee, chose to keep the funds in the plan. Husband had primary custody of children and was due child support payments from the ex-wife. Fast forward ten years and the ex-wife has not made any child support payments. Husband obtained garnishment order from the court going after ex-wife's alternate payee account. The order also mandated that the garnished amounts be rolled over to the husband's account under the plan. The only way I see this being accomplished is if a QDRO was issued for the child support arrearages allowing for a rollover to be accomplished. The plan document is silent on the rights and status of alternate payees. With that being said, can you QDRO an alternate payee's account? Also, this is more of a family law question, but can the husband use this backdue child support for his own retirement purposes? 

Jane starts out 2020 owning 100% of both Company A and Company B.  Both companies make and sell products, they are not service orgs and they do not provide services to each other.  Company A has about 50 ees and a 401(k) plan.  Company B just employs Jane and her husband (B's actual production is outsourced) and B has no retirement plan.

In July 2020, Jane sold 23% of A to a private equity firm, so now she owns 77% of A and 100% of B.   So effective with the transaction they are no longer a CG.

Can they now establish a plan in B for just Jane and husband for 2020?

My first reaction is that if the plan is set up for calendar year 2020 this would not work due to the CG. Coverage testing would be based on the plan year and they have former NHCEs > 500 hours in the testing group.   If they set up a plan in B effective 10/1/20, then the plan never exists while there is a CG, and the testing year would not include any NHCEs so presumably they would not have to consider company A in coverage.   But does this raise a potential 1.401(a)(4)-5 discriminatory timing concern?     Thanks.

If a self-employed individual exceeds the 402(g) limit, is he subject to the refund correction?  He didn't get a W-2 and his tax return hasn't been filed yet so he really hasn't taken the deduction at this time.  Could his accountant change the deferral on his tax return to $25,000 (2019 limit) and then we could apply the excess to another contribution type for 2019 (ie. match true-up or PS)?