BG5150

Come to think of it, I just looked up 416. The minimum benefit section does not specifically mention employment on the last day of the year. Where does it allow for those not employed at EOY to be excluded from the TH minimum? The section further goes on to discuss when the TH minimum is less than 3% and aggregation groups and the like. I see nothing about employment requirements. Is it in another section of the code? Source: https://www.law.cornell.edu/uscode/text/26/416

I think the 11-g in this case is silly. They are following the TH rules. They aren't making a discretionary contributions, nor did they choose to exclude the participants not employed at EOY. Unlike a last day and/or hour requirement, or excluding a class of employees for an employer contribution such as match or PS, the exclusions for TH are codified.

Let's assume the terminated folks all worked 750 hours. Would I have to do an 11-g amendment to give 1 NHCE some sort of allocation? I forgot to put in my question, that there is no Profit Sharing declared for the year. It's just going to be the TH contribution this year. And say ABT fails, too. (Lawyer's office and all the attorneys are younger than the NHCE support staff.) BTW: This is an academic exercise, not a real-world situation at the moment.

I have a question: Is the TH contribution subject to coverage testing? What happens in this situation: 10 HCE including 1 Key. All employed on last day of the year. 10 NHCE/non-Key, 6 employed at EOY. So, the TH will go to all the HCE except the lone Key and all the NHCE at EOY. So coverage is 67% [ (6/10) / (9/10) ] Note: there is no Profit Sharing declared for the year. It's just going to be the TH contribution this year.

Did you mean KEYs? The language in the OP is what we use in all of our documents that we underwrite. Too, we add a PS component, usually a new comparability scheme. This way, the non-Keys get their piece and if the ER wants, they can get the Key EEs the same allocation via a PS. (We also exclude HCE from the 3% Safe Harbor to give the ER flexibility in spending.)

This is what I was told by our doc provider: The Sponsor Level SECURE Act and Expanded Hardship Amendment Plan Level Hardship Amendment if any of the optional provisions regarding hardship amendments were selected. A CARES Act amendment, if any of the CARES Act enhanced provisions were offered to participants. We have not created a CARES Act amendment but if any of your terminating plans did offer the participants any of these options, I suggest having your client sign the administrative checklist that can be found on our website and mention in the resolution that the checklist is a good faith amendment to the plan.

Make sure you check off the Penalty Relief box in Part I D. And follow all the instructions: Don't forget Form 14704! Late Filer Penalty Relief Program The IRS Late Filer Penalty Relief Program for late annual reporting for non-Title I retirement plans (one-participant plans and certain foreign plans) provides administrative relief to plan administrators and plan sponsors from the penalties otherwise applicable under sections 6652(e) and 6692 for failing to timely comply with the annual reporting requirements imposed under sections 6047(e), 6058, and 6059. Rev. Proc. 2015-32 provides, in general, that an applicant under the program must print in red letters in the top margin above the Form 5500-EZ’s title on the first page of the return: “Delinquent Return Submitted under Rev. Proc. 2015-32, Eligible for Penalty Relief.” A filer who marks box D and submits the delinquent 2019 Form 5500-EZ under the program is not required to also mark the return as described in Rev. Proc. 2015-32. The return must still be marked as described in Rev. Proc. 2015-32 for delinquent returns for years earlier than 2019 or if box D is not marked on the 2019 return. Please be aware that each submission under the program must include a completed paper copy of Form 14704 attached to the front of the oldest delinquent return in the submission. Form 14704 can be found at www.irs.gov/pub/irs-pdf/f14704.pdf. See Rev. Proc. 2015-32, 2015-24 I.R.B. 1063, for more information.

Do banks loan their own money? Or is it the depositor's money? (That's why banks pay people interest--the bank uses the customers' funds to lend out. The interest on the loans is paid to the bank, which passes on a lower rate to the depositors.)

So what amendments need to be adopted if a plan is terminating these days (other than the plan term amendment, obviously)?

UPDATE: Plan doc was wrong. Entity is a P.C. and the owner does get paid on a W2! Company changed structure a few years ago and no one thought to update the plan doc. So, I guess this discussion doesn't apply to me any more. However, I think we had a good, robust discussion.

We have a client that has a Solo-K (Larry, don't yell at me, I'm using the term for clarity.) No contributions since 2013, the last year an EZ was filed. (under 250k since then). We find out today that he retired and took his money out in February. Do I really need to terminate the plan? What's the harm in leaving it "open"? He will file a final EZ.

My go-to description of my job in social situations: I work with 401k plans. They have a lot of rules and regulations they have to follow, and we help make sure they do that. Because if I only left it at "I work with 401k plans" they think I'm an investment guy.

Side note: does anyone know if the idea of large/small plan threshold being determined by account balances has any traction? I remember reading about it a year or two ago.

I wouldn't say to clients that documents are "legal" work, as that my imply that lawyers are involved.

Retirement Plan Consultant. We take care of all that pesky compliance stuff with the IRS and DOL that those other guys cannot.

First plan year: More than 99 participants(**) at the beginning of the year: 5500(*). 99 or less: 5500-SF(*) After the first year, use 80-120 rule. That rule says, if you file an SF, you can continue to do so until the BOY participant count is under 120. When the participant count (again, at BOY) goes over 119, then you must file Form 5500 with an audit. If you are filing a 5500, you continue to do so until the BOY participant count goes below 100; then at 99 or less, you can shift to and SF. However, you can still file the 5500 if you want, until the participant count goes below 80; then you HAVE to file an SF. (*) When I say 5500 or 5500-SF, I really mean large plan filer and small plan filer, respectively. Large plan filers must get an independent auditor's report and have it attached tot he 5500 filing. Small plan filers, as long as they qualify for audit relief, do not. However, a small plan filer may have to file From 5500 (with Shed I instead of Shed H and the audit) due to a variety of reasons. (**) Participants does not mean Employees. A participant for the 5500 series means anybody who was eligible for any component of the plan at BOY or EOY. PLUS any former Employees who have a benefit due under the plan. This includes eligible participants who may choose not to contribute and may have a zero balance. An Active participant is simply someone who was still employed at BOY and/or EOY. I have a client that has about 950 employees, but only 7 participants because the vast majority of employees work less than 1,000 hours a year and thus never became eligible for the plan.

Even if I made the formula based on PY comp, I still have to test using the comp from the current year.

'Zo: I know they can take a distribution now (kinda--its a pooled account and I have to do my valuation), but I'd rather wait a week or two and have the contribution deposited so they only have to take one distribution. I figured we could allocate 5% to the staff (I know their plan year comp already). I will have to look to see if there is a last day rule and do 11-g if there is. Then we can do distributions to the staff. Then, wait until the Sched C done and allocate as much as I can to the owner whilst still passing testing.

We have adopted a policy of filing SFs for "one-participant plans". I tell the sponsors that is an 'upgrade' to the SF with the benefits of immediate, electronic confirmation and the fact that its not available to be seen online. Plus they save the registered mail fees. We usually file for them and don't charge for the filing (we do charge for the preparation). I'd say we have a 90% adoption rate of that policy. There will always be a few sticks in the mud who can't or won't do stuff electronically. I leave that up to the bosses to determine if we charge more or not.

Sorry. There ARE other employees. Probably 5 or 6. Other things of note: company ceased day-to-day operation on 6/30, and no longer has employees. Maybe do a 5% contribution to EEs and then see what the owner can get after Sched C is available? This way Employees can take distributions.

Sole prop plan. Plan terminated 6/30/20. Profit Sharing only. Owner wants to make a contribution for the year. How do I determine the owner's comp? Sched C won't be ready until next year. What if it's not PS only, but a 3% SH, or a plan with a fixed match? Do I have to wait until late-winter or spring?

I think your answer lies in EPCRS. The sponsor has two options: Make a QNEC on behalf of the NHCEs at a level that makes the test pass --OR-- Do a refund and also contribute a QNEC in the amount of the gross refund.

The DoL calc seems low. overall, a 0.34% interest rate. Doesn't seem to be much return over 15 years. This was my reverse calc, and I'm pretty sure I'm correct, but let me know if I'm not: 1052 = 1000 x (1+x)^15 (divide both by 1,000) ln 1.052 = 15 ln (1+x) (ln 1.052) / 15 = ln (1+x) .0034 = ln (1+x) e^.0034 = 1 + x 1.0034 = 1 + x x = .0034 = 0.34%

In my experience, calculation of lost earnings means by any reasonable method. In this case, I would try to calculate the plan's rate of return over all those years. Using the DOL calculator, I put in $1,000 lost a/o 1/1/2005 with final payment today. Result: $1,052.28. If the plan had a RoR greater than 5.2% over 15 years then I don't see how you could rely on the VFCP calcuator. Lost Earnings Principal Loss Date Recovery Date Final Payment Date Amount Due $1,000.00 1/1/2005 7/21/2020 7/21/2020 $1,052.28 Principal Amount total:$1,000.00 Lost Earnings total:$1,052.28

I have a plan that is terminating and has liquidated all its assets that were held at a national carrier earlier this year. Funds were disbursed properly, per participant instructions. They did this before we could calculate the 2019 Safe Harbor contribution for them. The national carrier, as expected, is reluctant to re-open the plan. Our solution was to just have the client open up a bank account using the TIN obtained for the trust. The bank cannot seem to understand the nature of this transaction and is saying they need to "register" the the name as a new entity thru their CPA. And they said "alternatively, you can have business documents registered (articles of incorporation or short form) to the name [you] are looking open the account under." [sic] Any talking points to get these guys off the ledge? I've never had such trouble (or, rather had a client get so much push back) trying to open one of these accounts. This is a big, international bank, so I'm mystified as to why they cannot understand the process.