Lou S.

In the first case I believe the 401(k) does not have a problem but the SIMPLE IRA does. VCP can be used to ask that the SIMPLE IRA contributions remain in the IRA for years you had 2 plans. In the 2nd case I'm not clear on what happened. Did the controlled group/related employer adopt the Plan? Does the Plan Document automatically pull in members of a controlled group whether of not they formally signed on to the plan? Would the plan pass coverage with the related employer properly excluded, that is if it did not sign on and the document doesn't automatically pull them in?

No, CARES Act withdrawals need to be completed by 12/31/2020 to be treated as CARES Act withdrawals. Congress may pass legislation extending that date into 2021 if they feel it is warranted, but so far they have not. And by completed I mean check issued or funds transferred with a 2020, 1099-R attached to it.

The backdoor to the AO disappeared a few months ago. I think you can access specific threads if you work hard to get there and know enough about them to find them because nothing ever really dies on the internet but it isn't very easy from what I understand. https://community.goactuary.com/c/exams/5 Go Actuary has an an exam section similar to the old AO. If you're looking for a paid course Rick Groszkiewicz and David Farber are both very good, I did David's courses years ago. I suspect a google search on either would point you in the direction of their information. And if this is against the terms of this site I apologize, I have no realation to either nor do I receive any referral fee.

I agree. I should have worded it better in that "the client has a problem with effective availability"

Good catch on the 3 month rule, I did miss that so SH would not work for 2020 under any scenario.

I think you have a problem with effective availability with respect to the NHCEs since presumable they won't be able to make any deferrals but I'm not sure there is any specific reg that is violated. I know in the past we have put in 401(k) plans in December with prior year testing to allow the owners to put in 5% of annual pay + catch-up if over 50 but there was always the understanding that at least 3% TH minimum would be made for all employees and NHCE would be offered the plan for the final payroll(s) of the year if they wanted to contribute. With SECURE I suppose they could have put in a 4% non-elective safe harbor and got the full 402(g) limit for 2020. Though again you might have an effective availability problem since effectively only the owners could make deferrals.

Then I don't see why you couldn't convert the IRA to a ROTH without too much difficulty, though completing it all in 2020 may not be possible at this late date.

I thought direct charitable contributions of RMDs was only allowed from IRAs and not qualified plans? Am I missing some change?

Do you have any other traditional IRAs?

I'm not a lawyer but is there a provision in the trust that allows it to be disolved and would the Trustee agree to disolve it? It may be a form over substance issue where the payments have to continue to go to the Trust even though they then pass directly to the grand kids.

Can they pay a portion of your fees with the residual dividends in January and show it as a payable on the final 2020 form 5500?

Unless you opted into electronic notification point out specifically that the first time you were notified was the bill collector as you have no prior written communication from them. Ask them to indemnify you from any losses, taxes, fees or tax preparation services you may require as a result of their error. Also require them to removed the bill collector and ANY negative reporting to your credit that may result from them having sent this to collections without notifying you in writing that the error had occured. Tell them while you are happy to return any funds erroneously deposited to your account to the Plan, you will not be dealing with any bill collectors on this matter. Also you will need a detailed accounting of how they arrived at the over payment figure in question and why you are not entitled to that payment. If they do not agree let them know that your next call will be to the local branch of the Department Of Labor.

If she was an employee of the husband's business wouldn't that be a controlled group by stock attribution because as a spousal employee should be be deemed to own 100% of husband business as well as 100% of her other business? But he said no CG so I assume she is not employee. Assuming the wife has no direct ownership of husband business, is not an employee (and same goes other way) and there are no GC or ASG issues I see no reason why wife can't maintain SIMPLE-IRA for her business while husband has 401(k) for his.

CB I guess that is another way to look at. We've always taken the conservative approach that the 30 day notice period was to designed by the IRS to allow participants time to change their deferral elections if the removal of the SH match caused them to reevaluate their position. But I can see looking at this as an amendment before the year starts and not a mid year reduction and thus not being held to the 30 day notice rule.

If the loan is on extension then is it in default? Did the CARES Act. specifically prohibit a loan offset as valid CARES Act. withdrawal? I think those are the questions. I believe the answer to the firsts is clear that the loan is not in default prior to 12/31/2020 if it was properly suspended under CARES. The second question is a bit more gray and treating the loan offset as part of a CARES Act distribution may or may not be an aggressive position. I think taking a CARES Act distribution and then repaying the loan balance is not aggressive at all but requires a few more steps and cooperation of the participant to repay the loan with the proceeds of the CARES Act. distribution.

Any time you amend out a SH Match you need to give 30 days advance notice. I'm not aware of any exception that says, unless it crossed a plan year end.

What does your amendment say? I'm pretty sure you can set up separate sources and have the QACA safe harbor follow that vesting schedule and the traditional SHNE follow the 100% immediate if that's what client wants.

As David says you will receive the 3% contribution if they are a nonelective safe harbor plan for 2020, your termination in 2020 does not change that as safe harbor contribuitions can not have a last day of the year employment restriction. Whether you can take a distribution now or will have to wait until the contribution is deposited will depend on the terms of the Plan document and the Employer's administrative procedures. It's possible that you can take your funds now and then a second withdrawal after the funds are deposited but you might be charged 2 withdrawal processing fees depending of the how the plan handles that kind of thing. If you don't have an immediate need for the funds or intend to roll them to an IRA, you might consider waiting until the 2020 safe harbor contribution is deposited to your account for simplicity.

I was assuming the Plan allows for COVID withdrawals especially since OP said loan payments were further suspended under CARES Act, if it doesn't you are probably correct. But if it does allow for COVID withdrawals I think you can do the Loan Offset as described, as long a participant elects it. If you're not comfortable with a direct offset you could do a 2 step process that accomplished the same thing - take a COVID distribution for the balance of the loan and immediately pay off the outstanding loan.

I think you could get a COVID extension to 12/31/20 but I think payments would need to start in January 2021. I think he might be better off offsetting the loan in 2020 as COVID related. Participant would avoid 10% tax and could spread tax over 3 years or take in 2020. And could do a COVID repayment through 2022.

If he's an HCE it goes in the ADP test, if he's an NHCE it is excluded from the ADP test. If that HCE requires ADP refund, you don't double refund the 402(g) and Excess deferral, that is the excess deferral that needs to be refunded is reduced by the amount already refunded becuse of 402(g). There is nothing magical about off calendar plans, just a bit more complicated figuring them out some times.

Vesting is on service not participation. There are some exceptions for service that you can exclude but unlikely to apply here. 100% vested.

That would be my understanding as well assuming the plans are written that the DC plan satisfies the TH min. He would then be entitled to the gate way contribution if it is more than 5% which it often but not always is.

The tax credit is tied to how many non-HCEs are covered, since this plan covers no NHCEs it is not eligible for the tax credit.

I like Belgarath, I don't see a situation where the IRS would view rounding down to "Zero" as a reasonable method, even if you do it consistently.