austin3515

He's the national leader in 401ks as far as I am concerned. There's no one quite like him!

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 Its working but some are getting outdated, etc.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.

Dave, has anyone in the history of Benefitslink ever had more likes than posts besides Derrin?

Please, call me Austin ?

Not surprisingly my plan is a TIAA plan as well. And of course the scenario is that in 2009 pre 1/1/09 contracts did not matter so there was no need to exclude them. They have been reported as plan assets all along. The question would be, how do I get those assets off of the 5500? I suggested distributions, but if you have another idea I'd be all ears! One suggestion was to amend all 10 of the prior 5500s, which admittedly would work, but would be quite a bit of extra billing and work!

Well we're trying to avoid an audit in the first place. Count is about 115 people, so not over the threshold yet. Let's see if anyone has ever done this!

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).

Thanks Derrin!

This is hysterical - this article directly on point was in my in box last night! https://ferenczylaw.com/flashpoint-the-three-month-rule-and-retroactive-safe-harbor-elections/

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.

But it sounds like you think if its not in the document, it is not permitted? I will ask the document provider...

Two beneficiaries are 50/50. Participant dies recently (i.e., within a month or so). Beneficiary A is well off and does not want the money, they want it all to go to Beneficiary B who is not as well off. Can Beneficiary A disclaim the benefit? I have the IRS said yes, but one federal court said no, and another one said yes, etc. And I have heard state law is an issue. Our volume submitter document (Corbel/Relius) appears to be silent on the issue...

Ees with under 20 hours per week were excluded from participation, butt he document did not indicate that they were excluded. Have people tried to do VCPs for this to amend retroactively to exclude?

I want to add some emphasis here. If your client has a rollover IRA with Fidelity that has $100,000, and then contributes $6,000 nondeductible to a Charles Schwab IRA, then youre client has made a big mistake. Why? Because when you convert $6,000, $100,000 / $106,000 * $6,000 is taxable income. You have to add up ALL IRA's when figuring out how much of the conversion is taxable. The workaround is to roll that $100,000 into the qualified plan. But I'm sure this is missed all the time which is why I mentioned it here.

How about you fund it and then they just take a distribution upon termination. They can even fund it last minute. If under 59.5 its true there is a 10% penalty tax, but that presumably will be a relatively small price to pay for not having to worry about it.

I just read through the language in the Corbel Doc and I think what Derrin says about the PPD document applies to Corbel too. "The discretionary matching contribution under this Question 29.A.a. is a “Flexible Discretionary Match” unless the Employer elects to use a “Rigid Discretionary Match.” (Choose a. if applicable.)" So, I guess it depends on what the definition of "use" is. It does NOT say unless the Employer elects the Rigid Match formula below. It just says if it USES the rigid match. I guess the big question is going to be how to do they program it in Relius Docs. And I suppose where my last post is ending up is, why would you ever not elect the Flexible Discretionary Match AND the Rigid Discretionary Match?

So formula a is x% of 4%, annual computation period. Rigid match. formula b is flexible discretionary match. I get to choose between the two, which means the allocation of the match is now ambiguous notwithstanding the rigid match checkbox. and not for nothing if my spd says I’ll Match on deferrals up to 4% and then I turn around and match on deferrals up to 6% that would be pretty ridiculous. and now let’s say the rigid match is used every pay period to calc a match. And now we want to say “ok I’d like a true up so I’m going to now switch over and say this is a flexible match.” I do the true-up and give the notice. so the end result of the last one is that I now get to keep the option of the annual true up under a rigid pay period match and only do the notice if I do the true-up. And again the benefit is no true up = no annual notice. I keep all the flexibility I previously wanted with almost none of the notice requirements. I see this last part as the only “true benefit” because of the spd disclosures that the rigid match will require. So for example if no cap on the match was disclosed it would be unreasonable to now implement a maximum match amount under the flexible discretionary match... man I missing anything? I’ll have to look at the cornel doc and see if this is possible... unless derrin knows!

Thanks! I agree, Bill it stands to reason if the plan is eligible for the credit in the first place, then you would not get the credit for setting up a different kind of a plan. Can you tell me more specifically where I can find that Q&A? What notice number was it, or whatever they call it. I am a card-carrying member so I can get into the website...

It is true I am no Derrin Watson (but equally true that he is no international man of mystery!), but if you have both, then you have the Flexible Discretionary Match and you have to do the notice. The whole point is the document has to specify for every dollar contributed as match, who gets how much of that total match deposit. If the client has the "flexibility" to choose either the rigid or the discretionary then that alone subjects you to the flexible discretionary rules.

If an employer has a SIMPLE IRA plan and starts a 401k are they eligible for the start-up credit? I wouldn't think so, but i can't seem to get any fine print information...

The only "discretionary" variable is the matching rate (25%, 50%, etc.). Everything else must be defined in the document. That way, the employer decides on an amount (say $25,000). Then, the document defines precisely who gets what amount. Obviously. normally, we back into it the other way (that is calculate a 25% of 4% match), but that's besides the point. You have to look at it in the other direction (i.e., declare the amount first) to understand where the IRS is coming from.

That works too, but under my method, you won;t get the letter in the first place. Although, are you saying this is 5500-EZ eligible plan, that stopped filing 10 years ago? I would let it lie if that is the case.

I fail to see how not making any contributions to compensate a participant for a missed deferral opportunity could possibly correct such a failure. But the IRS said let it be so; and it is so.

If it were me I would file the 2012 5500 late, pay the user fe, but mark it as final. If its marked as a one-participant plan I think that should get you all cleaned up. If it were my client I would do that for sure. IF an IRS letter came, I would just say we never should have filed in the first place, we're exempt, etc.

But then you have to standardize what you get from the clients. We have clients who cannot even provide us reports with full social security numbers. Others cannot generate custom reports in Excel. And many more have no desire to learn how to do anything "techy". i.e., I think you're target market is relatively narrow. Even PayChex and ADP can be tough to deal with.