K-t-F

Ahh... so my reference actually has nothing to do with the employee terminating and recieving a severance package. Got it!

In the adoption agreement compensation is described as "W-2". The Post-Severance box is not checked: [ ] Include Post Severance Compensation in definition of Statutory Compensation. So... if an employee terminates on say 10/1 but is receiving severance pay through the end of 2023, we don't count any income earned from 10/2 through the end of the year, correct? AND, the employee can not defer from that severance compensation either, correct?

I 100% agree with you. I showed them the advantage of the cross tested plan with a SH NEC and it worked out well. But the requirement to give the SH NEC to all eligible employees, not just the ones deferring, didn't sit well. What about my thought in my original post. Give everyone the SH match. Then give them a company match with a formula of 100% of all deferrals above the safe harbor. No?

Client wants to match his employees deferrals dollar for dollar. He needs to entice people to work for him. In addition we need to build into this formula a SH match as well. Can this be done? Say 4% SH match + what... 100% company match over 4%? Is it that easy? (that just came to me)

That's how I've always done it. In the IRS' example for someone who does not have a vested balance that would allow them to take a $50K loan, the 2nd loan amount doesn't make sense to me. I would think you take the most that the participant can borrow and use that figure instead of the $50K figure. Honest, I'm not going to worry about it. It's just nice to throw an IRS link at the financial advisor backing up what you tell them. Thanks for responding.

My client has a plan balance much greater than $100K. So using the example above he would only be eligible for a second loan equal to $23,000. That would be what I tell him. But please explain your comment... In the IRS example Jim only has a $80k vested balance so he can take a $40K loan ... but you are saying for his second loan we don't use $40K we use the maximum $50K?

A client want's to take a second loan. I looked at the IRS' explanation and it is not how I have been calculating 2nd loans. In the end I have been more strict (it appears). Am I wrong? Here is the link to the IRS' example IRS Example / My comments in blue Jim’s vested account balance is $80,000. He borrowed $27,000 eight months ago and still owes $18,000 on that loan. Jim wants to take a 2nd loan. What can he borrow? Maximum second loan if amount still owed on first loan Jim’s current loan balance is $18,000. This amount plus the new loan cannot exceed the lesser of: $50,000 – ($27,000 - $18,000) = $41,000, or $80,000 x 1/2 = $40,000 Jim’s total permissible balance is $40,000, of which $18,000 is an existing loan balance. This leaves a new maximum permissible loan amount of $22,000 ($40,000 - $18,000). I always said that you take the vested balance to find the maximum loan amount for the 1st loan. If a 2nd loan is requested regardless of whether the 1st is paid off or not, this is how you calculate the maximum allowed: First, determine what the maximum loan amount can be right now Next, If the participant has an existing loan (or had a loan in the past 12 months), look to see what the highest balance of that loan was and subtract it from what the participant's could borrow now had s/he never had a loan THAT is what they can borrow. Using the IRS' example I would say that Jim could only borrow $13,000 ($40,000 maximum allowable less highest outstanding balance in the past 12 months or $27,000..... 40,000 - 27,000 = 13,000), not $22,000 It's a big difference. The IRS' example is more beneficial. Have I been wrong all these years?

A 401(k) plan ... single member... no rank and file employees

Single member company wants to invest in a UK based company. The company is not publicly traded. Are there mixed thoughts? Can it be done? Thanks

Thanks. I guess simply removing wouldn't dot any "i's" or cross any "t's". I'll pull out the template I have. Appreciate the responses.

I've done this before but it was not during a restatement year. A small plan (husband, wife, 1 employee), husband and wife are divorcing. Can I simply prepare the Cycle 3 restatement docs and take her off as a trustee? Or does she need to formally acknowledge and agree to no longer be a trustee in amendment form in addition to the restatement? Thanks

Sadly I started my pension career in '83, back in the day when we used "PENTABS" for anyone who remembers that system from Santa Barbara CA. Back when there were no message boards... no internet to research and ask questions, just the CCH books with their tracing paper pages (hated pulling out pages and adding replacements when rules/laws changed). I know the answers... it's just reassuring when I ask you fine people and your responses confirm what I already knew. So... cheers to you all! 🍺 To stay on topic... yes Bird... it's all about moving the assets. I told the new financial advisor to use the EIN on file for a seamless move. I'll take a look at that link. Appreciate it.

I have a client I have been working with for many years. He started with a Keogh opened at Paine Webber. In 2007 I restated the plan into my independent doc (ftWilliam). Back when he adopted the plan typically the account was opened using the sponsor's EIN. I have advocated forever that a plan needs it's own EIN. I obtained one (sadly I can not find the paperwork that assigned an EIN for the plan). Now, the client is switching financial advisors. The funds are going to be transferred "trustee-to-trustee" to the new financial institution. I provided the EIN I had in my records only to find out that the existing financial institution has a different EIN and so the funds would not transfer because the EINs are different. I understand that. Here's my question... the existing financial institution produced an EIN assignment (a copy of the SS-4). It goes back to 2006. The client has never taken a distribution and as you know the EIN on the 5500 is the sponsor's EIN. - Is this original EIN defunct at this point ? I mean, after so long with no activity don't they die? - or, should we use it for the transfer because his existing accounts are registered with it? I think that's enough info.

I do like the instant confirmation filing the SF electronically (for my traditional plans). I guess it's time to move towards electronically filing the EZ. Thanks

Does everyone file EZs electronically now? I just spoke to him and will file electronically.

For himself... not for his clients. If HE for his own business (or personally across all his businesses?) was required to file 250+ returns then yes, he needs to file electronically. But because he prepares returns for his clients this rule does not apply. Right?

Prove me wrong.... A CPA I work with prepares his own 5500-EZ. He is telling me that he must file the EZ electronically because he files more than 250 returns. Per the EZ instructions he is reading this: Mandatory electronic filing. A filer must file the Form 5500-EZ electronically using the EFAST2 Filing System instead of filing a paper Form 5500-EZ with the IRS if the filer is required to file at least 250 returns of any type with the IRS, including information returns (for example, Forms W-2 and Forms 1099), income tax returns, employment tax returns, and excise tax returns, during the calendar year that includes the first day of the applicable plan year. While he may file in excess of 250 returns on behalf of his clients, it is my contention that what is written he is interpreting incorrectly. Is what the IRS is saying the following... that if the plan sponsor files in excess of 250 returns on behalf of them self then sure, they must file the EZ electronically. But because he files on behalf of his clients that is not the case, don't need to file his EZ electronically. I am happy to file the EZ electronically to sooth his anxiety. I just don't think it's necessary.

I agree rocknrolls2. For 2021 the beneficiary does not need to take an RMD For 2022 the beneficiary will need to take an RMD based on the 2021 balance. So, the beneficiary will need to take the 2022 RMD PRIOR to taking a full distribution of his inheritance... correct?

Penchecks... setup the distribution, have the money sent to them and you are done.

Let me clarify my situation... Dr. Bob was 75+ He died late December 2021 - Dr. Bob must take an RMD for 2021 dead or alive... got it. Dr. Bob (dead) Still has a plan balance in 2022 - I am assuming Dr. Bob does not need to take an RMD for 2022... right? - Dr. Bob's wife (sole beneficiary)... must she take a 2022 RMD from the plan? (She has already rolled it over to her IRA) - and if so we would use Table I (Single Life Expectancy) (For Use by Beneficiaries)... yes?

Follow-up.... The surviving spouse and sole beneficiary must take an RMD for 2022. What table would I use? This single life for use by beneficiaries? 2021 Publication 590-B.pdf

The plan sponsor is asking... and as I read his email closely he's got to be off with his thoughts. Full disclosure, I think he is asking a hypothetical question. He feels he has a good price for the bond from Hartford and is worried they won't go any higher. IDK why they wouldn't. I'm going to tell him he just needs to have one bond... just keep it simple. sorry to waste any time.

He is asking if he can have 2 concurrent policies that add up to the bond requirement.

Client has a bond but needs to increase coverage. He is asking.... "to meet the coverage requirement does it matter if I have 2 bonds that in total meet or exceed the coverage requirement?" I don't see a problem... but thought I would ask

Yes the plan is terminating. Thank you for your reply