Santo Gold

We have a 401k plan that was merged into another plan towards the end of the plan year (calendar year). The merger date was 12/15. The last 401k contributions were deposited into the new plan as was the full employer contribution for the plan year. Preparing the final 5500 for the old plan, would you report either that final 401k contribution as part of the overall contributions in the old plan? Same with the employer PS? Thanks

Not a DB plan; just a 401k. No PBGC

For calendar year 2020, if a plan covers only 1 individual and that individual is not the owner or spouse, would they file a 5500(S/F) or a 5500-EZ? Thank you

Thank you for your replies

This involves a fairly standard smaller 401(k) Plan that started in 2016. At that time, all participants completed a beneficiary form. The one participant completed his, naming his spouse as primary beneficiary and his son as contingent beneficiary. 2018 the participant divorces and then marries spouse #2. But never changes the beneficiary form. 2020, the participant passes away. Even though a new beneficiary form was not completed, the new spouse would be the beneficiary, is that correct? Is that automatic? Thanks

Understood and thank you for that reply.

No, terminated participants cannot take loans from this plan (we don't have any that would allow for this) but I think that plans can allow loans to terminees. My question centers on whether the plan sponsor can eliminate the loan feature for all participants or just to eliminate it for terminated participants or newly eligible participants. Thank you

Just looking for confirmation, but a participant loan program in a 401(k) plan can be eliminated as loans are not considered a protected benefit. Does eliminating the availability of new loans apply to all participants, or just to terminated participants and/or newly eligible participants? Thank you

If a plan uses match formula of 100% match on the first 1%, plus 50% match on the next 5%, is that considered a safe harbor match?

I can ask a few more questions, but the he seemed set on a 401k.

I am working with a doctors office and their 401k plan. They currently have a One year of service/1000 hours eligibility requirement to enter the plan. However, they would like to change that to 6 months elapsed time requirement for new doctor hires. The new doctors would not be owners. If the new doctors make less than $130,000 (2021) and are not HCEs in their first year employment, then there would not be a discrimination issue for 2021, is that correct? What if in future years their earnings are above the HCE dollar threshold? Is that something that could be viewed as discriminatory a year or 2 after they are hired? I would not think so since I think any eligibility discrimination would be applied in the year of hire. But I wanted to check if that is correct? Thank you

Thanks very much. I appreciate the replies

I am talking with an attorney who has a practice with no employees, just him. He has dba business name and he puts all revenue through the dba which he reports as a sole prop on his tax return. But he does not have an EIN and seem reluctant to create one. He wants to start a 401k for himself. Can he do that without an EIN? Thank you for any comments.

I think I know the answer to this but was hoping to hear if that is correct: Participant enrolls in a 401k plan in 2016 and names his wife as beneficiary and son as contingent beneficiary. Lump Sum only distribution, no J&S. The wife passes away and then, the participant passes away on 2020. The participant had remarried (not sure when) before he passed away in 2020. A new beneficiary form was not completed. Is the son still the beneficiary since he was named as the contingent beneficiary on the beneficiary form that is on file? Or is it the new spouse, even though there is no beneficiary form stating her as the beneficiary? I think the new spouse is the beneficiary. Any comments are appreciated.

Happy New Year everyone. Any help is appreciated. If more information is needed let me know. Around 50 doctors/partners in a medical management group. Each partner receives a K-1 of around $100,000 annually from the management group. The same doctors are also part of a very large regional hospital network from which they are maxed out in that the 401k and DB plan through the hospital. Their compensation directly from the hospital is over 7 figures. Can they establish a retirement plan through the management company and, assuming no discrimination problems, max out with a 401k and/or cash balance plan as well? Thank you

Thanks both Alonzo and Bill. Bill's reply was more what was at issue. The decision to make after-tax is 12/31, but for this type of business entity, the deposit can be later. Thanks

We have a 401k plan that allows for after-tax employee contributions. The plan sponsor is an LLC that is taxed as a sole prop. Can the owner deposit the after-tax contributions up until his tax return due date or does he have to deposit those by 12/31? Thank You

I should have added the following question: The same error occurred in 2018 and 2019. Since those 2 years are within the 2 year window, they can be handled via SCP. However, would it be required to file those under VCP since the problem started in 2017? To me it is a separate problem for each plan year and so SCP should be used for 2018 and 2019. In addition, the assets were under $500,000 in 2017 but over in 2018 and 2019, which would make the user fee jump from $1,500 to $3,000, which we would like to avoid. Finally, if we do have to file VCP for all 3 years, does the user fee apply to each year (3 user fees) or is 1 user fee all that is needed (and would that fee be $1,500 or $3,000)? Thank you

A match formula was not applied correctly and all participants were short on receiving their match for the 2017 plan year. It is now 2020 so we are passed the 2 year window and we are considering the errors significant. Is it correct that the employer should deposit the missing contributions plus an earnings amount as soon as possible or should the VCP be filed and wait to hear from the IRS before taking any corrective action? Thank you

Thank you for the replies.

A participant is 63 years old and per the plan, he can take an ISW (59-1/2) of all of his money. The NRA is 65. He has Roth, rollover, 401k, safe harbor and PS money in the plan. He is 100% vested. He wants to take an ISW from the plan just from his Roth. Is he required to take the ISW first from any of the pre-tax accounts? The recordkeeper is saying that but I don't see where in the plan document that is required. Is that an IRS requirement? Thanks

An participant in a 403b was fired and has requested distribution of her retirement plan accounts. She has also filed a grievance of wrongful termination through her union and wants to be re-employed. Although I'm told it is not likely she will win, Should the plan act on the distribution request, even though there is a chance she would be rehired soon? Thank you

Thank you for the replies. I am double-checking on the omitted employees to confirm.

I am looking at a non-safe harbor 401k plan that failed the ADP test (passed ACP) in 2017 and 2018. Only 1 of the 3 HCEs were required to take money back and that was done each year. About 15 total participants are shown in each years ADP test. However in reviewing that plan now, it seems that from 5-10 non contributing eligible NHCEs were left out of the tests. Adding them back in will make the test fail even worse. Can we have the employer make a QNEC for these past years even through we already made a distribution of the excess to the one HCE? Or do we have make an additional payout to the HCE since we already made what would be a partial refund? Thank you for any replies

We have a terminated 100% vested participant (under 59-1/2) who wants to take all of her money out of the plan as a cash distribution. The plan has not adopted any of the CARES Act relief measures. The participant is claiming that 20% is not required to be withheld since she is claiming she was impacted by COVID19. But this is a distribution due to termination of employment, not an ISW. Is she correct? Thanks