K-t-F

This client sold his business, it was absorbed by a larger company. Almost all of the employees went to work for the new owner. Many employees are rolling their pension accounts into the new employer's plan, some into IRAs. One employee has a loan and would like to "cancel it out" and only roll over her tangible assets to the new employer's plan. Am I missing anything... any reason she can't do this? Split her distribution into 2 parts, rollover to new plan and cash distribute her loan as a taxable distribution? Thanks

Deceased participant... Spouse is the primary beneficiary... Can she waive her right as the primary thus passing the benefit onto the secondary beneficiaries? (the kids)

Thanks... was hoping for an exception but it is what it is. The CPA messed up... not my client, not my problem.

Just some clarification please... If an owner participant dies before the year end but after the RBD (I was told he is way past 72), the RMD should have been taken before 12/31... correct? Thanks

Client bonused himself $28,000 to max out his deferral He reported on his W2 $28K in box 12 and coded it D I told him he exceeded the 402g limit He withheld taxes from the $28K and deposited $25,858 into the plan. He wants to say that the extra $2K is a voluntary contribution. He can do this (doesn't exceed 415 limit) but it needs to be in Box 14... correct? And technically he needs to actually deposit $28,000... correct? In the end he needs to amend the W2 and make whole the $28K in the plan... correct?

Perfect... thanks!

I have a single member plan which is funded solely by ROTH money. His CPA told him he didn't need to take an RMD because it was ROTH money. In the case of an IRA an RMD is not required as long as the owner is alive, so that is good advice for his IRA accounts. But I have read that when it comes to a qualified plan it doesn't matter if it is ROTH money or pre-tax money... an RMD must be taken. Right so far? That said, how would a ROTH RMD be taxed? It wouldn't? Thanks

No one huh.... So... when a plan pays expenses for TPA work or to the financial advisor... does the plan not need to issue a 1099?

I was asked by a financial advisor of a single member client just now: "should the plan issue a 1099-NEC to a person who did some work on the property the plan owns?" Thinking it through I would say yes. I would also guess that whatever account pays the RE tax bills would be the account that issues the 1099-NEC. Anyone have a quick answer? Of course the 1099 was due yesterday. Thanks

I completed the online fields, took screen shots and sent it to them. Spelled it out pretty good. I wanted them to see that I am not making anything other than my fee for services on this debacle they created. She will reach out to me if she has problems. Thanks

Back when there was an amnesty program for the Form 5500-EZ a bunch of single member plans came out of the woodwork asking me to prepare the paperwork to take advantage of the free compliance option. A simple process.. no big deal. Before X-mas a client who left me came back telling me the new TPA disappeared and did not file the 2019 or 2020 form 5500s. Simple question.... Paying the $1,500 fee ($750 for each year)... when you complete the online calculator, if you follow it all the way through it takes you to a payment option. Is that the best way to go? There is the option to mail in a check... not advisable? I've done the work and am ready for them to remit the fee. Just looking for opinions

Thankyou. For contributions each entity pays their own share. That is, if Betty earns compensation from her S-Corp then her S-Corp pays the contribution while at the same time Company X pays the contribution for her Company X W2 wages. It makes sense... just crossing my "T"s.

I am really sorry for beating this horse. I am a very visual person. I've attached a quick "schematic" of this situation. The goal is to have a plan for Company X for the employees. If A and B need to be included, so be it. Gotta do it right. If you look at my schematic attached you will see that Betty receives W2 income from X and wants to participate. Dave is just the owner of S-Corp B, no W2 from X. Dave wants to have a plan through his own S-Corp. (sheesh, he may already have one) I am no CPA... S-Corps owning other businesses... above my pay grade how you set that up. I get that each S-Corp will be paid their share of the profits from X via a K-1. Bottom line, they want a plan for X... do we need to include A and B (ASG)? and if so we just count everyone involved as is they were all part of one big company.. correct? Sorry to recap. Just want to put the facts out there.

The partnership has rank and file employees. I have been given the following facts: Partnership has 6 or so rank and file employees One of the S-corp owners also receives W2 wages from the partnership Other partner only receives a K1 from the partnership How does that change the circumstances?

Here is a follow-up question that the client sent to me regarding contribution.... would the contribution for the owners be based on the net income of the partnership? Or on the W2 wages paid out of the S corporations that hold the ownership in the partnership? Contributions are based on compensation... so W2 wages.. right? Damn... and what I understand is that one partner earns W2 wages from the partnership and of course her S-Corp. The other only from his S-Corp. When you have this situation, do you combine W2 income she gets from both places (partnership and S-Corp) to determine her total comp? And contribution wise pro rate it between the 2 businesses? And... if this plan comes to fruition the best option would be to setup the plan as a new comp with everyone in their own group. Best bang for the buck for the owners. THANKS! Always learning.

Allll Righty then! If that is all it takes then an ASG. Question... in an ASG does there not have to be any reciprocal services performed? Can it simply be that the 2 S-corps own company X and that alone will make it an A-org FSO?

Really? I was just reading up on ASG. Is there some kind of grid to complete that helps determine yes or no? Maybe a good clear example? I will ask more questions of the owners but it is my understanding that both S-corps are just owners of X. They do not perform any services for X or draw business from X. All 3 businesses are accounting firms. All stand alone businesses. Thanks for questioning me. I want to give this potential new client the right answer.

No there is no affiliated service group. Both A & B are single member companies. They are both CPAs.. IDK why they set it up like this. I didn't see it as an issue after talking it through with another pension professional. Just getting other opinions. Thanks

A CPA came to me with this scenario... She and her partner own an accounting firm (Company X) The accounting firm is owned by her S Corp (Company A) and her partner's S Corp (Company B) Accounting firm ownership % is Company A 25%, Company B 75% Company A owner earns W2 wages from Company X, Company B owner takes his Company X compensation in the form of a K1 to Company B They want to setup a 401(k) plan for Company X. Q1 - I don't see any problem there... Company X pays it's employees and they can defer if they want. Correct? Q2 - In this scenario do we have to include all 3 companies? I don't see a control group Q3 - Can each company have their own plan? I guess what is throwing me is that the S Corps own the accounting firm, not individuals. Does that make a difference? Am I missing anything?

I have this older client who has a single member business (a civil engineer consultant). He want's to retire. Unfortunately, he got hooked up with a guy who sold him 2 lots in an RV park. Both lots are basically worthless now, he can't sell them. I've never heard of a pension plan donating assets. He's ready and willing to walk away if that is what it takes to liquidate his plan once and for all. - Can the plan donate the RV lots? - Does he have to take the RV lots as a distribution in "kind", and then donate them? Any thoughts on what the best course to take might be?

I am cleaning up the client's mess. IDK what ADP's official role except that they are taking over the plan. The financial advisor is the one who informed me that ADP was originally taking care of the 2020 form 5500. I've been paid in advance, I've included my cost to prepare 1099-Rs so if they are not needed then I made a little more for my trouble. Thanks to anyone who chimed in. As a small TPA I keep things very simple. I think the advisor thought what she was doing would help but did not think about the behind the scenes stuff that a TPA does to keep a plan out of trouble.

That old saying is SO true, you can lead a horse to water ..... I am authoring an email to the financial advisor and found I needed to take a break... I was venting too much. It is FUBAR and it didn't need to be if she and the client had heeded my advice. I suggested way back then (11/2020) to just let me finish up 2020. Nope, ADP was going to do it all. I am going to call it a merger and if the plan is reviewed let them deal with it. That said, when 2 companies merge and each has a plan one plan goes away... why have 2 administrations right? These 2 plans were identical... both plain old SH Match designs. - If company B merged with company A on/around 11/2020 then company B is taking over responsiblity for Plan A's outstanding 2020 contributions (SH Match receivables). They took over the company and all it's obligations. Right? - And if Plan A's assets were rolled over to Plan B on 12/15/2020 (that's when the rollovers occurred) then Plan A's SH Match obligation should be paid by company B into Plan B. Probably not how it should have all gone down but Plan A's participants are entitled to get a match. My questions are.... is/can I say that Plan A is terminated on 12/15/2020 when it's balance was reduced to $0? Make the 2020 Form 5500 the final one? Prepare a 2020 1099-R showing only what was rolled over? Thanks

UPDATE: 1st, I agreed to help out.. got a check up front. What you think is a good amount for you is never enough. The plan sponsor terminated, the plan terminated and the participants rolled their account balances into the plan of the new business. All that happened November 2020. I have discovered that the 2020 SH contribution was not paid to the plan prior to the rollover but rather to the new sponsor's plan. If it was a merger situation I would think no problem. But a termination situation... problem? - Is it water over the dam? - 1099-Rs representing the rollovers need to include the SH deposits. Right? A mess...

Ok... got it... it's all about the "election" to defer that needs to be by December 31. Thanks

Ok.. my mistake. I recall reading that single member sole proprietors have until 4/15 of the following year to adopt and fund a 401(k) for the previous year. No?