pmacduff

Hmmm...I was channeling Tom Poje (as opposed to Derrin) when I read through it Nevertheless - fun again to have something bring a smile this time of year, thank you Belgarath!!!

We are in the small plan market and we have had an issue when a participant has both 401k deferral contributions and a loan repay. When the participant doesn't have enough for both after taxes and health benefits, our clients or their payroll company always take the 401k deferral and then apply what's left (if any) to the loan repay. Makes an already messy process (loans!) even messier. Again the reasoning is that the employee elected "x" amount or percentage for 401k deferral withholding therefore the payroll company takes that first. Isn't the loan repayment also an employee elected choice? I've often thought that the loan repayment should take precedent over the deferral but as previously mentioned have never seen a "formal" hierarchy for deductions and/or guidance of any sort. Certainly would be helpful.....

reminds me of the plan I have with in-service distributions at age 62. the client moved the plan to one of the larger 401k vendors and I was completing the set up checklist. There wasn't an option for an age indication on the in-service withdrawals. When I questioned how to complete that section I was told that they only have set up for in-service distributions at age 59 1/2. Since both I as TPA and the client had to approve all withdrawals, the vendor told me that it would be set up as 59 1/2 and then the client and I would have to review and deny any that were requested between age 59 1/2 and 62. Apparently they must never deal with disgruntled participants who would ask why was the option available online at 59 1/2 if they aren't eligible until they are 62? (she said with sarcasm!!!)

I was thinking more of what the OP said about checking the 5558 box on the return when filed: "...get"into gear" and file Form 5500-SF today and check off the box for Form 5558. "

Isn't it also true that if the 5558 wasn't filed timely it's a moot point anyway because the IRS will go back to the original filing deadline to access late filing penalties?

Any chance it could be classifed a COVID withdrawal? It sounds as thought that might have been the thought process if it was for $100k. I don't recall if those had any source restrictions though.

Not to worry - thank you for checking and I feel better now about my "reputation" 😁

Thank you Lois! I'm not able to click on the number (perhaps my browser or browser settings?). If I put my cusor over the number it only says "member's total reputation".

Hey Dave - sorry if this has been dicussed before but I'm just noticing...what is the "member reputation" figure that appears by our names with a plus sign and a blue number? Not that I'm vain mind you, but mine is rather low and I wasn't sure what is driving it 🙂

and just so that you know - you are not alone 🙂! The client plan in question is with a "large" national 401(k) vendor. I was shocked because I compute the profit share and perform the cross-testing for the client (long story - vendor takes too long - I do it for the client in January every year). Anyway - the vendor came back to the client and said the Plan failed 415 for one of the Doctors. I thought for sure the vendor would have known so I started second guessing myself. I have past research on this exact situation, which lead me to believe I was in the right...finding that on th IRS website was good backup! The vendor did agree after I sent the information that the plan did not require the 415 correction.

Hello all and thank you for the responses. I found the attached on the IRS website, which explains it well and supports our situation perfectly. 415 limit example.docx

I know this topic has been address repeatedly, however this time of year I sometimes need a refresher. For 2020 participant over age 50 contributes $22k in deferrals. Compensation is $270,318.33. Match contribution is $10,812.73. Can this participant receive a profit share allocation of $30,687.27 in order to reach a total allocation amount of $63,500? Years ago I used to think the participant was limited in his total allocation amount under 415 because he only contributed $2,500 over the deferral limit of $19,500. However I was later advised that you can recharacterize the full $6,500 in catchup to compute the 415 limit. In other words, talking about two different tests and what gets recharaterized in that particular test (415 vs ADP for example). Do others agree that my participant can get $30,687.27 in profit share? Thanks in advance!

Our Relius software offers three options for otherwise excludables when you run the ADP/ACP testing: 1. include in test; 2. test separately, 3. carve out NHCEs Hopefully your system does as well.

Like ESOP Guy - I've seen the amended return and the original goes away. I have looked relatively soon after filing the amended return (like the next day). Since the original is no longer there, it seems like the amended should be there. I also agree about the DOL EFAST help line, always received good service when contacting them....

I suppose - but our extension was filed 07/13/2020 so that's quite a backlog! Though I shouldn't be surprised I guess with the snail's pace of mail these days....

Anyone else seeing the recent letter from the IRS that the 2019 extension request was approved? Hearing from many of our clients and we actually received a letter today for our own plan! anybody know what gives??

I guess another question I would have is how about the vesting? If you are only doing money type balances annually, even if the participant can get values daiily how do they know their vested portion? Then again I can't remember if 404c states that vesting only need be provided once annually? Perhaps there isn't any money in this plan subject to vesting? just food for thought...

Our VS document beneficiary designations require a notary for the spousal waiver signature.

Thank you C.B. - for some reason I could not get the 2020 instructions on the irs.gov site, which is where i normally go. The 1099 General instructions were there but not the individual form types. Thanks again.

Its semantics but it appears based on the information you provided that this is a "transfer" within the plan assets and not a "distribution" of plan assets. Therefore no 1099-R should have been generated. That being said, I had a client some years ago with a similar situation and the 1099-R reflected the name of the Plan. The broker and client tried to get the investment firm to fix it but they refused. There was never any fallout or followup by the IRS in our case.

Hello Stash - Yes - beneficiary ssn and name and you can use both a 4 and a G in Box 7 on the 1099-R forms. The 1099-R instructions (attached pages 15-17 and available on the irs.gov website) have a list including all of the codes and those that can be used together, which I have found an invaluable resource! ["fyi" I do realize that these instructions are for 2021 1099-R forms, however there aren't any 2020 1099-R instructions posted on the irs website] i1099r_2021.pdf

Plan termed in 2020 and all payouts completed in 2020 along with the required tax withholding and dpeosits. Plan was a monthly schedule depositor for 2019 (total tax liability was < $50k). Due to the plan termination and the number of distributions during August of 2020, the withholding deposits for August were over $100k. If I'm reading the 945 instructions correctly the Plan became a semiweekly depositor because the tax liability in August exceeded $100k. This means the client must complete and attached Form 945-A instead of Line 7 on the 945. Agreed?

Wondering what others think...the general instructions for the 1099-R forms indicate a mailing address for us in NYS as: "Department of the Treasury, Internal Revenue Service Center, Austin, TX 73301" (same as last year) However I see on the actual 1096 "red" copy a filing address as follows: "Internal Revenue Service, Austin Submission Processing Center, P.O. Box 149213, Austin TX 78741" I'm assuming that the forms will get there either way, but would like to advise my clients accordingly for proper filing. Thoughts?

See I should never answer things when tired...I did not see that it was a 2019 contribution in the original post, my apologies!!!

The SH match is an Employer contribution and therefore due to the Trust by the time the Employer files it's tax return (plus extensions). In other words, the true up contribution must be in by the Employer's tax filing deadline unless it extends, then it would be the extended date. Does this help?