TPA Bob

Appreciate the responses

Plan compensation is defined as W-2 compensation with no exclusions Employer provides group term life and has to add to the employee's W-2 at end of year the PS 58 costs (or whatever it is called today). Plan is silent as to non cash compensation in this regard. I remember years ago at a seminar that you cannot defer to the 401(k) if no cash element. I just never see non-cash fringe benefits being excluded in the Plan documents for 401(k) purposes. Is this because a cash or deferred arrangement? I am confused and not sure if I need to be concerned. Thoughts / cites are very much welcome.

Having not been able to discuss with the new provider I am not certain. I believe it is an open MEP. I will try to connect.

We have a dental office client who has a qualified retirement plan (401(k)) and has signed up for and is now under a PEO arrangement. The PEO sponsors its own retirement plan and the employees will now be participating in that Plan. Have been asked options for the participants if any resulting from the termination of their Dental Plan. I am concerned about the replacement plan rules associated with going to a PEO and what options are available to the participants (if any). Under 401(k)(10) - would the PEO be considered a "replacement plan"?

Thanks very much.

Carrying on with this - we have a Plan that excludes highly compensated employees. In 2019 there was a participant who had compensation of 140,000 making them highly compensated for 2020. And the participant continued to participate in the Plan even though communicated he could not. Same correction - ineligible employee allowed to participate? Thanks in advance.

We are converting a simple 401(k) plan as of January 1, 2021 to a regular 401(k) plan. If we convert a participant's balance in the Simple to the regular 401(k) plan can we avoid the 25% penalty tax if some of the monies "converted" have not exceeded the 2 year limit for the 25% penalty tax. We will continue to maintain separate accounts for the Simple 401(k) and the Simple Employer Contribution accounts in the new regular 401(k). Both plans (the old Simple and the new 401(k)) will be maintained by the same employer. Sources of money in the new 401(k) plan would be Simple 401(K) contributions, Simple Employer Contributions, Employee pre-tax 401(k), Employee Roth 401(k), and Employer Matching Contributions. FYI, this is not a Simple IRA.

Sometime the easiest solution is the best solution. Thanks Lou.

Establishing new safe harbor 401(k) plan. Have established 401(k) effective for October 1st, using 3% QNEC. Effective date of Plan January 1, 2020. Employer mistook when the first payroll would be in October. Instead of being October 8th it is October 1st (actual payroll date). The enrollment meeting scheduled for September 30th, after when the October 1st payroll will be called in. Next payroll to be paid October 15th (bi-weekly). I see nothing except the "3 month rule". And find no exceptions. As we are using the QNEC for the safe harbor does anyone have an opinion on delaying until October 15th the first 401(k) deferral from employee's pay? Any assistance or thoughts greatly appreciated.

Okay, it took a while but now have better details (and also working with clients on PPP loans, taxes, etc). Delinquent years (all ending June 30) are 2014 - 2017. A Form 5500-EZ was filed for each year in November 2019. Also filed was a timely Form 5500-EZ for 2018 (ye June 30, 2019). IRS has sent notices requesting 15,000 each on years 2014 - 2016. 7,875 for 2017. Referred to us by the CPA who prepared the late Form 5500. The client's previous provider passed away sometime in 2015 / 16 - client received a notice in August 2019 regarding filing of Form 5500-EZ or SF. CPA, unaware of the relief that was available filed all of the late Forms 5500-EZ. FYI, client believes that years ago they had a similar late filing of a Form 5500. Am looking for any recommendations before proceeding - see original question first listed above. Is it too late to file for relief after receiving notice? Thanks in advance, especially for those who responded originally. And am sorry for the delay in response.

I have received a referral client from a CPA friend of mine. Client had not filed Forms 5500 for several years. When the CPA became involved he prepared and filed 5 years worth of Forms 5500 but not through the Delinquent Filer Program. Client has now received notices from IRS wanting lots of money. And it appears that this is probably not the first time the client has been delinquent (many years ago). Has anyone been successful with "after the fact" going through the delinquent filer program? Or does anyone have any suggestions? Thanks in advance.

Your set of facts does not mention if the CEO has any ownership in the S Corp. Need to verify. We have taken over plans where ownership was paid 1099, had a Schedule C on their personal tax return, and had a separate plan for that activity. Which would never pass discrimination.

I have been trying for two days to pay online a $750 payment under delinquent filer and the page does not come up. Anyone else having issues? Thanks.

Thanks for the responses

We have a client that is bringing on board a new physician assistant. Their 401(k) Plan has a one year of service with semi annual entry dates. They want to amend the Plan to allow this employee to participate immediately. Any thoughts on amending the Plan and under eligibility naming this individual specifically as being a participant in the Plan? I am told this employee will be compensated well below the HCE limit (around $90,000 a year maximum compensation). Thanks in advance.

We have a client who just started their 401(k) at the beginning of the year. They have essentially been shut down for days due to ransomware. They still do not have access to most of their computer functions including payroll. All election forms are electronic. And emails are down. Payroll was manually completed last week (approx 500 employees) and the bare minimum was done to get paychecks out. FICA, Federal and State withholding. As their software handled the employees 401(k) in the past they did not have deferrals taken out of the last payroll. And it appears that they will still be manually required to do payroll for a while (they are not paying the ransom but there are backup issues). FYI, safe harbor plan with standard match, determined on a payroll v payroll basis. No true up. I have not encountered anything like this in the past. Generally you can make up missed deferrals if the participant has enough time to make up what was not deferred. Trying to formulate options. Any thoughts would be appreciated.

Plan document calls for safe harbor matching contribution to be determined on a payroll v payroll basis (with no true up). True up calculated for 2016 and 2017 and deposited by Plan Sponsor. How do we correct? We were going to forfeit the excess amount due to true up with earnings and file under EPCRS. Anyway to avoid this? Suggestions greatly appreciated.

Looking at filing Form 8950 for a client - the instructions are revised January 2019 but on the IRS website the Form 8950 itself is has a revised date of November 2017. Any ideas? Thanks in advance.

Thanks all.

I have attached an estimate of the calculation of tax deduction limit and allocation. 2018 Projection of Contribution Allocation.pdf

In our FIS Corbel document under Maximum Annual Additions it provides in part that if an employer contribution that otherwise would cause annual additions to exceed maximum permissible amounts the contribution is reduced and any amount in excess of the maximum permissible amount that would have been allocated "may be allocated to other Participants". We have an employer with the only three participants who are all owners or related to owners (no other employees, all HCEs). Two out of three of the participants have maximized their 401(k) for the year. When we determine the 25% deductible employer contribution based on eligible compensation and we allocate based on plan formula these two participants will hit their 415 limit. Which then per plan document would be allocated to the other owner who did not defer. Any problems with allocating additional monies to this third participant once the first two participants have reached their 415 limit? I have been told that this is aggressive but I cannot find any guidance that says we cannot do this. Thanks in advance.

Thanks for replies.

Have a new client - all employees are family members and all are HCE. Want to adopt a 401(k) plan for 2018. I know the 3 month rule for safe harbor plans. But for non safe harbor plans unable to find specific guidance. Something from my past says that all participants have to have an effective availability to the Plan. If all HCEs with the ability to bonus out at end of year for 401(k) any issues with adoption in December for a calendar year plan?

thanks.

I was thinking years ago there was a process that a Plan could do to eliminate the QJSA provisions (joint and survivor annuity) when the monies sources do not require it. I searched over the weekend and came up blank. Can someone help me with a cite? Or am I dreaming. thanks in advance