BG5150

If the plan made the interest payments for late deferrals from 2017, '18 and '19 in 2020, do I still need to do a 5330 for all those years? Or just 2020?

I think it's more of a document issue. What does the document provider say about doing that?

In 2011, the IRS and a phone forum that suggested that prime or prime +1 might not pass muster as "reasonable." Here is the transcript: https://www.irs.gov/pub/irs-tege/loans_phoneforum_transcript.pdf However, in the intervening 8 or 9 years, I have yet to hear about anyone getting in trouble for prime +1.

They are also too late to adopt Safe Harbor provisions for 2020. That ship sailed 12/31/2019.

These kind of things pop up from time to time. Once in a while somebody will do a review of 5500s with zero or inadequate bonds and start scaring people with unsolicited calls that their plan is out of compliance. Or they look for the late deferrals item. Same schtick.

Are FFCRA wages subject to 401(k) withholding? And the subsequent match responsibility?

The IRS would have issue with only the HCE deferring. However, election forms by the NHCE showing the request to not make deferrals solves that issue. If they say they have it in writing, it's not on you.

Darn, CBZ. I forgot about everyone getting the GW. I did say MAY help, lol.

Component plans is one way you MAY be able to get around this (no guarantees). However (to me) it's a little advanced to explain it in one or two posts. Is there someone in your office familiar with the process?

I think he meant "NHCEs" that's all. Ah, Mr. Rigby beat me to it...

Re-read your second sentence carefully....

Are there any HCE at the 3% level? Can there be? Will you be able to use component plans?

You can separately test those employees with less than 1 YOS (and under 21). So one group will be the HCE and no one else. It's not that no NHCE benefit, it's that there are no NCHEs required to be in that group. So it automatically passes. The other group is all the NHCE, but no HCEs (similar to the group above, but opposite). So automatic pass.

I would posit: what's the difference? They are taxed the same. Both money sources are 100% vested. Now that h'ships are possible from earnings on the 401(k) sources, there is no reason to keep track of the h'ship amounts over the years.

I second the notion of getting an ERISA attorney involved. Who knows what else was missed.... Who was administering this plan throughout the years? Who was doing the 5500's?

If you are looking at EPCRS, where does it say you can do a retroactive amendment to do this?

If you are failing testing on a contributions basis, you will wither have to do an 11-g amendment to get the benefits where they need to be in order to pass testing. Remember, you cannot reduce an HCE benefit with this method. Or, you can give everyone the gateway and cross-test it. My calculation is the GW is 3.35%. ( (0.67 * 15) / 3)

Wouldn't the last day to make refunds also be the "determination" of taxes due? If the refunds are late, there is a penalty tax.

As long as you pass ACP at the end of the year, I think you are ok. Just beware the match calculation period in the doc. Just b/c an ER is putting match into the plan each payroll doesn't mean the match is calculated on a payroll basis...

I'm having a brain cramp Sole Prop. Over 50 Gross Sched C. : 19,114 Net after SECA, etc: 17,764 Deferrals: 17,764 415: 100% Can he put in another 6,000 as c/u? Could he put in PS and have some of the 17,764 classified as c/u? I know the PS will lower the plan comp. I'm having a hard time reconciling these numbers with 415 and the comp on Sched C

The first hurdle is to determine if the election to withhold 20% of pay was received in good order by the company/payroll company. If so, then the 50%/25% (plus full match) is an accepted correction. If not, then there may be no issue if the plan is not auto-enroll.

The correction principle is to put the plan in the same potion had the error not occurred. So if, say, when the $100,000 was liquidated, 25,000 shares were sold. If it only takes $95,000 to repurchase those shares, then so be it. Tougher to calculate though, are investments that pay dividends or capital gains directly to the plan. What happens if those 25,000 shares were sold in September and 250 more shares would have been added to the account as a capital gain on December 28? Should the particiapnt be required to re-purchase 25, 250 shares (regardless if the share value went up or down)? I guess that's why it's acceptable to use the plan's rate of return instead of the exact gain/loss...

Do you remove the 179 from 14A deduction though?

Still employed? Or still with an account?

For one year, I don't see a problem.