I just found out a week ago, while having my taxes prepared, that our company offered the SIMPLE IRA plan.  I noticed the "X" on box 13 and to be honest, never looked/noticed before.  Please excuse my fail to notice previous years.

I started in 2012 and checked all my past W2's and all had the check from 2013 on.  I asked the owner about this and he setup a meeting with me a few days later.  After initial investigation on his part he came to the conclusion that I wasn't aware/notified of the plan and he was concerned and assured me that this was 100% unintentional.  He stated the program was established/implemented in 2008 and he's aware that some employees have been contributing and others haven't.  I should mention he's VERY hands off in these situations and relies on other parties to take care of HR types of tasks, given we are so small and we don't have an HR dept.

I confirmed with other co-workers and most all were totally unaware as well.  One EE in particular has been employed since 2005.  Since we've always had 2 facilities (corporate/warehouse), up until 2017, it's feasible to understand a potential communication issue (albeit unlikely) due to 2 sites but still not excusable.  The employer recognizes the severity of this and is working with others to understand the impact and come forward with a plan to amend/repair.  I want to stay positive and optimistic and take him at his word about the total lack of proper communication and give him the benefit of the doubt with this revelation.

My concern is how something like this (involving possibly up to 10+ employees [past/present]), spread out over that 11-year time frame and how this will possibly be rectified?  If I can assume this was an honest mistake, as the owner stated, can this be fixed by the tools/guidelines in place for this sort of thing?  My hope is that it can because I would obviously want this to be a viable program and would like the years I missed out on, to be properly/fairly compensated and have a good program going forward while I'm here.

Basic details:
Plan established 2008.
Magically appeared on my 2013 W2 and ever since then (box 13).
     I will say that the EE that has been with the company since 2005, verified that the checkbox was not checked until 2013 as well so that's a little concerning.
Notification/forms were not presented for a majority of the off-site facility EEs and can't speak for the corporate side EEs.
Employer said he signed up for the 3% matching option (I'm aware of how those work since I've been studying the ins and outs of the SIMPLE IRA program feverishly since I found all this out).
Employer did state that our broker did tell everyone but I know this is obviously not true and I haven't seen him since I started in 2012 and he's never spoke to me about anything, that I can be sure of.

Trust me, based on all I've been reading concerning similar situations, I realize the word "egregious" comes to mind but wanted to find out from the professionals in this forum if this plan is recoverable or a lost cause?

I think that explains my predicament and really looking forward to some good advice from this forum.

Thanks for the help!

DR245

Currently active DB plan with about 25 active participants.  Employer will be hiring about 100 new employees later in 2020 and then more in the near future.  Employer would like for those employees not to participate in DB plan.  He will start a 403b plan in near future.  There is one HCE in DB plan.  If DB plan is frozen to new entrants effective say, 4/1/2020 and new 403b plan is established, will 401(a)(26) still apply to DB plan.  And if so, if DB plan is also amended to freeze and exclude HCEs, will 401(a)(26) still apply, or will plan satisfy 401(a)(26)?  Thanks. 

My question is the following:

Corporation A maintains a 401(k) Plan in the US.

Corporation A is a US company with foreign subsidiaries.

Corporation A has a number of employees that come and work in the US from their Canada and Paris offices. 

Can employees that have worked in the foreign offices have their time counted towards eligibility and vesting when they come over to the US?

Client makes profit sharing deposits during the year and also has a Cash Balance Plan.  In 2019, the profit sharing contribution deposited into the plan was greater than was deductible for combined plan purposes  (e.g. profit sharing exceeded 6% due to it being a service company).

Since the owner’s portion is not deductible and is below the 415 limit, can the money stay in his account and be treated as after tax basis for taxation purposes.

Is t his distribution subject to any withholding.  I assume no since it can't be rolled?  Correct me if I am off base here.

SIMPLE IRA plan has excess Employer match contributed for 2 participants for 2019 plan year.  The excess match totals $120, but excess is less than $100 for each participant.

Rev Proc 2019-19 says if the excess amount is $100 or less, the Plan Sponsor is not required to distribute the excess..

The question is whether that $100 limit applies by participant or does it apply to the plan as a whole?

Thanks!

Trying to run eligibility in Relius and getting the following error under Plan Specification Errors:  Sub PerformBulkWriteNet () :Database write error.    Relius no longer has their chat, so I put in an Incident but who knows how long it will take them to respond.  Anyone ever have an error like this?  The plan specs are fine.

I've looked all over the boards here and still can't seem to find a definitive answer to this question so I thought I'd take a crack.

Facts:

• Company is a sole proprietorship on 1/1
• On 7/1, company changes to an S-Corp. No change in ownership (the former proprietor owns 100% of the new S-Corp shares) and no change in business operations. Change in entity was done for tax purposes only
• On 9/30, S-Corp adopts a 401(k) plan with effective date of 1/1

Questions:

• Does service with the sole proprietorship count toward service eligibility for the plan even if the plan docs don't specifically call out the sole proprietorship as a participating employer?
• Is compensation earned by participants under the sole proprietorship included in plan comp for the year?

Seems like such simple questions and common sense tells me that service time should count and comp should be included since the only change made was for technical tax reasons (i.e., no change in ownership and no change in operations). However, I've looked and looked and only find conflicting information. Any clarifying thoughts would be appreciated!

I currently have a 5305-SEP at Vanguard where the last contributions were several years ago. I would like to open a one-participant 401k (to enable the "mega backdoor roth" option) with a provider that is also a TPA. Currently, I'm looking at Employee Fiduciary. I have a few questions about signing up.

1. My understanding is the 401k would be plan 2, with the SEP being plan 1. I know I'll need to "terminate" the SEP at Vanguard (even if they won't necessarily do anything). There will be no contributions to the SEP in 2020 and the plan will be "terminated" with the balance moved to the 401k. Can I terminate the SEP in the same year I open the 401k, assuming I make no SEP contributions that year (i.e., can the termination be retroactive to the first of the year). Or do I need to terminate the year before and/or amend to a prototype SEP (e.g., Schwab) as an intermediate step? There was a forum thread on this, but I don't think it quite covered this case:

2. Can the plan fees be paid as a business expense or do they have to be paid from contributions?

Thank you

Plan has loan feature, 2019 first year any loans.

Looking at the fundholder annual report, is reflecting loan repayments in the total contribution made during the year.  Is this correct?

This is a theoretical question but with possible relevance to one of our clients.  Plan A is a db that is has been around for >5 years, has a 10% per year accrual.  A is very overfunded, and client wants to adopt a new DB to gain some additional deductions for year X. Plan B is adopted at the end of year X and provides that the 415 limit is first applied to plan B. Plan A is not frozen.  As a result the benefit that employee X would have accrued in plan A for year X is now reduced due to the 415 limits. Plan A was not yet amended to state that the 415 limit is applied secondary to the new plan. For the year in question all participants are 5% owners.  Is this a 411(d)(6) cutback, since the benefit in plan A for year X was fully accrued the day before  plan B is adopted and will now be reduced. My understanding has always been that 415 limitations are not 411(d)(6) issues. 

 1. Is this 415 restriction considered a 411 issue? 2. If Plan A was also amended in yr X to state that 415 limit is applied secondary to plan B, would that amendment give rise to a 204(h) notice?  3. Does the adoption of the new plan require a 204(h) notice for employees in plan A?  Would appreciate some feedback on this one!

Good Morning to All!

I have been asked to post the following question to the group:

I have a situation where a participant's lump sum is being limited by the 415(b) limit. I.e. 5.5% and 2020 mortality LS factor with their high 3 compensation. This is limiting the lump sum as the plan is fairly rich (1.6% FAE 5 of 10) and the participant has 45 years of service (no cap, very generous). It's unfortunate, as the participant is not a high earner (approx 45k FAE) and it feels like the limit is impacting a participant it was not intended to target. I am wondering if there is any exceptions (other than ME, collectively bargained, church/gov't plans) that might allow this participant to receive their full LS?

One item I cannot find clear direction on, the plan was contributory long ago and the value of the participants contributions with interest is higher than the amount that the lump sum is being limited. (Their 415 max LS plus ee contributions is greater than the unrestricted LS). I would think that the 415 limits were intended to apply to the employer portion only?

Additionally, the plan offers split benefits (LA and LS) in 10% increments. I also thought perhaps they could take 10% as an annuity to reduce the LS below the limit, but the 90% LS the Administrator is showing is 90% of the restricted (415 limited) lump sum. Is there anything I'm not thinking of "creatively" on this? Is the participant truly just out of luck on their total benefit (if desire is to take as LS)?

Sorry for the ramble, thanks in advance!

Situation is as follows:

1.Three solo PAs(A,B,&C) that equally own another PA(D) that does billing and clerical work for all three PAs. No common ownership among A,B&C. A has a 401(k) plan;B and C do not. D has one NHCE  employee. If the NHCE of D is a full time ee he/she will need to be covered under A's Plan as it would seem to be an ASG. Are either of the following acceptable to avoid covering the NHCE in A's plan. i)Put the NHCE on B's payroll and just have A pay B for clerical work, ii)have the NHCE part time on A's payroll and part time on B's payroll so that A does not have to make employer contributions for the NHCE provided the NHCE works less than 1,000 hours for A.

Any thoughts or possible solutions are appreciated.

I have a client that has had a 401(k) Plan and has been taking RMD for several years. He terminated the plan in early 2019 and rolled his account into an IRA.  Question: In the year of termination, was he required to take an RMD from both the terminating plan and his IRA?  In other words, must he take two RMD's in 2019?

Eligibility 3 consecutive months

Assume Hired 2/15/2013  works only 400 hours a year.

Came into plan 7/1/2013

Terminated     8/1/2019

Rehired 2/1/2010

Never had 501 hours so they are all breaks in service.  Doc says we can exclude if employee had 5 or more consecutive breaks in service.  Does that include the years he was working too?

never put any money in the plan

Thanks

Client is moving from the short form 5500 to the long form based on the number of participants. In your experience is that switch more likely to trigger an audit? There are some other issues that require some expensive clean up. TIA

Can a charitable donation be made directly from an inherited IRA of a  non-spouse beneficiary?

Is the 2% S-Corp. owner health insurance considered a fringe for purposes of 414(s) exclusions?

Thanks for any guidance.

If the 401k plan year is July 31, 2018 to July 31, 2019, do you use the 2018 or 2019 5500 form?  

Thank you.