thepensionmaven

We prepared a loan document for a client in December, 2019, at that time, prime rate +2%, and loan issued at 5.75%. With the COVID suspension and re-amortization, would the interest rate need to be the same? Since the new re-amortization can not go beyond the original term of the loan, and this participant only made 3 loan payments prior to suspension, the new loan amount plus accrued interest from date of suspension through 12/31/20 at the same 5.75%, yields a higher monthly payment than the existing amortization schedule. That does not make sense.

Optimally, but broker telling me the residuals may not come in until February at the latest and he has no idea what the amount will be.

We have a plan that was terminated in 2020, all money is out of the plan; broker tells us the account must stay open as dividends and interest will trickle in 2021. Client does not want to file 5500 for 2021. I don't see how unless maybe the plan account can be renamed to an individual account in the name of the company prior to 12/31, then the account is liquidated and the proceeds paid to TPA as a fee. Suggestions?

That's good to know because I have run across a few TPAs as well as brokerage people who are under the impression the plan can't be closed until all the money is out of the plan. I think their logic (?) is that as long as the participant has not done anything with the money, it is still a plan asset.

We're terminating a defined benefit plan, the checks are written to the rollover institutions, all sent prior to 12/31/20. It is my understanding that the plan can not be closed and a 'final 5500" prepared until either IRAs have been established or the participant cashes a check and the 20% withholding has been paid. So, 1099s can only be prepared for 2020 only if the plan funds were deposited into IRAs mor cashed their checks in 2020; if done January, 2021 has to be a 2021 1099R. Correct???

We administer a combination CB/401(k) which we recently took over. The 401K is calendar, the CB is 9/1-8/31. Client wants to bring the CB to calendar year, so we have a short plan year in the SC 9/1/2020-12/31/2020. Client is in cash flow (who isn't these days) and wants to keep the CB as low as possible. The limitation year is calendar for both plans. Thinking of doing CB with actual salaries 9/120-12/31/20 and full cal year for 401K, but that does not sit right. Full calendar salaries for both and then pro-rate the CB contribution?

OK, it appears this conversation has gotten a bit out of hand -perhaps I did not ask correctly. 1. Not to split hairs, the ASPPA Annual Conference (AC) was held, although not in person, but virtually. A conference is still a conference, whether in person or virtually. 2. My second question was worded entirely incorrectly. The owner overshot his 415 limit by some portion of his voluntary contribution. I was not asking if he could take a COVID to pay the excise tax. What I was thinking, and I did check this with an ERISA attorney with a positive response, was removing the excess prior to 12/31; claiming as income, paying the excise tax, then loan the excess to corp, corp to plan to pay a portion of the safe harbor 3% 3. Client also has a DB. Take a CRD to pay the baalance of the safe harbor, the balance to fund the DB.

Agree with CuseFan. I just completed an IRS audit of a 401K plan handled by Paychex, not even a plan of mine. Nine months of torture, mainly because Paychex would not release any of the pertinent information the auditor required. There was a question similar to yours on another Board a few months ago. Someone asked how many plans is too many to work on, she mentioned she had over 150 and is a 1 person operation. The answer was unique - what type of operation do you want to run - data processing or consulting. The "80/20"s are the ones you have to watch out for - spending 80% of your time and receiving 20% of what you're worth. Good luck you

If I am understanding correctly, from ASPPA AC, pertains to DB plan, since corp also sponsors a defined benefit plan, owner can take a Covid distribution equal to the amount of overage in the 401K, pay tax, contribute to corp who then pays to plan as part of the minimum required contribution?

Three owners, two doing voluntary, the second minimal, third $0. ACP passed, I checked by hand as I could not believe it, either. Oh well, in addition to our mentioning it, he't just got to watch for the limit. ADP (payroll ADP) isn't going to limit him. They don't even limit some of our 401k clients for the maximum 402(g) anyway! Thanks all.

Before I stand accused of wasting time, and know this is not going to fly, but accountant as well as broker did question. I have a 401K safe harbor with voluntary, after tax contributions. One of the owners mistakenly over contributed a portion of the voluntary such that he's over 415. Since voluntary is not deductible anyway, could not the excess be transferred to a rollover account. I said " no", but I they they're fishing.

I assume you mean to adopt the SHM, so nothing further is given to the participants that are not contributing.

Our client has maintained a SHNE 401K as he has made discretionary profit sharing contributions. On November 1st, the client asked to change from SHNE to SHM effective 1/1/2021 as he is not intent on making a profit sharing contribution for quite awhile. A Safe Harbor Notice of Matching contributions was delivered to the participants prior to November 30th. Question is, the participants that received the SHNE in the past, would they be due any employer safe harbor?

We have a similar situation, but I did not know whether to attach to this thread or start a new one. We had a one-participant DB plan, went to another TPA who apparently drew up an amendment to freeze accrued benefits as well as freeze the plan to future participants. Two participants met the service requirement, but are not "in" the plan because of this amendment. Now the accountant has come back to me asking if this is kosher. This one has a nasty smell to it.

Thanks guys, could be as we get on in years, the less patient we become. This happens all the time whenever there is a change of EINS or an inadvertent look on the wrong computer screen. A few years ago, it took IRS 11 months (no kidding) to straighten out an 1099R filing. After that one, patience is being stretched!

Obviously, I was not clear as you missed my point; and we are certainly not passive. If anything, this has proven to be tedious at best. Over the years, this has occurred many times - there has to be a much simpler way to handle, besides, obviously doing the filing correctly and check specifically the EINs are the same as the prior year. Of course we respond to the CP-403, complete all items in and the "other" box, explain that the Form 5500 was filed with the Trust ID and not the Sponsor ID, and DOL advised to amend the return showing the opposite - use the correct EIN and put the prior EI (the incorrect EIN of the trust ). We attached copies of the original return as well as the amended return, on each circling the two different EINs showing we had corrected the problem and ask that they change their records. About a month later, client gets a bill for a late filing of the 5500 with the correct EIN, we go through the whole process over again, respond to their Notice and bill in exactly the same way as previously done - in fact, send copies of every attachment from CP-403. After another month, the client gets a letter abating any penalty. Three months for IRS to change their records. Years ago (I'm going back at least 10 years), we just called an EP person, he went into their system and connected the two EINs. End of story. My question was - once an error with EINs is noticed by staff, is there some way to notify Ogden of the mix-up so they can make the change before the client gets letters like this. Of course ll this is un-billable time.

I would have thought others have had a similar issue.

Thought not. Since made by 12/31, how can you pay excise tax on non-taxable contribution??

Owner's wife is under age 50, made total of $23K deferrals to SHNE plan. $17K to Roth, $6,000 pre-tax. Accountant asking even though Roth is not deductible, can be used to satisfy SHNE contribution. I don't see how this is permissible as document does not distinguish excess Roth v excess pre-tax.

A client just asked an interesting question. If an employee was hired pre-COVID and furloughed/laid off for a spell, when would the initial one year eligibility period start? Obviously there is no break in service for a non-participant.

Most if not all W2s we have received net deferrals from Box 5. We know pre-tax elective deferrals are added back to Box 5 on W2, such that gross is used for determination of any employer contribution. Since post tax are already included in gross income (usually Box 1 on W2) of mixed opinion of others, do not increase gross by any Roth deferrals?

Depends on what services you are looking for. I believe my email is listed, but if not, steve@thepensionmaven.com

I don't use the term "recordkeeper" as that sound too much like data processing. We are retirement plan consultants, not limited to 401k's and do not handle plan assets.

This has happened on a few occasions, and has taken up to 3 months for IRS to correct on their end. Form 5500 was filed using the Trust ID # instead of the Sponsor ID#. IRS sent the client their usual CP-403 Notice, we immediately noticed the error and filed an amended return using the correct EIN and showed the incorrect EIN in Box 3b. We attached the EFAST Acknowledgement. As a response, IRS issued a penalty for the late filing of Form 5500-SF that reflected the correct EIN, the Sponsor EIN. Sound familiar? Anyone have a sample letter to the IRS in this regard, or we just have to "wait it out" and hope IRS makes the correction on their end?

An accountant recently mentioned to me that husband and wife, even if husband owns 100?%, attribution would apply.