pmacduff

I'm not an Accountant, but I believe that an LLC owner or owners can change from W-2 to K-1. Much like our industry however, I don't believe they can switch back and forth.

I can't believe in all my years of administration I've never run into this before, but here's the situation: LLC that had owners with W-2 wages in 2023 (and prior) decided in 2024 to put the owners on K-1 income. This Company traditionally fails the ADP-ACP testing. Accountant gave us preliminary K-1 information so that we can at least run preliminary 2024 testing and determine refunds prior to 03/15. We'll then make adjustments when the final K-1 info is available, and the client will have to pay excise tax on any late refunds. Am I missing anything? I guess because 99% of my K-1 and Sch C clients are safe harbor I haven't run into this ever before. I can't believe it's very common, though, is it? Thoughts?

Have a client with seasonal layoffs this time of year. A participant wants to request a loan but is currently on lay off. Since the loan policy requires repayments be made through payroll deduction, is the Sponsor ok with denying this loan until the participant returns to work? With the nature of this business, the client should address this is in the plan loan policy but at this time has the stock loan policy from the Plan Doc, which does not specifically address this situation.

Yes - plan is with VOYA on VOYA's retirement plan platform.

ok - so a plan filed their 2022 5500 return with an audit because they had over 120 eligible participants. For 2023, they have 180 eligible as of 01/01/2023 but only 34 with balances as of 01/01/2023. I know they don't need an audit for 2023. Can they file a 5500-SF or must they file a 5500 with a Schedule I? I've gotten differing opinions.... Thanks in advance!

Small 401(k) plan with 13 participants. match formula in plan doc is 50% up to 4%. match was set up in payroll incorrectly for some participants who received 100% up to 2%. owner is asking if he can leave the excess match in the participant accounts for those who received too much. (There were 2 participants shorted match that are going to be trued up and 4 that were matched properly. 7 received excess match. all participants who received excess match are NHCEs.) Thoughts?

new plan as of 01/01/2020. Plan set up with auto enrollment features. client wants to remove the auto enroll features from the plan. client currently has 11 active employees. Is this permissible? Thanks in advance.

Client moves plan from national 401(k) vendor #1 to national 401(k) vendor #2. Vendor #1 has a fee they charge when the plan leaves and Vendor #2 reimburses a portion of that fee and puts the $$ in the plan unallocated cash account directing the client that it can be used for reducing employer contributions or to pay fees. If the client paid the initial fee to vendor #1, can the client reimburse the company for the portion that vendor #2 put in the cash account?

Thank you John, much appreciated!

If it's after the fact (i.e. $15k loan was already processed) then I guess you would be stuck with two loans anyway. If it wasn't processed yet you could always send your AF RK rep the 72 (p) code above to backup your assertion that the loan can be $22,500. At least that has worked for me before in some cases! Good luck!

just curious - if this was a NHCE, how on earth did they deposit the additional $1000 without it going through payroll?

Ok - I'll take a crack at it. I don't think you have to apply both limits. Here is the verbiage from 72(p): (A) General ruleParagraph (1) shall not apply to any loan to the extent that such loan (when added to the outstanding balance of all other loans from such plan whether made on, before, or after August 13, 1982), does not exceed the lesser of— (i) or (ii) (i) $50,000, reduced by the excess (if any) of— (I)the highest outstanding balance of loans from the plan during the 1-year period ending on the day before the date on which such loan was made, over (II)the outstanding balance of loans from the plan on the date on which such loan was made, or (ii)the greater of (I) one-half of the present value of the nonforfeitable accrued benefit of the employee under the plan, or (II) $10,000. For purposes of clause (ii), the present value of the nonforfeitable accrued benefit shall be determined without regard to any accumulated deductible employee contributions (as defined in subsection (o)(5)(B)). Since the starting balance is less than $100,000, then (ii) is "the lesser of". In my opinion, the $22,500 is the amount that the participant had available, not the $15,000. This would account for the additional $7,500 that was available on that second day ($15,000 plus $7,500). I was taught that you only need to examine the $50,000 limit when the participant's vested balance is over $100,000. Hope this helps!

Thank you everyone. EMoney - I'm looking for why Relius does not show a YOS for 2022 as the participant was definately over the 500 hours whether you look at employment or plan years, he just isn't 21. David - I'll recheck the specs and see if I can find anything out of the ordinary. As previously mentioned, all other LTPT participants are processing correctly for 2022 LTPT credit and the only difference between them and this employee was his age under 21. edited to add: Apparently it's too close to 10/15 and I'm a little burned out. I played around with this last week and thought it was still off. In checking it this afternoon after I read EMoney and David's posts, it appears all is well and the employee DOES now show with his 1 YOS LTPT credit for 2022. Many thanks again to all who replied!

Relius is not showing him with the 1 LTPT year of service credit that I think he should have for the 2022 plan year as he worked over 500 hours. (it shows 0) If I start crediting for the first year he worked over 500 hours, then shouldn't he be showing 1 year of LTPT service? I understand the plan can apply the age 21, so he can't enter until 2026 anyway, just trying to determine how the LTPT YOS are counted for him.

Thanks Lou that was my thought as well. Relius did not give him LTPT credit for 2022 and I'm trying to ascertain why because the other LTPT people in the plan appear to be receiving the correct credit. The only difference with him was that he isn't 21 yet. I know I can hard code the LTPT YOS for him but I don't like to do that.