Bill Presson

If they made the election, then the issue is the deposit and it should be corrected immediately. I don't see this as being different than a w-2 employee making an election and it not being deposited.

Jak, if you use "seasoned monies" for insurance premiums that exceed the incidental limits, those amounts are treated as a taxable distribution. That's why you get to exceed the incidental limits. I don't recommend it. Also, just an FYI even though you didn't ask, rollover monies are not considered in the calculation for the incidental limit since they weren't contributions to that plan.

Agreed. It's all about the timing on this.

Loan limits are separate from distribution limits. Since a loan can't be made from a SEP, take the distribution from there and the loan from the DB.

The participant terminated in 1989, not the plan.

If it's a corporation, you use 1563(e)(4) instead.

https://www.napa-net.org/secure-act-tax-credit-qas Technically it was NAPA. But no membership required.

This was part of an ASPPA Q&A on the credit. Q25: Does the start-up credit apply to a SEP? A25: Yes, it applies to a SEP. The credit is not limited to qualified plans. IRC Section 45E refers to IRC Section 4972(d) for the definition of a plan. That section includes qualified plans, 403(b) plans, SEPs and SIMPLE IRAs or 401(k)s. While it doesn't specifically address your question, I think it answers it.

As you've described it, the S Corps seem to have been done correctly. But if the LLC is taxed as a partnership, the partners should not have received w-2 compensation. https://www.irs.gov/businesses/partnerships From the IRS: "Partners are not employees and shouldn't be issued a Form W-2." So, the CPA did it wrong. With that said, you will need to count both amounts from the LLC. Depending on the K-1 amount, the calculation might get tricky.

They should be getting K-1s from the S Corps as well. Those aren't earned income and can't be used for pension purposes. If the LLC is taxed as a partnership, then the K-1 is (generally) treated as earned income, assuming they had an active role in the business. If the LLC is taxed as an S Corp, then the answer is the same as for the other S Corps. Maybe they chose not to pay themselves a salary and get a w-2 in the LLC. You'll need to ask more questions.

You're welcome!

1. https://www.irs.gov/retirement-plans/terminating-a-simple-ira-plan 2. No issue with signing in December 2020

So the CPA wants to actually have the money not taxed ever? Sweet deal if you can get it.

I stand corrected. This I did not know. I would be interested to see the math in a real life situation.

I don't believe any of the match is included in the ACP since it qualifies as safe harbor. This is why the after-tax contributions will fail unless it's an owner only plan or a very large plan where a lot of typical HCEs are excluded because of a top paid group election.

If the employer isn't currently a sponsor of a plan, then they can't withhold any deferrals. There isn't a plan that allows it.

As Bird said, it's ok. But I think it's silly. Are there really some 13 year old kids they need to exclude? Just eliminate the age requirement. Usually the 18 & 21 ages are there to exclude high school and college summer help or interns. Not sure an age 14 eligibility requirement accomplishes anything.

If you feel you've been harmed, you need to contact an attorney and seek legal action. I don't think we can help you here.

They're definitely coming but not till 1/1/21. We'll have the capability and are getting things prepared now, but not advertising anything. The only advertising I've seen at this point is Terry Power's group.

I've been involved with insurance in plans for a number of years. Usually it doesn't make sense. Almost every time it involves the agent using the plan money because it's easier than getting the insured to write a check. The "seasoned money" is a term of art meaning "money available for withdrawal" and using that money to pay for life insurance just means that you can exceed the incidental limits without disqualifying the plan. Taxes are still due because it's equivalent to an inservice withdrawal. You seem to be using that amount however to then calculate the incidental limits. And those are based on cumulative premiums, not annual premiums. The loan availability will likely change drastically if you spend as much as you're indicating on life insurance. Lots of moving parts.

Yes. This means my interpretation is right. As soon as someone gets to 1,000 hours, they are eligible. They don't wait until finishing the 12 months. This has yuck all over it. Just because something is legal doesn't mean it is a good idea.

BG, could be, but I've seen some documents that don't specify having to wait until the end of the service period. Just says 1,000 hours in the service period. The OP didn't say either. But I agree with asking the attorney. One of the benefits of having an attorney draft a document.

"first Entry Date preceding" likely means 1/1/19 for your two examples. Yuck. WCP

Thank you, KevinC!

All, what if the plan starts/is adopted December 1 and deferrals are only available for that month of the year. However, the plan is retroactively effective 1/1 and allows PS and SHNEC to be made for the entire 12 month period. Would that check all the boxes?