thepensionmaven

We have recently taken over a plan from another TPA. Client has notified TPA and asked the transaction be handled as smoothly as possible. Client can not find some documents and the prior TPA is charging him a fee to copy the documents from TPAs file. We have run into this situation very few times, the last time I believe Circular 230 had been mentioned, and the client told the request for a duplication fee is prohibited under Circular 230. I can not find the exact reference in Circular 230.

Per accountant, name change only, same EINs. Buyer keeping seller corporate name.

We have a situation wherein the Plan Sponsor is in the process of selling the assets of the company, the employees will all terminated from seller payroll and hired by the purchaser. The seller made the SHNE contribution for all those employees through the date of their termination of employment. The name of the plan has remained in the name of the sellers. The sellers will be changing the name of the company and I assume will file corporate registration under the name of the new corp with respective EINs. The sellers will be the only employees in the new corp and will have W-2 income. Q- I assume termination resolution would be effective as of the date of sale, and would be in the name of the seller's corp? In order to avoid any IRS communication (which, on prior experience is unavoidable), I assume Form 5500-SF for 2020 would be in the name of the new corp and Item 4 would show the name of the old corp with the old EIN? We have had a lot of headaches in the past with IRS not looking at Item 4 on the 5500s and clients have received numerous LTRs and Notices asking for 5500s.

Much simpler , core cost effective and immediate acceptance if SF filed instead of EZ.

In this case, IRS has not cross referenced, even though item 4 was completed, issued the client a penalty letter for one EIN, which they reduced (somehow) for a late filing on the amended return.

Larry, I would like to see your letter. I have been corresponding with IRS on a trust EIN and the EIN for the Sponsor, up and back for over 3 months. Apparently the computer is not programmed to review Box 4 on Form 5500-SF.

That is all the information I was given. This does seem entirely too confusing and either more information is needed or suggest they seek another opinion.

Accountant asked for a consult on a client's 401(k). Prospect apparently did not review TPAs allocations of SHM and contributed an amount equal to the SHM plus an amount equal to employee deferrals as the SHM contribution. Upon instruction from bookkeeper, the difference was allocated to the profit sharing portion of the plan. His client discovered and hit the ceiling, insisted the money be returned to the company, although he was told by the fund holder the money could only be returned with their check to the Plan, or held in an unallocated account. Client insisted on a check to the plan, which he endorsed as trustee and deposited into his business account, although he was advised of the ramifications of so doing. Apparently the profit sharing doc called for a new comparability allocation, which was done. The fund holder, upon instruction from TPA, reallocated the funds, but apparently improperly. Accountant asking for advice on how to clean up. I would think the under-age or coverage that was taken from each participant's account would be reallocated to the affected participants on W-2 for the year of correction, not the year the contribution was made? I ain't doin' it.

I guess I am thinking more in terms of changing frequency of the company SHNE, not necessarily a suspension. Big difference.

Contribution stopped, agree on that point. The question is why - contribution was stopped due to unforeseen circumstances (certainly not the client's) that are a result of world-wide pandemic, no ones' fault.

Client has a safe harbor non-elective 401(k) stand-alone, you'd think DOL would offer some sort of relief, like "due to CO?VID-19, employers can elect to stop SHNE contributions" without a 30 day notice (since a notice was not required for 2020 anyway; and all employees would know why. Also, if the client stops the SHNE, thus required to ADP test from the beginning of the year though the date the contribution ceases, obviously the plan would fail ADP. Isn't the purpose of the SH contribution to avoid any testing issues.

True, I was thinking post 59 1/2.

Available for DB plans? I assume plans would need be amended to include a withdrawal provision and then add the $100K COVID-19 language?

Thanks very much.

What is the correct procedure to follow when a client realizes he has filed a 5500 under the EIN of the trust?

Profit sharing plan is in the process of termination, the owners have been taking their RMDs each year. Under SECURE ACT, does the provision of taking RMD prior to rollover apply?

I think we all should give them a call. There are going to be a lot of plans in this position; and unfortunately, it does appear that termination is the only way to go.

3% of W-2 through the date of the amendment, I assume?

The 2020 SHNE Notice was given out prior to the effective date of the SECURE ACT. The Notice stated the SHNE contribution will be made, if the client decides that due to economic reasons, the contribution will not be made, doesn't some notice need to be given out taking back the prior notice?? If not, the participants will not be receiving the 3% contribution and they may be expecting it. But then again, you'd be giving out a notice even though there is no notice required?

I'm pretty sure of the answer, but my client has already filed the 2019 tax return and wants to know if he can make the contribution by July 15th. I believe he's out of luck since the return has already been filed.

Thanks.

Accountant's question to us - he has a Dr. client who will work for 1/2 year in 2020 at hospital participated in 401K. He also has a PC where he is self employed and has a SEP (he contributes 25% of salary). Last 1/2 of 2020 he will change employers and does not want to participate in their 401K plan but wants to do a DB plan in his PC. Can he form DB plan in same year he terminates SEP? Can he form DB in 2021 while working for a company wherein he is eligible to participate in 401K but does not? I believe if he contributes to a hospital plan he must subtract that amount from the maximum amount he can contribute to the SEP. Second half of the question, he's still a participant in the 401K, whether he contributes or not (most confuse "does not want to participate" vs "$0 contribution). As far as a DB in his PC, my gut tells me "no", but i'm not sure why.

DFVC was checked in error, previous year had to be filed under DFVC. Just wondering if we amend the filing to get the "DFVC" box unchecked, as DOL suggests, IRS could possibly come around and not only ask for the $425 in late fees, but add some sort of interest increment to it.

We took over a plan recently, Form 5500-SF was filed, mistakenly checked the box "DFVC" The form was filed late, we have EFAST receipt; and IRS would have charged $425 had not the DFVC box been checked. I called EFAST and was told all I had to do was refile an amended return without checking DFVC. Just a bit concerned about IRS. Client has no problem paying the $425, but I'm sure they will assess a penalty for "late payment"? Just wondering which way to go.

Participant W2 as follows: boxes 1,3,5 53,140.23 Roth deferral 1,840 Is not the Roth deferral contained in the above?? Accountant adding the Roth deferral to the above. Plan definition of compensation W-2 plus all deferrals. Which calc is correct?