We have sort of a hodge podge of different versions of Adobe in the office.  Its working but some are getting outdated, etc.

What are others using?  I kind of like the Office 365 approach where you pay a subscription and everyone always has the same and most recent version of office.  Is there such a subscription based model so you don;t always have the office on old versions?

Definitely relying on these pdf tools more in a paperless age.  But not as much as we rely on money of course, which is why Adobe is not in the running!  I'm sure Adobe must do something amazing to justify the price, it's just not anything I need.

Just wondering -

If the plan isn't going to actually file a 5500-EZ because the assets are less than 250,000,  does the Schedule SB still have any 7/31 or 10/15 signature deadline for the actuary?

The 5500-EZ and 5500 (Schedule SB) instructions don't actually seem to indicate that affirmatively.  Only that it be retained by the plan administrator.

Thanks....

-bri

Some states are paying certain front-line employees a "grant" or "extra payment" or whatever you might want to call it. This comes from the state/federal funds, and it is run through the employer as TAXABLE wages. The employer doesn't pay this out of their own pocket.

Is this considered eligible compensation for deferrals/profit sharing/whatever? The "simple" answer is that the plan in question defines compensation as W-2, so it would seem that as long as this is being reported/taxed on the W-2, it should be eligible compensation for plan purposes.

But since nothing is normal this year, I thought I'd see if anyone has different opinions?

As a TPA I'm being asked by a CPA whether paying employees Sick and Family Leave constitutes compensation for purposes of any 401(k) Safe-Harbor contribution.

Any thoughts?

Plan used to be hubby & wife pooled account.

Then daughter joined the company in 2016. 

Plan was amended to participant-directed effective 1/1/16.  Daughter opened her own account.

However, the husband and wife contributed to utilize the pooled accounts (there were two, now there's three!).

What kind of problems am I looking at with the pooled account for the parents, but an individual account for the daughter?

(No other employees)

Is it still accurate that if a Plan has less than $250,000 in assets they don't have to file a Form 5500?  I know I've heard it before, but I don't see it in the instructions for the forms.

Thanks in advance!

I have a plan that did not make their 2018 profit sharing contribution until September 15, 2019.  Under the correction methods they are allowed to make that contribution but they have to  make sure that the 415 limits for 2019 still pass including the 2018 profit sharing amounts.  I have one person who terminated in 2018 so does not have any 2019 compensation so their 415 limit would be exceed for 2019.  Since this is a new comparability formula with everyone in their own class and their contribution was necessary to pass the test in 2018.  Can this money be removed from this participant and put in suspense or reallocated?

Participant takes a COVID loan on 9/1/20, and defers payments. Question is, when this is re-amortized for payments to begin after 1/1/21, does the loan ending date become 12/31/2025? The participant seems to think that he can go to 12/31/2026, but, truthfully, after reading the literature on COVID loans, I can safely say I have no idea. 

Thanks for any replies.

If a firm is structured as an LLP, there are no shares.  Can an LLP convert to a C Corporation?  

If an LLP owns a company, and they want to sell 30% to the employees via an ESOP, can they "convert" the LLP to a C Corp so the owners can use a 1042?  Is there any way to enable the owners to get 1042 treatment?

We have a DB plan for a Sole Proprietor.  His net Schedule C after FICA deductions but before deduction for contribution was $10,000.  The contribution for 2019 was $9,293.  Is this okay?

Is it too late to decide to exclude pre-1/1/09 contracts?  Taking over a new client approaching the audit and they have 10 or 15 pre 1/1/09 contracts.

I would just report them as a distribution I guess (if it is doable).

So, my ex-employer from 5+ years ago just sent me a letter asking for the return of $6400 that it says was distributed from my old 401K plan, in a nutshell that the amount wasn't vested.

I left in 2015, and officially rolled over my 401K balances/funds into a Rollover IRA in 2018.  

This is official text of letter...

Quote

"...we discovered you have an overpayment from your account in the XXX 401K Plan....we determined the vested amount in your 401K plan account was overstated when we processed your distribution request.  As a result the overpayment is not eligible to be distributed because it is not vested"

"The overpayment is $6426.10 and must be returned to the plan excluding any additional interest"

"In addition the Plan must notify you that the overpayment amount was not an eligible rollover distribution if your distribution was rolled over into a qualified retirement plan or IRA...you may request that the plan administrator or your IRA trustee transfer the overpayment funds back to the plan"

"You will receive updated 1099's for the original tax year of the overpayment by the end of November"

Soo...questions.  What should I do with this?  I figure that at the very least I'm going to owe the IRS an early distribution penalty on that $6400?  But isn't that admitting that I made a mistake in fact when this was the error of the 401K plan?  Do I need to pay back this amount?  Any advice is appreciated   Thank You

In our adoption agreement we exclude for deferral, match and employer discretionary contributions "all fringe benefits (cash and non-cash) . reimbursements or other expense allowances, moving expenses, deferred compensation, and welfare benefits.

I am new having just started in July and working with auditor- they have picked a sample who was paid short term disability for about half the year (2019) and are questioning why she did not get a match true-up. We are self insured and pay the employee STD through payroll. She did have  401(k) deferrals withheld on the STD pay and the plan was amended 1/1/2019 to exclude this from all plan contribution types;i.e 401(k), match and employer discretionary. The employer discretionary did include the STD pay for compensation purposes as well

What is meant by "welfare benefits"? Would employer paid STD pay be included in this welfare benefit exclusion? 

Much thanks!

Alexa

ps. 1 follow-up : we do exclude in another section of plan compensation "long term disability payments" but STD is not mentioned here

Hi

I was asked the following by one of my CPA's for 2019.

"I have a client whom who has two W-2s and whom who is allowed to make catch-up contributions on her 401(K) contributions.  On one W-2, she has made traditional contributions of $25,000 and on the other W-2, she has made Roth contributions of $25,000.  Since she is limited to the $25,000, can she just have the money distributed to her in 2020 and have a 1099-R prepared"

Since one is deductible and the other is after taxes, how is this handled/corrected? I believe it is all for 2020 but which deferral is to be corrected?

Thank you for your comments.

Can I set up  a new profit sharing only Plan effective 10/1/2020, and then have the 401(k) and SH Nonelective effective 11/1/2020?  This would ensure that my plan year is at least 3 months.

I bleeive the answer is no.  So  many articles that say "the plan year still must be at least 3 months" are not specific enough, and really the same old requirement that CODA must be effective for 3 months still applies.  And any the SECURE Act amends the statutes, and it is the reg that includes the 3 month minimum.

Anyway, just want to make sure we are all on the same page that in order for a new plan to be a safe harbor, it must be established and accepting 401k by 10/1.

All I can see is fog today.

Employee enters calendar year plan on 7/1.

401(k) limit remains the max (based on age) as long as the pay supports it within the partial year of participation 7/1-12/31

PS limit - I believe it also remains the max as long as the pay supports it within the partial year of participation?  They Comp Limit would also not be prorated in the participation period.  it's just when there is a short fiscal year that Comp and 415 are prorated?

Just too foggy today to recall.

I have a client that offers group health insurance to its employees.  The employer contributes up to $500 per month toward the cost of the benefit for each eligible employee.    One employee does not enroll in the group health plan because he is covered by his wife's group health plan through her employer.

The employer has decided they want to pay this employee the $500 benefit that he is "missing out on."  The employee and employer insist that this should be considered a non-taxable health insurance reimbursement.   Their argument is that all the other employees receive the $500 employer paid benefit non-taxable.  From everything I have read, that is wrong and it is considered  cash in lieu and is taxable to the employee on his W-2.     

Can anyone provide me with an authoritative source (IRS Notice, etc.) that addresses this and states that is should be taxable income to the employee (assuming I am correct)?

Thanks in advance!

Sorry, I'm not a health and welfare plan expert but I've come across a couple of situations recently that have me confused. 

In both, there has been a clear controlled group with at least 2 different companies set up and with different welfare benefits at the different companies.  In the first group, they offered the same health plan and 401(k) plan across different companies but the company with all the execs also had group life insurance, vision, disability, etc., some of which was partially paid through a group cafeteria plan.  Other companies in the group, however, did not offer welfare benefits beyond the group health but had folks, of course, participating in the cafeteria plan for health insurance premiums. 

In the second group, they offered a robust, highly-subsidized health plan to the one company with all the executives and longer term / permanent employees along with a full suite of other welfare plans.  The other company within the group, however, has only bare-bones group health plan with less employer contribution and no other welfare benefits.  Apparently that company often employees individuals on a full-time but less long-term / permanent basis.  Some individuals have been there years though.  And they do get to participate in the same group 401(k) plan (which is how I came to this issue) but not at all the same welfare plans (including no ability to participate in the health FSA under the cafeteria plan that the parent company offers).

Assuming the different medical plans at the two companies both pass ACA muster (which is probably questionable on affordability), surely these arrangements cannot pass the Section 125 tests?  When I asked about 125 testing though they all look like I'm from another planet.  (That doesn't surprise me as I know that testing often gets ignored but I'm curious how brokers are setting up such disparate benefit offerings without a concern over various testing issues.)  Am I missing something?  Thanks.

Client discovers that 1094's have not been filed since 2016. They want to come forward and file and pay any penalties, but hopefully negotiate them down if possible. (We estimate that if the IRS actually imposes the full penalty, the number will be in the low 6 figures.) 

Any thoughts on how to do this? Just file the forms and wait to see what happens? Or try to do some type of "submission"? Where would you even submit it? 

All ideas welcome!! Thanks in advance. 

I have a client with a DB plan who has decided to delay their contribution until 1/1/2021. Since there is an unpaid minimum contribution on line 11a, how would I answer line 11b about the reporting of missed contributions to the PBGC? I cannot find anything that provides an answer.