AlbanyConsultant

Very bold to assume I'm only married to one person... ! 😁

@Paul I I'm not sure I can distinguish exactly who is the problem... does it matter? I sent them a report that says in part, "dear Partner 1 and Partner 2, make sure to deposit your pre-tax 401k deferrals per your elections". Partner 1 responded "will do". "The partnership" made the deposit of all the employer contributions (including for the partners), didn't send any funds for the partners' deferrals, and then filed their tax returns (taking deductions for the deferrals that were not deposited). I don't see where any additional impact on the partners would be, other than lost earnings paid by the partnership.

Sound points as always, @Peter Gulia. There are other participants - in fact, this is in a MEP. One of the participating employers messed it up (this PE does have other non-partner participants as well). So the MEP sponsor is keen to do this as 'by the book' as possible.

To clarify, they took the deduction on their return. So treating it like a late deferral deposit (instead of a missed deferral) sounds reasonable.

@Bri, that sounds more like correcting it as a late deferral deposit.

I know I've seen this discussed before, but I'm not finding it... 401k plan with SHNEC and profit sharing. The partners have their valid deferral elections in place by 12/31/25 to both do the max. We sent a contribution report telling them to deposit the SHNEC and PS and also the deferrals for the partners before the due date of the tax return... and they forgot to do the deferral part. 2025 taxes are filed. What recourse is there for the partners at this point? I thought I remembered that it was treated like a missed deferral opportunity for them? Appreciate anyone pointing me to where this is covered. Thanks!

D, the 100% owner of an S-corp, passed away in 2018. Ownership of the business passed to D's two sons who worked there (and were already participants) 50/50, and they also happened to be his 50/50 beneficiaries. D was in RMD payment status, so we've been continuing to calculate his RMD each year and splitting it between the two sons. Since D passed away pre-SECURE, are there any timing issues I need to worry about for the distribution of D's entire balance? The post-PPA plan document says that the beneficiaries "may" elect the 5-year rule. Thanks.

I would hold to see the W-2. I figure that since I already have evidence that it was NOT on W-2, I can't take it unless I now see that something has changed. I wouldn't immediately resign; I'd complete the work based on what I could support. If they want to fire me over that, so be it. If they ignore my calculations and do something different, then I'd probably have to resign. I'm pretty sure that I would apply this consistently regardless of the client... but you know what they say about good plans surviving first contact.

If it was my plan from the jump, totally. But this is showing up at my door with this problem. I had intended on amending this provision out (and I still probably will), but this employee is kinda adamant.

Had three clients get these this week. All on plans fully on recordkeeping products that have never filed a 945 for plan purposes. Which makes me wonder if those plan sponsors have previously filed a 945 for some other non-plan related reason... It's always been our experience that whomever is doing the 1099-R should be doing the 945 as well. When we did 1099-Rs for non-product plans (remembering those days un-fondly), we prepared the 945s.

To answer some of the above questions... Yes, the plan allows for a one-time irrevocable election to opt out of the plan entirely. I'm referring here to "opting out" of the safe harbor nonelective and profit sharing allocations. "Opting out" of deferrals is trivial. I always forget this. I'll have to see if this works. Thanks!

Taking over a plan with an owner and two NHCEs. As NHCE#2 is becoming eligible, she says she wants to opt out of the plan entirely. But... then it fails 410b, and the correction is to give her allocations. I've explained this to the financial advisor, the plan sponsor, and the participant. She is adamant she wants nothing to do with the plan "and I've checked with the DOL and I am aware of my options." Sigh. I've had similar situations where someone wants to opt out entirely due to religious reasons... but fortunately, it's never caused a 410b failure. And she is not answering if her objection is along those lines - not that I'm sure that helps. What can we do? Thanks.

Some selected sections of the basic plan document... I bolded the part that I think makes this work.

I'm waiting for the day that casinos convince the government that allowing participants to "invest" in a spin on the roulette wheel is a prudent investment.

Small S-corp has come to me looking to install a plan. Husband and wife and two kids are the only employees. Simple, right? They mention that Western Employee Services is the EIN on their W-2s and also handles all their other benefits. This isn't a problem, is it? I'm not entirely sure what to ask who next. Kind of sounds like a PEO situation, but that should still allow Small S-corp to have their own plan with no ties to the larger population, I think. Thanks.

Totally agree - not worth playing games over.

Thanks for the good information, @Peter Gulia and @fmsinc. I am definitely recommending that they run this past their attorney, but I'll bring up these points to them.

Thanks. It does clearly indicate it is for "... the full satisfaction of the outstanding restitution balance", though it does go on to say that a portion is actually for "Court-ordered interest" on the base restitution amount. It doesn't say anything about "criminal restitution"; do we need to be that detailed? It's neither of those.

100% - I am not advising them. I'm answering strictly that the rules say if FICA comp is over some number, then the rules kick in. I don't discuss how the W-2 compensation is determined. This is adorable.

An accountant is asking if he can just lower the W-2 compensation of the S-corp owner so that it's below the HPI threshold and that gets the owner out of the new Roth catchup rule. Can they shift more income to the dividend K-1 and avoid the issue that simply? Sure, it lowers their overall employer benefit, but I suspect some will find that a fair trade-off. Thanks.

A client just sent me a Final Order of Garnishment from a US District Judge, demanding $X from a participant account for restitution and court-ordered interest. The order names the Participant as Defendant and the recordkeeper/custodian as "Garnishee". Nowhere does it mention the plan name. Anyone have any experience with this? I get that it's not the same as a QDRO, but shouldn't there at least be some basic standards it has to meet? I don't want to do anything that will put the plan sponsor in a bad position, either by paying out without proper due diligence or by rejecting it without good reason. Thanks!

I don't think she is. I'm just wondering about the incorrect statement in the divorce paperwork (that we did NOT ask for!). I'm no actuary; I read the CB statements (yes, it's an ERISA plan) that say the person's "balance" is $X. I know that's not a 'real' number until it's time to pay out a benefit. The statement in 2015 said $3K, and his calculation as part of the plan termination distribution is... I don't remember exactly. $9K or $10K. I only bring the 401k plan into this because the section we were provided (I don't even know if what legal document that was provded - we got a half-page picture) specifically (and correctly) identifies the 401k plan and then specifically says there are no other plans that J is a partcipant in, and it clearly says that S is waiving her right to all benefits in the 401k plan. All your other questions are better answered by attorneys, which is why I suggested that's the route the plan sponsor take. In accordance with our client services agreement, I disagree that we are a fiduciary and that we are "more than ministerial" now, though I suppose a dogged attorney could attempt to prove otherwise.

This is for a cash balance plan, so QJ&S applies. Participant J and spouse S got divorced in 2016. There was no QDRO because as part of the divorce, S waived her rights to J's benefits (kind of...), so nothing was ever provided to the plan sponsor or us as TPA. We never knew or cared about this. Fast forward to now and we're terminating the CB plan. J calls us because the standard distribution package asks for the spouse to sign if married. J says that he was married, but now he's concerned because in the divorce paperwork, it clearly says that S waives her right to J's benefit in the 401k plan, and that J attests that he is a participant in no other retirement plans. Like many participants, J didn't understand what the CB plan really was. [It's not relevent, but at the time his balance in the 401k plan was $20K and his lump sum benefit in the CB plan was $3K.] Now J and the plan sponsor are wondering what to do. Obviously, the best answer is "check with an attorney". I told them without a legal opinion or a QDRO, we can't split J's CB payment. Any other suggestions? Thanks.

That would be very cool, and an excellent tool to teach new administrators how it works...

Believe me, this is where I started the argument against even considering this. This is what I was afraid of. I mean, not "afraid", since I'm glad to not have this as a recommended option.