Lou S.

Do you have a short plan year from 10/1 to 12/31 or do you have an effective date of 1/1 to 12/31 with the 401(k) componenet effective 10/1? In the first case you would prortate your 415(c) and 401(a)(17) limits, in the second there would be no proration.

They bought the stock so Plan B is now a plan of Company A with all its history and Company A now has two 401(k) Plans at the same time. To have allowed distributions to Participants in Plan B the Plan would have needed to be terminated prior to to the sale on July 15. Typically you need to make safe harbor contribution up to 30 days after you notice participants but you may qualify for a shorter period as part of bonified business transaction.

If his earned income is $0 for 2020 his 415(c) limit for 2020 is also $0. Also assuming a combined plan limit where he can deduct 6% of his pay a DC contribution (since the minimum required contribution is more than 25% of pay), 6% of $0 still equals $0.

It seems like there should be an easy way to do this internally like just designating $x for 2020 and $y for 2021 but that doesn't seem to be how the IRA custodian is set up. And while it is a pain and more a form over substance thing it does appear you have the mechanics and tax implications correct. Since the "over contribution" was in 2021 and being corrected prior to the dute date of you 2021 tax return, there should be no additional penalties which respect to this transaction.

Ask them if they have a form for removing Excess IRA contributions. Since the deposit was made in 2021, it shouldn't be too hard to removed the excess plus earning timely to avoid the 6% excess tax on excess IRA contributions.

If they want her to participate and she's the only part time employee, why not just drop the eligibility to enter to 0 hours? Why wait for her to be forced in under SECURE?

In your example if those are the only 2 participants in the plan and there are no other contributions in the ACP test then HCE ACP = 10%, NHCE ACP = 0% and 2 x 0 = 0 so you would refund 100% of the after tax contributions plus earnings. As to why you are getting a lot of questions, I think there was Wall Street Journal article about mega backdoor ROTH somewhat recently.

Under the SECURE Act the part time eligibility rule only applies to elective deferrals. The Plan can be more generous and extend it to Employer contributions but it does not have too. Presumably if you have an eligible part-time participant who elects not to make 401(k) contributions you now have a participant with a $0 balance but a participant and unless the IRS releases some additional guidance on the subject the plan would no longer be able to file an EZ. They would have to file the full 5500 or SF if they qualify.

https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/pension-benefit-statements-lifetime-income-illustrations

The Act allows you to set up a new plan it does not allow you to make post year end amendments to an existing plan. It's kind of a pain, but in your case you could set up a new (second plan) plan in 2021 for 2020 and then merge it into the old plan in 2021. Kind of a hassle but it is an option.

If you could show it was a commercially available loan rate at the time. Otherwise it would probably be deemed an unreasonable rate of interest. As an example, perhaps if they had an offer for 0.9% financing on a new car loan but instead chose to borrow the money from the Plan for 1% instead the IRS might view that as a reasonable rate of interest.

Yes, you have a first and final Form 5500 return. Form was due April 30, 2021 if distributions were in September.

Is the employer running 2 tests for 2 short plan years? one for PYE 1/1 - 9/30 and one for PYE 10/1 - 12/31? Either way the particiant is going to have 1 catch-up for the calendar year. So if you fail the 9/30 test and recharaterize say the full $6,500 catch-up on the 9-30 plan year then you would include all of the $6,500 deferred in the 4th quarter in that test. If you pass for 9/30 and don't recharaterize, then all of the 4th quarter is catch-up since it is now over the 402(g) limit and not in your test.

Maybe they applied for social security disability? Maybe the Plan Sponsor has bad dates of birth? But yeah seems odd.

If it's the same employer isn't there only one test for the full year?

Are the plans related employers or unrelated?

If you have old terminated participants who were previously reported on SSA you'll want to remove them from t he old plan and report them on the new plan. But if they are active employees, I agree with Bill Presson. Doesn't seem to be anything to report unless they separate from service with vested benefits.

With respect to profit sharing set up everyone in their own group you shouldn't have any issues. The match I'm not sure. I honestly don't know if you can set up a truly discretionary match were you pick and choose what match you give by individual. I'm not sure why I feel the match might be an issue while the profit sharing isn't but for some reason I can't put my finger on it just doesn't feel definitly determinable. Maybe someone has some more insight on it.

20 years late it looks like.

As long as you can write it into a document and administer it, it looks like it would be non-discriminatory. Unless you had a lot of low paid 5% owners but doesn't sound like that would be an issue in a 400 life 403(b).

How would an IRA work? You'd have to set it up in the dead participant's name which I don't think you can do after death. If the estate is the beneficiary, why not send a check payable to "The Estate of enter deceased participant name". You could send it by certified mail or or some other delivery service with signature required. If you're concerned about them holding the check, why not send them a cashier's check to close the trust?

https://employer.calsavers.com/home/employers/program-details.html?gclid=CjwKCAjwieuGBhAsEiwA1Ly_nXE7Ra9sR0bx02GErhzJflOQ0y6Zg9pcTGDfK5Emhus97HoNYDO1WhoCLJ0QAvD_BwE I don't believe there is any penalty if you sponsor a qualified plan whether you opt out or not. And for those that are supposed to sign up but are late, I don't think the penalty starts until 90 days after you are noticed. That may change in the future but for now seems fairly easy to avoid the penalties unless you willfully ignore notices.

I believe the assets have to be subject to US jurisdiction so the Canadian brokerage may be problematic.

As long as you are under the deduction limit for 2021 (and it sounds like you are), I don't see a problem.

One way or another, whoever ultimately does the admin will need a copy of the current document to administer the plan, even if they will be amending it on to their document as they will need to make sure any changes don't violate 411 cutback provisions. whether they get that document from you or the client I'll leave to you. But you are under no obligation to explain the document to the new group. The new group is not your client, you don't have a service agreement with them. You could certainly send anything directly to the client and let them decide what to send to new group.