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Lou S.

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  1. Like
    Lou S. reacted to Belgarath in IRA $$ Stolen   
    Other than asking a good CPA...
    Perhaps this will help a bit? And I believe you can maybe deduct a theft loss on a Form 4684? But this is way out of my area of knowledge. My deepest sympathy to the poor lady with a loser of a Son.
    Theft losses
    A theft is the taking and removal of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and must have been done with criminal intent. The amount of your theft loss is generally the adjusted basis of your property because the fair market value of your property immediately after the theft is considered to be zero.
  2. Like
    Lou S. reacted to Paul I in 402(g) Excess (all Roth) not taken--loophole?   
    It is fair to recognize that for excess deferrals that are not a 401(a)(30) violation (i.e. the excess is not known to the plan), the participant has the responsibility to report the excess and to choose how much of the excess is in each of the plans.  It the participant does not provide this information, neither plan will know about the excess and each plan will not be able to account for the amount of the excess.  Each plan doesn't know what the plan doesn't know.
    If the participant does inform a plan that it holds an excess deferral, then that plan's recordkeeper should ask for information about the amount of the excess and the type of deferral (pre-tax or Roth) that is in that plan.  Then recordkeeper should properly account for the excess going forward.
    Note that the reg says "For this purpose, if a designated Roth account includes any excess deferrals, any distributions from the account are treated as attributable to those excess deferrals until the total amount distributed from the designated Roth account equals the total of such deferrals and attributable income."  If there is no separate accounting, then the first dollars out are a refund of the excess plus earnings and are not eligible for rollover.  (This is similar to what is done for RMDs.)
    As evidence that @Lou S.'s odds on how this is reported are fairly accurate, I observe that I have never seen a conversion data request that asks for the amount of excess deferrals that are in a participant's account.
  3. Like
    Lou S. got a reaction from Bill Presson in Minimum required distribution   
    RMD first, then rollover. Must have typed too fast.
  4. Like
    Lou S. reacted to Bill Presson in Minimum required distribution   
    Rollover first? Or RMD first? Because the RMD has to come out if the participant will reach RMD age during the Distribution Calendar Year.
  5. Like
    Lou S. reacted to rocknrolls2 in Excess deferral across two plans--too late now?   
    Code section 402(g( prohibits an individual participant from making elective deferrals exceeding the annual dollar limit, except to the extent that the participant is eligible to make catch-up contributions. 402(g) applies determines compliance with the annual limit across all plans to which elective deferrals are made, regardless of whether the employers are related. 401(a)(30) is a qualification requirement prohibiting a plan from accepting elective deferrals in excess of the annual dollar limit except to the extent that the participant is eligible to make catch-up contributions and the total of such contributions do not exceed the sum of the regular limit on elective deferrals plus the annual limit on catch-up contributions. Reg. Section 1.402(g)-1(e)(8)(iii) provides: "If excess deferrals (and income) for aw taxable year are not distributes [by April 15th of the taxable year following the taxable year in which the excess deferrals were made] they may only be distributed when permitted under section 401(k)(2)(B)[except to the extent distributed in accordance with correction under EPCRS]."
  6. Like
    Lou S. reacted to truphao in Mike Preston   
    I second that.  This is a huge loss to the retirement benefit practitioners community.  Let him rest in peace and condolences to his family.
  7. Like
    Lou S. reacted to Below Ground in Mike Preston   
    While I did not know Mike personally, I did benefit from exchanges with him.  My prayers and condolences go out to his family.
     
  8. Like
    Lou S. reacted to Paul I in 402(g) Excess (all Roth) not taken--loophole?   
    See Reg. 1.402(g)-1(e)(8)(iv):
    "(iv) Distributions of excess deferrals from a designated Roth account. The rules of paragraph (e)(8)(iii) of this section generally apply to distributions of excess deferrals that are designated Roth contributions and the attributable income. Thus, if a designated Roth account described in section 402A includes any excess deferrals, any distribution of amounts attributable to those excess deferrals are includible in gross income (without adjustment for any return of investment in the contract under section 72(e)(8)). In addition, such distributions cannot be qualified distributions described in section 402A(d)(2) and are not eligible rollover distributions within the meaning of section 402(c)(4). For this purpose, if a designated Roth account includes any excess deferrals, any distributions from the account are treated as attributable to those excess deferrals until the total amount distributed from the designated Roth account equals the total of such deferrals and attributable income."
    Short version as I understand it: Excess Roth deferrals and related income are taxable and cannot be rolled over.
    Shorter version: less like a loophole, more like a snare.
  9. Sad
    Lou S. reacted to tymesup in Mike Preston   
    I sadly have to inform this group that Mike Preston unexpectedly passed away Sunday 5/5 from natural causes.
    He was knowledgeable and generous with his time.
  10. Like
    Lou S. got a reaction from acm_acm in DB change of Sponsor to his New LLC   
    Do you use a pre-approved plan doc? Can you ask that provider? I think most have some kind of amendment system to generate a short amendment to change the Plan Sponsor. Is the EIN changing? If yes, there is a place to report the sponsorship change on the 5500.
    It might also be easier to just amend the Plan to have the FL LLC as an adopting employer (that seem a clear CG), then end the participation of the NY LLC when it dissolves and have the FL LLC take over as lead adopter.
  11. Like
    Lou S. reacted to truphao in DB change of Sponsor to his New LLC   
    It has been happening a lot and that is the exact approach we have been taking - just throw all the entities into the Plan, check the CG box and change the adopting ER/main entity to be the most recent one.  It requires participation/joinder agreement for other/old entities.
  12. Like
    Lou S. got a reaction from truphao in DB change of Sponsor to his New LLC   
    Do you use a pre-approved plan doc? Can you ask that provider? I think most have some kind of amendment system to generate a short amendment to change the Plan Sponsor. Is the EIN changing? If yes, there is a place to report the sponsorship change on the 5500.
    It might also be easier to just amend the Plan to have the FL LLC as an adopting employer (that seem a clear CG), then end the participation of the NY LLC when it dissolves and have the FL LLC take over as lead adopter.
  13. Like
    Lou S. got a reaction from SSRRS in Schedule C income   
    Well the DB plan has a minimum required contribution which may be larger that the Schedule C net income. In that case your income for the year is $0 (probably) and you may have a nondeductible required contribution to the Plan. Depending on when it's deposited you might be able to kick the can into next year by designating different years for MRC and deduction.
  14. Like
    Lou S. got a reaction from Paul I in Terminating Plan and 401(k) Safe Harbor Reliance   
    I see no problem making 12/31/24 the date of termination. If you get all contributions funded and everyone paid out before then great 2024 is your final year. If you have some distributions that carry into next year you just have a final 5500 requirement because the plan is terminated and no additional contributions will be made for 2025 (other than any 2024 receivables that might be deposited in 2025).
  15. Like
    Lou S. reacted to Paul I in CARES Act distribution repayment - source?   
    You may find Q&A 7 helpful in this IRS Q&A  https://www.irs.gov/newsroom/coronavirus-related-relief-for-retirement-plans-and-iras-questions-and-answers
    As I read it, you repay the amount to the plan and then file amended tax returns for each year in which you received a payment to claim a refund of taxes you paid on the distribution in each year.  In effect, you are reversing the payments out of each year's tax return.  It would make sense to have the repayment flow back to it's original source.
    Of course there is no mention of what to do about state taxes.
    FYI, Q&A 7 in particular reads:
    Q7. May I repay a coronavirus-related distribution?
    A7. In general, yes, you may repay all or part of the amount of a coronavirus-related distribution to an eligible retirement plan, provided that you complete the repayment within three years after the date that the distribution was received. If you repay a coronavirus-related distribution, the distribution will be treated as though it were repaid in a direct trustee-to-trustee transfer so that you do not owe federal income tax on the distribution.
    If, for example, you receive a coronavirus-related distribution in 2020, you choose to include the distribution amount in income over a 3-year period (2020, 2021, and 2022), and you choose to repay the full amount to an eligible retirement plan in 2022, you may file amended federal income tax returns for 2020 and 2021 to claim a refund of the tax attributable to the amount of the distribution that you included in income for those years, and you will not be required to include any amount in income in 2022. See sections 4.D, 4.E, and 4.F of Notice 2005-92 for additional examples.
     
  16. Like
    Lou S. reacted to justanotheradmin in SDBAs for owners (can it be done?)   
    There are some custodians that offer brokerage windows within their retirement product offerings. Worth looking into, and then all the participants would still be with XYZ recordkeeper, but could have way more options than just a regular fund line up. and getting year end reporting/ statements/transaction history is SO MUCH EASIER
    I agree they are terrible for plans. Even though I work on a lot of plans with them. 
    Is the plan going to limit what kind of SBDA? maybe to a single financial institution? or are folks going to be allowed to pick their own, wherever? having all the accounts at schwab is simpler than a dozen accounts a dozen different places. And is each account going to have a different advisor? I don't like it when plans tell participants their personal advisor can be the advisor on their account. Accounts often don't get set up correctly, the plan needs to be the owner, the trustees on there, and the participant is only an FBO so they shouldn't be the one controlling the account anyhow. interested party/duplicate copy statements for the trustees, the TPA etc don't always get set up right. And I don't think I've never seen a good participant fee disclosure from a SDBA financial institution, and I doubt the plans are keeping copies of them. 
    I guess my main question is WHY do they want SDBA as part of the plan? Also - if the owners think the investments in an SDBA are so good for themselves, why wouldn't those investments be good for the rest of the participants? 
    If the owners can take distributions out - I would suggest they do so, and roll the money over to an IRA wherever they want, and leave the plan assets in a proper recordkeeping arrangement. 
  17. Like
    Lou S. reacted to Belgarath in SDBAs for owners (can it be done?)   
    Since there is no official guidance on the effective availability requirement under 1.404(a)(4)-4(c), I'm not sure what degree of confidence there is - depends on how aggressive you are (or more to the point, how aggressive your client is willing to be). Your proposed parameters seem pretty safe to me, although the minimum value to have a SDBA could be an issue. If, for example, the minimum is say, $5,000, and 90% of the NHCE's have $5,000 or more in their accounts, then it seems "reasonable" that this would qualify. I would tell them, if they wish to pursue this, that they need ERISA counsel opinion, etc. - the usual CYA stuff.
    And of course, the plan fiduciary must determine that the fees are prudent and reasonable, etc., etc., and a flat fee for small brokerage accounts might not qualify.
    As you said, potentially a bad idea on many levels. 
  18. Like
    Lou S. reacted to Paul I in Terminating Plan and 401(k) Safe Harbor Reliance   
    @Lou S. has laid out what likely is the best path forward - terminate the plan effective 12/31/2024.  Very likely there will be some assets still in the plan after that date which will require a 2025 5500 filing, but that should be easier than juggling all of the other issues that would come up with a mid-year termination.
    Make sure to dig into the details when navigating this situation. For example, here are some random thoughts:
    The client is a partnership of corporations, and the other owners do not participate in the plan.  Do the other corporations have employees?  You need to confirm that there are no (and never have been any) coverage issues. Is the plan top heavy?  If yes, letting the plan run to 12/31 may provide a pass on making a top heavy minimum, and keep in mind that the top heavy contribution is subject to a last day rule.  If everyone is terminated by 12/31, that should not be an issue. Why Is part of there a concern about hiring some people back? Is the owner thinking he doesn't want to give the rehires the SHNEC?  If the rehires are HCEs, their status as HCEs will not change during this plan year. If there are rehires, will the plan continue possibly into next year?  If so, then it is possible many of the rehires will not be HCEs next year if they are out of work for a significant part of this year. It sounds as if the owner is overthinking every detail, including wanting definitive answers to situations based on not-yet-known facts.  Keeping it simple likely will be the best approach, and in the end, least expensive one.
  19. Like
    Lou S. got a reaction from Bill Presson in 2022 SH contribution not deposited yet (2024) - how to fix?   
    I believe this would fall under the newly expanded self-correction procedures for operational failures corrected within 2 year. I believe the fix would be to make the missed contributions along with earnings. But you can check the latest EPCRS IRS notice.
  20. Like
    Lou S. reacted to Paul I in RMD from profit sharing plan   
    It sounds like you answered your own question.  If there are other assets available (with Nationwide) to cover the RMD, then take the RMD from there.  That leaves the remainder of the year to rollover the LP.
    Once the LP is in an IRA, he can use funds in any of the other IRAs (assuming he has some other IRAs) to cover the RMD due based on the collective balances in all of his IRAs (including the one with the LP).  This could be motivation to make the move.
  21. Like
    Lou S. got a reaction from CuseFan in Schedule C income   
    Well the DB plan has a minimum required contribution which may be larger that the Schedule C net income. In that case your income for the year is $0 (probably) and you may have a nondeductible required contribution to the Plan. Depending on when it's deposited you might be able to kick the can into next year by designating different years for MRC and deduction.
  22. Like
    Lou S. reacted to truphao in Excess Assets in Terminating Cash Balance Plan   
    You follow the plan terms but you need to test the total allocation for the year.
  23. Like
    Lou S. reacted to david rigby in Excess Assets in Terminating Cash Balance Plan   
    The above word "allows" might imply some discretion.  The document probably does not include discretion but check carefully.
  24. Like
    Lou S. reacted to Bri in When is it too late to setup a DB plan?   
    Sure, but a plan set up as late as October 15 will have some sort of a problem, since the minimum funding was due September 15.
  25. Like
    Lou S. reacted to david rigby in will 417e table affect lump sum payment from DB plan   
    In addition,
    Timing is important:  Very likely, any change that applies would take effect at the beginning of the next plan year.  You should ask your HR rep (assuming that exists) what changes might apply and when.    And take into account that some plans require participants who are no longer employed to begin their payment (in whatever form they choose) at Normal Retirement Date (often, age 65) so that your proposed delay may not be permissible under the Plan provisions.
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