BG5150

And don't confuse reamortizing the loan with refinancing. They are different things.

I can count on my ten fingers (and not use all of them) the number of plans I've dealt with that allow participants to purchase life insurance. And even less experience in what to do when it comes time to distribute those policies when they terminate employment. Are there good resources that explains when needs to, or can be, done in these situations? I'm not sure if this participant wants to keep the policy or cash it out. Any ideas would be much appreciated.

I didn't mind the old way...

That. Or a revised 1099? I don't think I've ever had anyone repay anything. Remember the entire withdrawal needs to be repaid; not just the check amount.

Is this going to affect what we do? This is for State tax. Is income reduced on K-1s for state taxes? If so, I would assume that it's been reduced by the time the K gets to me. As far as I know, the subsequent calculations of plan compensation only involve the SE tax and a couple other things; but not state tax.

Another note: If the $20,000 was more than what was owed, check the loan policy. See if pre-payments are allowed for a part of the loan. We usually write our loan policies to only allow pre-payment for the whole thing. Makes administering them a heckuva lot easier. (I'm assuming that $20,000 check got put into the account to pay off some of the loan)

Box 14A. i wasn't sure if we would have to reduce THAT for the PTET.

If a 1099 wasn't issued, can't you just correct it under EPCRS? a) catch up with a lump sum payment then resume payments b) reamortize the outstanding amount c) combination of both

For a SE person, and if they are the only person benefiting in the plan, the deductible limit is really 20% of the gross income. To remember, I just use $100,000 of comp as an example. 20% is 20,000. That makes the net income $80,000. 20,000/80,000 = 25%. So max deductible is 20% of gross comp, 25% of net. So, the owner who makes $25,000 (that is not on W2, Sched C), the max is $5,000.

Do it soon. 1099's are due out in two weeks.

Do you subtract it from the gross K-1 or the net after all that other arithmetic we do? If they are S-corp, is it figured into the W2, or it is the W2 comp reduced to get the comp?

For one, if there were loan repayments withheld from a paycheck but not sent to the trust, it's a prohibited transaction, and should be corrected by the employer depositing the withheld amounts along with lost earnings. The employer also owes a 15% penalty tax on the earnings, payable with the filing of Form 5330. Optionally, the ER can file with the DOL VFCP. Also, the missed amounts must go on the form 5500 until the year of correction.

Do you need a 2848 to pay on behalf of someone? I don't think we ever got PoA.

And/or ask the software vendor how to exactly make the changes you need so nothing is overlooked

Just one bond covering 100% of the non-qualifying assets OR 10% of total plan assets, whichever is greater. (And, as we now remember, there is no $500,000 cap if/when the the nonqualifying assets are more than $500k. Or, I guess, $1MM if there employer securities involved.) Side question about the $1MM bond. If a plan has $12MM in assets, but only, like, $40,000 in employer stock, do I still need a $1MM bond?

It's everything EXCEPT rollover and voluntary after-tax.

That's what I thought. thanks.

Plan has $2MM in assets, of which $1.5MM are in non-qualifying assets (real estate and partnerships). Does the bond have to be the full $1.5MM? Or it is capped at the traditional $500,000?

Do you have some sort of compliance software? just enter the relevant information and have the computer calculator it. And is the husband the owner? You didn't say so. S-corp and the husband's comp is W-2 also? if not, the calculations are different for deductibility.

I just wan to make sure I'm getting this right. I have restatements on the brain, and I'm having trouble shifting gears lately. Husband and wife plan, husband owns 100%. Assets over $250k. 2020 divorce is final. QDRO effective 10/1/2021. (shouldn't matter) Filed an EZ for 2020. What about 2021? Is the plan now subject to ERISA since it no longer only covers husband and wife? Pooled account, non-traditional assets, so they have to get a bond for 100% of those assets. Side note: If a plan covers the owner who is still working and a spouse who no longer works for the company, is it still a one-participant plan? I just found out she left employment in 2016.

What if the asset is a painting. It's valued at $10,000. It's the only thing I was invested in. I cannot sell 20% of a painting.

My point is that participants SHOULD be able to rely on the IRS website for that information. Same with retirement plan professionals. Sometimes we have questions. Unfortunately, I've learned not to trust the IRS site.

Not true. In addition to what Bird said, I cannot tell you how many times these sole proprietors, on the advice of accountants or financial advisers, just chunk the entire 415 limit in every year. Then it turns out, they do not have the income to support the contributions. Or, if they are over 50, the contribute the 415 maximum plus a catch-up, but there is no 401(k) component. Or, they take a 'loan' at some point during the year with no paperwork or regard to limits or whatnot. Or take distributions, allowed or not, and don't tell us, and no 1099-R was ever done. Is the administration of a one-participant plan less, or even much less, than a plan with more participants? Sure. But the work should be greater than 'no annual work.'

And what's next? A link to the 2021 Form? Which KINDA makes sense, since people are working on their 2021 returns. But then some people are preparing to take their 2022 RMDs now. The would need a 590-B TWO YEARS later than the one that is linked right ont he IRS website. It's not like it's some third party site, it's the gosh darned IRS site!

I found the Federal Register page. I even have the text from the FR itself. But what is a participant to do? If they went to the IRS site, typed in RMD then followed "Retirement Topics--Required Minimum Distributions (RMDs), then "Calculating the RMD" and clicked the link to the Uniform Life Table: That leads to 590-B (2020). How is a participant supposed to PROPERLY calculate their distribution?