Plan uses 415 safe harbor comp.  The Owner of a Sub S Corp is now on Medicare.  The business pays the Medicare and Supplement premiums on behalf of the Sub S Owner.  Would this premium be added to the Sub S Owner's compensation for plan purposes?

Employer deposited $50k in 2019 for a profit sharing contribution not realizing they had excess DB assets of $52K  that came over from their terminated DB plan which would cover the 2019 profit sharing contribution which ended up be $44K to max out the owner. 

Question - if the CPA does not take a deduction for the $50K deposit can they just carry the $50K over and allocate it in 2020 or is there an issue with funding the plan and not allocating the money - is there a penalty for that?

A charter school 403(b) plan provides that all employees who work 10 or more hours a week are eligible to participate in the plan. Plan also establishes a minimum deferral of $10 per month.

My understanding of Universal Availability is that no minimum age or service requirement is allowed for eligibility to make elective deferral contributions. Statutory exclusions for elective deferral contribution eligibility:

• Employees whose annual contributions will be less than $200
• Employees eligible to make salary deferral contributions to another 403(b), governmental 457(b), or 401(k) plan sponsored by the same employer
• Non-resident aliens with no U.S. source income
• Students performing services described in IRC Section 3121(b)(10)
• Employees who normally work less than 20 hours a week (lower number of hours can be selected) subject to certain conditions.

Does the charter school 403(b) plan design comply with 403(b) regulations?

There is a lot of information out there about what a permissible Normal Retirement Age is.  IRC 411(a)(8) says that a plan cannot have a NRA later than 65 & 5.

The plan I am looking at has a NRD that is the last day of the plan year (December 31) in which 65 & 5 is met.  So, for someone born on January 1, the NRD would basically almost be age 66 for them.

Typically, plans define NRD as the first of the month coincident with the attainment of NRA.  This has the same issue as the one noted above, in that someone born on the 2nd day of the month would have a NRD that is almost at age 65 1/12 and someone born on the first day of the month, the NRD would be 65.  But this doesn't feel as unfair as the example above, where the NRD is practically at age 66.

What restrictions are there on NRD?  This might be a dumb question, but I've never had to think much about it since all the plans I've seen before have a NRD that is close to NRA.  

Client sent me a screen shot of their prior TPA's data collection module.  It seems to be called "Plan Sponsor Link".  There are several tabs across the top of the screen, including one that says "Annual Data Collection".  Underneath there, are a series of "Steps" including General Information, Principal information (e.g., owners and officers listings), Family relationships, Other Businesses, etc.  Green Checkboxes appear for steps that are complete.

It's obviously a program someone built for TPAs. And it looks awesome.  Really awesome.

Does anyone know the name?  I figure some of you are probably using it too.

Client recently notified us that they have a 457(b) plan for their executives and they are not sure if they have a Rabbi Trust in place.  Their plan was established over 10 years ago.  Is there a problem with establishing one for the assets now?

Employer make prevailing wage profit sharing contribution. That is the only profit sharing contribution.  Is it subject to General Testing? If yes, Gateway if using accrual basis? In this plan's case, there is an HCE who receive the PW contribution.

Also, how do you determine who is "eligible" for the prevailing wage?

SHM 401k plan with age 21 and 1 year eligibility, excludes union employees.  A non-union employee has been contributing to the SHM non-union plan for several years.  During 2019, he switched to a union employee but is continuing to make deferrals to the SHM non-union plan.  His Shop Steward told him that "since he cannot contribute to the union 401k for a year, he can continue his SHM 401k Plan contributions until that time."   Is this accurate?  Since he already completed the one year of service requirement with the Employer as a non-union employee, shouldn't he be able to enter the union 401k plan on the date he switched?

I have a large plan that failed ADP/ACP testing for 2019.  They have 11 HCEs and 200 plus NHCEs -- they want to know now how much HCEs can put away in 2020 in order to pass the test. Not sure how to figure this out.   They do current year testing and are less than 5 years old so they can't switch to prior, correct?

Hi all,

First time post here; therefore, I apologize if this has been previously discussed.

I have a question about vesting in the final 33% of my employer’s match. To my records, I’ll vest in it after 1,000 hours of service, which I should hit on Friday 6/12. The previous 2 years when I vested in the first and second 33%, I saw that amount become vested in my T Rowe account the following pay day, which in this case will be on Friday 6/26.

My question to you is if I put in my 2 weeks notice on Wednesday 6/17 (to resign on Wednesday 7/1), which will be after I hit the 1,000 hours of service, but before I see it become vested in my account on T Rowe, will it forfeit my unvested amount? Sorry for the complicated timing, but it’s roughly $12,000 that I’m set to vest in, and I don’t want to make a mistake and leave it on the table.

Thank you for your time! 

As you already know, Code Section 401(a)(9)(C)(iii) provides that if a participant who is not a 5% owner has his or her required beginning date be the April 1st of the calendar year following the calendar year in which s/he retires, the plan is required to actuarially increase benefits after the employee attained age 70 1/2. When the SECURE Act increased the age for the required beginning date from 70 1/2 to 72, it did not increase the age at which actuarial increases are required to begin to be made. Is this merely an oversight or intentional? Any thoughts about what the IRS or Treasury intended to do in this provision?

Hi all,

Thank you in advance for your input.  Long time lurker, but 1st time poster.

My question pertains to the language of the governing IRS rule, IRC section 408(p)(5)(A)(i) for SIMPLE IRA employee deferrals:

Quote

(A) an employer must—

(i)

make the elective employer contributions under paragraph (2)(A)(i) not later than the close of the 30-day period following the last day of the month with respect to which the contributions are to be made, and

The IRS FAQ states:

Quote

You must deposit employees’ salary reduction contributions to their SIMPLE IRAs within 30 days after the end of the month in which the amounts would otherwise have been payable to the employees in cash

I'm paid monthly, on the first business day of the subsequent month.

For instance:

January-->paid 2/3/20 for January

February-->paid 3/2/20 for February

March-->paid 4/1/20 for March

My interpretation of the IRS regulation is that elective employee salary deferrals should be made as following:

For work performed in January, no later than 30 days from 1/31

For work performed in February, no later than 30 days from 2/29

etc etc.

However, my employer is interpreting this as "since I'm being paid in in February", the employer has 30 days from the end of February (i.e. end of March) to make what were my January salary deferrals.  I strongly disagree and feel that this 60 day window is a clear violation of the law.

What do you think in response to the IRS definition of "in which the amounts would otherwise have been payable to the employees in cash"

Please let me know if I need to clarify.

Hi

My apologies if this was discussed before.

RMD recipient advises their broker to have 15k of the 30k RMD to be provided to charity and 15k to them. But now gets a 1099 for 30k.

Can RMD's still be provided to charities? Does it matter if from a pension plan (any type) or IRA?

Thank you.

I have been searching in vain for discussions concerning the impact of the SECURE Act on the allocation of pension and/or retirement benefits.  

Ex:  May a Participant in a 401(k) Plan elect an annuitized payout of his 401(k) Plan account prior to the divorce and thereby deprive the Alternate Payee of the ability to elect an immediate  lump sum tax free rollover or a taxable distribution? 

Thanks,  

David

We do not work with 457 plans but a financial advisor who refers to us asked me about a 457 plan that they took over management of - specifically what is the plan document restatement cycle like for these plans?  Was there an April 2016 PPA deadline like 401(k) plans?  Or something else?  When was the last required restatement deadline?

Thank you,

Tom

Cross-tested plan. Compensation for allocation purposes excludes certain items such that 414(s) testing is required. Plan requires last day/1,000 hours to receive employer contribution. Pan is NOT top heavy, nor is it a safe harbor. Question is this:

Terminated participants with more than 500 hours, so not excludable - when doing the rate group testing, for purposes of the 70% ratio test for the rate groups, do these people have to be included for purposes of 414(s) testing?  Seems like I recall that they are not included in the 414(s) test for this purpose, as they are not benefiting.  In other words, are they automatically included in the 414(s) test if you go to the average benefits test, or only if 1 or more rate groups fail the ratio test, and you must move on the the ABPT?

The plan in question passes the 414(s) with flying colors regardless, so this is more a question to avoid a future brain cramp. 

Thanks.

Two participants terminated employment in July, 2019.  They are zero% vested.  

The plan document says if participant’s vested account balance is zero, the participant is deemed to have received a distribution.  (Plan allows for “immediate” distribution upon termination of employment.)

Document further says that participants receiving a distribution shall forfeit the non-vested portion of their account as soon as administratively feasible after distribution (but no later than end of plan year during which distribution occurred). 

Plan sponsor decides to make a profit sharing contribution for the 2019 plan year.  It’s new comparability with each person in their own class.  The goal is to maximize the owner’s contribution.  In order to do so, the terminated eligible participations require an allocation to pass non-discrimination.  Plan does not have a last day or hours requirement to receive an allocation.

Contribution has not been deposited into the plan yet.  Under normal circumstances, I would think the contribution needs to be deposited to the plan, but since they term’d with zero vested balance, the amount can be forfeited.

Here’s the kicker:

Sponsor is terminating the plan in 2020.  

One thing I read is that anyone with an account balance is fully vested upon plan termination.   Do these term’d employees have an “accrued” account balance?

The other thing I read says “In General Counsel Memorandum 39310 (1984), the IRS ruled that participants who separate from service and are paid their vested accrued benefits need not become further vested if the plan terminates.”

Should the two terminated participants become 100% vested in this instance?  

We have a client who wants to condition the annual matching contribution for a terminated employee on the employee having worked 520 hours (obviously OK) AND having given and worked 2-weeks notice before he leaves. 

I have never seen a plan condition an allocation for a terminated employee on the employee giving/completing notice.  I can't really find a reason why this would not be allowed though.  Any thoughts on this?  I do realize this adds an additional wrinkle for coverage testing, as far as an additional element we are tracking in making the determination as to whether a terminated employee is benefitting for the match.

Thanks!

Hypthetically,    You see multiple factors pointing / leading to inevitable Market crash   ..........     but,   before that you manipulated your 401K to have in place  45% cash,  45% bonds, and 10 %  stocks  in order to reduce the overall loss to your 401K.     My question is ,    the 45 %  Bonds that you moved into   . .    what type of commitment comes with making that particular move  ?  When someone does that ,   are you now held accountable to remain in those particular Bonds for a particular amount of time ( maturity ) .    What is a minimum amount of time a person can participate in a Bond   ?

signed,      BUG

An employer can have a 401a, 403b and 457b plan,  a DB plan and a 401k plan or separate 401k plans for employees covered under a collective bargaining agreement and all other employees, but I have had the understanding that there can not be more that one 401k plan covering the same employees. This was based on the premise that it is impossible for an administrator to serve two masters. I.e. which plan's participation requirements, plan features, etc... would apply.

Is this correct or am I wrong.  Is there any IRC, CFR or other IRS guidance confirming this either way. Or is there some level of inference that drives this.