Cynchbeast

We have a client who sold his business in October last year (asset sale). The sponsor had paid ongoing SH match, and when we look at the data from 2019, we found 1 person was overpaid $24 and 4 of the 5 who deferred were underpaid, ranging from $32 to $244. $ is in John Hancock, and all but 2 have already been paid out. We figure he can forget ever getting the overpayment back. Plan is currently SH with all NHCEs in one group. Only HCEs were owner and son, and neither deferred. Were this a New Comp with one class per participant and no SH, and we were to count the SH paid as Profit Sharing, this plan would pass ADP and 401(a)(4) testing since Owners/HCEs got nothing. Is there any way to justify a retroactive amendment to 01/01/19? Any ideas?

We have a client who sold his business in October last year (asset sale). The sponsor had paid ongoing SH match, and when we look at the data from 2019, we found 1 person was overpaid $24 and 4 of the 5 who deferred were underpaid, ranging from $32 to $244. $ is in John Hancock, and all but 2 have already been paid out. We figure he can forget ever getting the overpayment back. Plan is currently SH with all NHCEs in one group. Only HCEs were owner and son, and neither deferred. Were this a New Comp with one class per participant and no SH, and we were to count the SH paid as Profit Sharing, this plan would pass ADP and 401(a)(4) testing since Owners/HCEs got nothing. Is there any way to justify a retroactive amendment to 01/01/19? Any ideas?

I am unclear on how the new RMD rules apply to someone caught in the transition: Ex 1: DOB 10/27/48 (turned 70 1/2 in 2019, turns 72 in 2020): If participant in DB plan would have had first RMD due for 2019, but chose to delay until 04/01/20. Now since she hasn't yet started benefits yet, is 2020 now her first RMD (which could be delayed until 04/01/21), or does she still have to start by 04/01/19? Ex 2: DOB 04/01/49 (turned 70 1/2 in 2019, turns 72 in 2021): If participant already took 2019 RMD, does she still have to take RMD for 2020 or does she skip that and pick up again for 2021? If participant hasn't yet taken 2019 RMD (delayed until 04/01/20), does she still take it or wait until 2021? And if taken again the question does she also take for 2020 or skip that.

We have a client with two plans (DB & 401k), and there are only two participants - the owner and his mother. They have asked if they must have a bond. I think that since technically it is an ERISA plan, a bond would be required, but it is only owner and momHow would you suggest I respond?

Questions re due date for corporate contributions to DC plans: We know corporate contributions now due 15th of 4th month (04/15 for calendar year). Does this apply to both S Corps and C corps? Does extension now extend them to 10/15? We have plan with fiscal YE 05/31/19. This means we file 2018 version of 5500s. I can't find anything that tells me when that contribution is due - would it be 02/15/20 (old rules) or 03/15/20 (new rules)? Exactly when was this change effective? I am just having a lot of history researching it to find out the history. Everything I find just addresses current rules. Thanks for the help.

Sorry, I cut and pasted and forgot to edit the second version. SS-4 says "ABC Defined Benefit Pension Plan and Trust", while the AA says "ABC Defined Benefit Plan and Trust" (I said it was a MINOR error)

SS-4 for a plan listed plan name as "ABC Defined Benefit Pension Plan and Trust". Adoption Agreement mistakenly showed plan name as ""ABC Defined Benefit Pension Plan and Trust"". Plan is a couple years old and our actuary caught the mistake. What is the best way to resolve this? Would it be appropriate to do a retroactive amendment to correct the original documents?

Nope - just whether a life insurance policy within the plan would preclude them from filing a 5500-SF. The instructions for 5500-SF list "investment contracts with insurance companies" as an example of a "eligible plan asset", but does not list specifically insurance policies.

We have a client with a Profit Sharing plan that includes 2 life insurance policies. Can they still file 5500-SF or do they have to file full 5500?

We have a 401(k) plan that terminated effective 03/31/19. Last contributions were paid to John Hancock 03/04/19 and last participant distributions made 08/19/19. For the final 2019 ADP testing, do we use comp only through 03/31/19 or the full year, or is it our choice?

We have a 401(k) plan that terminated effective 03/31/19. Last contributions were paid to John Hancock 03/04/19 and last participant distributions made 08/19/19. For the final 2019 ADP testing, do we use comp only through 03/31/19 or the full year, or is it our choice?

We had a large plan client that stopped communicating with us and stopped filing 5500s several years ago. Now they have contacted us to bring the plan up to date. This will mean DFVC filing for 7 years (thru 2019) - all large plan 5500. Q: Do they need a separate audit for each year or can they use one comprehensive audit for 01/01/13 through 12/31/19?

We took over a plan from another TPA who had done a PPA restatement effective 2015. The restatement was COMPLETELY wrong (some of the terms didn't even make sense). All valuations from 2015 on have been done consistently as I expect the prior TPA intended, but not in compliance with the restated documents. At this point, what is the best way to proceed? We need documents that agree with the valuations. Is there a good way for us to correct this situation or do we have to use one of the EPCRS programs?

Re reason for using PenChecks - the plan has assets in a brokerage account and they really don't want to start requesting separate checks for tiny amounts. Not to mention the fact that they may not be able to locate some of these participants and then they would have to deal with uncleared checks.

We have a PS plan with pooled accounts and several terminated participants with small balances (under $200). We will be sending to PenChecks for check processing and the fee they charge is $35 per participant. The sponsor would like to pay the charges from the plan's forfeitures. Is this a legitimate plan expense?

We have a client with DB and PS and the only participants are him (100% owner) and his mother. There are no other employees and so no other participants in the foreseeable future. What is IRS position on bonding for such a plan?

PS plan is written on PS 401(k) document. So, the operations side of this is clear - no more SH match, and first 3% of PS is SH NEC for the other plan. That means the 1st 3% will be fully vested, and anything above that is subject to graded vesting. Does the PS plan have to be amended to allow for SH NEC contributions? If not amended, doesn't the PS doc have to somehow reflect that some of the contributions are fully vested?

PS plan is written on PS 401(k) document

Client has both a 401(k) and a PS plan. 401(k) previously had SH match to NHCEs only. We are amending to no SH, with provision that SH NEC will be paid to another plan - the sponsor's PS plan. Q: Does the PS adoption agreement have to state somewhere that it will receive SH NEC contributions to cover the 401(k), or is it all okay just as long as all 401(k) eligible participants receive at least 3% in the PS? (we can't seem to find any provision in the PS adoption agreement)

Plan defines comp as W-2 comp, but does not include post-severance pay for Deferrals, match or non-elective contributions. Terminated participant received severance pay, but we don't know yet exactly what constituted the severance pay. Would assume at least part of final check was unpaid vacation, sick leave, etc., and possible customary 2 weeks "severance pay". Question is, do we include all or part of the severance pay in calculation of SH NEC or not?

Very unusual situation - we have a plan that was terminating PYE 06/30/19. They moved money to checking account and paid everyone out. Then without consulting us, instead of closing the account they kept it open and put in an additional $250 to cover bank fees. They now have about $167 remaining. Whereas we had planned to file a final 5500 for PYE 06/30/19 showing the plan terminated, they actually have no participants and a small bank balance remaining. Technically, it seems we would have to have them clear out the account and file a final 5500 for PYE 06/30/20. Any suggestions as to how you would handle this?

Any word yet on proposed changes to hardship withdrawals? Is anything final?

Good article - thank you. So I am assuming we issue no 1099-R for 2018, and the 1099-R for 2019 will reflect both years' RMDs? And what does the participant do if he has already filed his (1040) tax return? Obviously filed without the 5329.

We have client who missed paying an RMD for 2018 (seems to have been legitimate error since person normally handling this was out for illness). Participant will take RMD now - my questions: Form 5329 reports missed RMD. This goes with his 1040? If taxes already filed, does he amend 1040? He will attach letter of explanation; does he pay 50% penalty with 5329 or not? If 2018 RMD taken now (Jan, 2019), do we prepare 1099-R for 2018 or 2019? Anything else I am missing? Does the sponsor have to report this?

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