Hi.  We have an employee that approached us with the following request and situation:  she is the stepmother of a child.  She and the father are no longer married.  She has a court order awarding joint legal custody to the mother, father, and herself (stepmother).  Primary physical custody has been awarded to her (stepmother).  The employee (stepmother) wants to add the child as a dependent beneficiary to her employer-provided life insurance policy.  Our policy language requires that the non-biological parent be a legal guardian or that the step-mother be married to the natural parent.  The court order is a custody order and not an appointment of legal guardianship.  

Any thoughts?

I have a TCC for the IRS FIRE site and file the 8955-SSAs for our clients after they review them. 

Can I use the same TCC to file the 1099-R forms for the few that we do?  I wasn't sure if that same TCC code will work or if I have to prepare a 4419 and get a different TCC to file the 1099-R forms.

Still have some small balance forward plans and have been preparing paper forms.

Thanks in advance and hope everyone has a Happy New Year!

Client has various levels of ownership in a variety of businesses, and was operating a single 401(k) plan for all of the companies under the assumption that it was a controlled group. Well, SURPRISE!! It is not a controlled group. Now what? I understand that we will have to re-run coverage and non-discrimination testing for the years in question.  But, any thoughts on how to handle this going forward? Form a multiple employer plan? The companies are all in the same industry. 

Everyone is aware that Plan Sponsors have a fiduciary duty to periodically benchmark service providers, such as recordkeepers and advisors, that are paid from their 401(k) Plan. However, if a large company has outside counsel that they use for all corporate activities, but also pay sporadically from their 401(k) Plan when they perform work that can be paid as a qualified expense, do those services have to be formally benchmarked?

I think the selection of the outside counsel would be considered a settlor function since the fiduciaries are not involved in the decision. However, since they sometimes are paid from the Plan, does the Committee need to perform some sort of benchmarking on legal services? Any insights are appreciated. 

When I initially joined my employers 401K , (three years ago) I elected to contribute 30% of my pay. This would put me near the maximum dollar amount allowed. My employer will only deduct 20% of my pay for my 401K .  I did some research and found that they are allowed to do this. Apparently there is a rule to keep a few employees from contributing way more  than the rest of the employees. So I am contributing $15k a year. My age allows me to contribute up to $25k. What can I do to make up for  this shortfall? I already max out my IRA contribution.

General Rule: We have a plan where the sponsor wants change the pension formula from (Z x comp x service) to (1/2 Z x comp x service).  Employee R did not have the 1,000 hours needed to accrue before the amendment and only accrued 500 hours during the year.  Since Participant R has not yet met the 1,000 hours needed to accrue a benefit for the current year, it seems that anti-cutback does not apply and Employer can reduce his current year accrual.  No problem there.  However, the amendment will be adopted next week and will also reduce the hours required to accrue a current year benefit from 1,000 to 100.  Since Employee R completed 500 hours, so he then get an accrual.  The question is: which accrual is he entitled to receive?  My interpretation is the reduced accrual under the 1/2 Z formula because he didn't gain the right to an accrual until the very day that the benefit formula had changed.  Since both the formula and hour change occurs at the same time, it is confusing.  Better to amend the formula first, then the hours requirement in the following day?  Appreciate any comments here. 

I have been trying for two days to pay online a $750 payment under delinquent filer and the page does not come up.  Anyone else having issues?

Thanks.

This question goes to the definition of "active participant" in the f5500 instructions for a pension plan. My client received a $2 mill age 70 415 lump sum in 2012 under the C-limit, but he continues to work and is still accruing service and comp credits, BUT it is unlikely that he will ever be able to accrue additional benefits. His comp is $350k per year. I ran a MASD analysis and he is still about 10% away from ability to accrue. My question is: should he be listed as a participant on the Form 5500CR. On the SB he would not be listed as a participant since he has no current benefits.

Hi

This is a 2019 related question to confirm if my understanding is correct:

2019 w-2 is $30,000

Can I do the following:

PS contribution $7,500

401k Deferral $19,500

Catch up $6,000 - not limiting to 100% of pay

OR

2019 W-2 is $20,000

Can I do the following:

401k Deferral $19,500

Catch up $6,000 - not limiting to 100% of pay

Thank you and happy New Year and holidays

An employer is Top Heavy in it's initial plan year. If the plan makes a discretionary match to NHCEs, is this employer contribution included in the Top heavy ratio for the first year? 

Or does it have to specifically be a non-elective contribution as specified in the plan document?

Any feedback would be greatly appreciated. Thank you. 

Participant  divorced in 2011. DRO wasn’t qualified, but a hold was placed on retirement account.   
Participant remarries is 2014 (updating his beneficiary to current spouse ) , and becomes disabled as of Jan 2017, and opted to receive reduced  disability retirement. Commencing December 2018.   Participant elected optional spouse pension, and began receiving 50% of benefits.  
Erisa law allowed for plan to withhold for 18 months while waiting for a QDRO.   (Beginning Jan 1, 2017).   The plan continues to withhold 50%.   (December 2019 ).   
Having already commenced, and finding AP and her Attorney negligent in completely a qdro (as written in DRO) husband hires QDRO attorney to complete QDRO   It’s now being written as “Shared” QDRO.  
In our state disability retirement is not a marital assets so her shared payment will begin after participant turns 65.    
If participant dies before 65, survivor benefits are to go to current spouse.  ( as there was no QDRO at commencement )    If participant dies after 65 ...is it legal for AP to share the spouse pension with the current spouse?    And continue to receive her percentage of the “spouse benefit”  for her lifetime or until the current spouse passes ?  

A Plan Sponsor's Payroll Company processed a participant's deferral change in July 2018. For some unknown reason they stopped the deferral as of July 2019. There reason is it was an "anniversary election" - wait....what!!!

So now it is December 2019; and the participant has not had deferrals withheld from pay since July 2019. I have instructed the Plan Sponsor about the correction method to use. However, if the participant can still defer the maximum for 2019 from the final 2019 bonus paycheck, is the QNEC still necessary?

I don't know about anyone else, but I never knew about this form until I read Ilene's SECURE Act review:

Last but not least, a little-known provision of the Code requires plan administrators to file Form 8822-B to register a change in plan name or plan administrator name/address.  The penalty for nonfiling of that form will increase from $1 per day to $10, up to a maximum that is going up from $1,000 to $10,000.

Hi, A DB plan offers benefit option of Joint and Survivor combined with a years certain annuity. The J&S can use non spouse as the survivor (and of course there is a maximum % allowed based on the age difference between participant and the non spouse survivor). The plan offers cost of living (COLA) increases as well (up to 4.99%)----the  benefit at RMD age/ret. is reduced  due to the future increases of 4.99% per year. Is this COLA allowed to be used in a case where you are using a non spouse for the J&S? Thank you

SECURE permits retroactive adoption of qualified plans during tax return filing period beginning with 2020 tax years.

Obviously can't include retroactive 401k deferrals for corporate employees receiving W-2s.

But given the long running debate over the "deadline" for self-employed proprietors and partners to make 401k deferrals has anyone considered whether the new provision will allow self-employed to make retroactive 401k deferrals?

For example, some practitioners take the position that 401k deferrals can't be elected or deposited until the amount of self employment income has been determined which can be as late as the extended due date for the tax filing.

So could a "solo K" be adopted by a proprietor on 10/15/2021 to create a 2020 tax deduction? 

I saw this today in a SECURE Act review by Ballard Spahr LLP:

b. Nonelective 401(k) Safe Harbor Changes for Traditional and QACA Safe Harbors – The SECURE Act eliminates the notice requirement for safe harbor plans that make non-elective contributions to employees.

I can't put my finger on this in the text of the Secure Act text.  Can someone confirm this?

In the event an employer wants to merge a prior plan that contained life insurance policies in the accounts of its participants into a successor plan that does not permit life insurance, what options does the client have in regards to those life policies?

Husband and wife one participant plan has made nondeductible contributions in several years.  They still have over $100,000 of nondeductible contributions being carried forward to 2019.  They want to retire in 2019.  What happens to the nondeductible contributions that can no longer be carried forward, and what is the plan sponsor's excise tax obligation?  Thanks!

Would appreciate any opinions on a new employer using a plan effective date prior to the start date of the company.  I know the EOB says it may be possible but recommends requesting a determination letter which is not likely possible for a pre-approved plan.

Say the employer (in this case a one-man company) start date is November 1, 2019, and the employer wants to start a calendar plan for 2019.  If we make the plan effective for November 1, 2019, but define the limitation year as the calendar year, are we still good with not having to prorate limits?

Thanks.

All: 

I have a plan with 401(k) deferrals and profit sharing.  The plan is top heavy.  The elig for the 401(k) is age 21, 1 month of service entering monthly.  The profit sharing is age 21, 1 YOS, entering quarterly.  It is a new comp plan with each person in their own group. 

I have an employee with a DOB in 1993 and a DOH of 9/29/2017 who was hired as an intern.  On 10/24/2019, she was reclassified as a "regular employee".  She did not complete the YOS (1000 hours) in 9/27/2017 -- 9/26/2018 or 1/1/2018 -- 12/31/2018.  She will complete the YOS for 1/1/2019 -- 12/31/2019. 

Based on her data, she will become a participant in the 401(k) portion on the date that she becomes a regular employee (10/24/2019) and she can begin to defer immediately.  Since she did not meet the YOS previously, she will not become a participant in the profit sharing portion of the plan until 1/1/2020. 

So for 2019, she is eligible for the 401(k) portion of the plan.  She is actively employed on the last day of the plan year so she is entitled to the TH minimum allocation. 

The issue is that based on her indicative data and the fact that the 401(k) portion uses an elapsed time methodology for eligibility, I believe that she would be a statutory employee.  (She has met age 21 and she has met a YOS, on an elapsed time basis, on 9/26/2018.  Based on the statutory entry dates, she would be a statutory employee as of 1/1/2019.)  Do you agree?  If not, why? 

Under the assumption that she is a statutory employee, she is now required to receive the minimum gateway contribution.  If this is correct and she does receive it, she will have a high EBAR and cause the testing to go from failing to passing.  Does anyone see any issue with this? 

One more thought on this is, if the allocation changes and the testing then fails, I cannot provide her with an additional contribution that would cause her to get something above the gateway as she is not entitled to it.  Agree? 

Finally, the plan calls for compensation while a participant in the plan, so I ask what should her comp be for minimum gateway purposes?  Since she is received the TH min, should it be her 415 compensation?  If not, what should it be since she has no compensation defined for the profit sharing portion of the plan since she is not eligible. 

My apologies if this is rambling.  Please let me know if anyone has any questions.  Thanks in advance.