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jpod

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Everything posted by jpod

  1. jpod
    Quite possible there is a failsafe provision in the plan that creates an exception to the general eligibility requirements for one or more people who have more than 500 but less than 1,000 if necessary to satisfy 410(b).
  2. jpod
    Why the PA? The election constitutes direction to the "employer" to contribute money to the plan rather than pay it to the employee. For a Schedule C filer, it is the same person. Sure, the Schedule C filer may also be the PA, but he is not wearing his PA hat when he is the recipient of the supposed election.
  3. jpod
    Who said anything about back-dating a document? My query is what is a sufficient election by a Schedule C filer? If a note to self is sufficient, that proves how ridiculous the concept is.
  4. jpod
    I know that Vanguard's solo 401k instructions say very clearly: DON'T SEND US THE ELECTION FORMS.
  5. jpod
    1099 implies no longer employed by or a partner of the firm. Therefore, RMDs must commence. The fact that he is not personally "retired" is irrelevant.
  6. jpod
    It may be a gift for tax purposes, but not necessarily (e.g., a constructive contribution to capital of the company followed by a constructive payment of taxable compensation to the son. In any event, you still have the issue of having to gross-up the owner to cover the withholding taxes so that there is enough net cash to make the loan repayment.
  7. jpod
    So you think a Note to Self dated on/before December 31 will satisfy an agent?
  8. jpod

    409A: Going Concern

    jpod replied to a topic in 409A Issues

    Almost 10 years later. Wow! Anyway, have their been to anyone's recollection any PLRs or other IRS guidance, formal or informal, relating to this standard: "jeopardize the ability . . . to continue as a going concern"?
  9. jpod
    Naturally, it all assumes the Company is willing to provide the tax gross-up. Absent that this would be much trickier and require more thought than I have given it.
  10. jpod
    If they handle it correctly it is additional W-2/941 compensation to the employee, subject to all applicable withholdings, whether or not it actually passes through his hands. So, for example, if $10,000 is to be paid off, maybe the Company needs to report $15,000 as compensation, pay $10,000 to the Plan, and $5,000 is for required tax withholdings. I don't see how this could be fairly characterized as a plan contribution or create any other tax-qualification issue.
  11. jpod
    I will un-retire the discussion for a comment on the flipside of all of this. Let's say an "election" is made by the Schedule C filer, and he's the only person on earth who knows about it, because there is no requirement that anyone else must know about it. Then, he changes his mind and doesn't contribute anything. Clearly an operational qualification violation, right? If his plan is audited do you think the agent is going to inquire about any elections he might of made which he subsequently ignored? More indication of the futility and irrelevance of a Schedule C filer needing to make an election.
  12. jpod
    Thank you everyone for contributing to the discussion, notwithstanding the fact that I am clearly in the minority. It is interesting that nobody addressed the elephant in the room which I keep mentioning: What meaning does an election have when the same human is on both sides of the election? I gave you my silly illustration, but it is an illustration of exactly why the rule stated in the regulation is so stupid. I am willing to retire this discussion.
  13. jpod
    I am not asking you to do any work but you cited Sal as rejecting my view but in fact what you shared didn't do that.
  14. jpod
    That's not the only difference. The critical difference is that in the case of a Schedule C filer there is only one party, whereas in the case of a p/s there are two parties: one who is in control of the payment of the compensation and one who will receive it.
  15. jpod
    He is talking only about partners in that excerpt, isn't he? If he has a discussion about Schedule C filers please share.
  16. jpod
    I stand corrected on what the regulation says. I still believe it is ridiculous. What would the election say? Dear jpod: Please contribute out of my earned income for 2019 the lesser of $X or the maximum elective contribution permitted under the Code. Sincerely yours, jpod.
  17. jpod
    Kevin C: You win!
  18. jpod
    I'm not good at finding old links. I'm not saying everyone agrees with me. My analysis is this: The usually required election that must be made before the compensation becomes currently available is an agreement between the employee and the employer, or the partner and the partnership. The reason the IRS regulation does not address a Schedule C filer is that even the IRS recognizes that it would be a complete fiction for the Schedule C filer to enter into an agreement with himself. Those who are very conservative will advise the Schedule C filer to sign some sort of election form on or before December 31 and stick it in a file or the cookie jar, and that's fine, but I am absolutely confident that it is not necessary.
  19. jpod
    Ignore the k-1. If there is no compensation reportable on a W-2 there is no pension-eligible compensation. Maybe the corporation needs to re-do all of its tax reporting, but you don't know that yet.
  20. jpod
    EXACTLY - for partners in a partnership.
  21. jpod
    Yes, no qualification problems for the plan. I would send the check back to him with a CYA letter. If he sends it back to you again I would stick it in the file with an explanatory note (for your plan auditor, if applicable, and in the event of an IRS or DOL examination). Do not skip subsequent year's RMDs just because you expect the same result.
  22. jpod
    I think it's 99% that something of this nature will be enacted by the end of this year.
  23. jpod
    Respectively disagree. We've been down this road before on BenefitsLink.
  24. jpod
    Not bad, but I enjoyed what I think is the worst plan ever, back a while ago. Simple ps plan with allocations based on comp. No 401k feature. Pooled assets. Balance forward. Anyway, no matter what the event, transaction or occurrence, the employer did what it felt was right or necessary without any thought whatsoever about what the plan document said, let alone qualification or ERISA rules. A few examples which I can remember. (1) In a few years employer felt that certain employees did such a bang up job that he juiced up their allocations to reward them. (2) One employee asked if he could get his annual ps money directly rather than as a plan contribution because he needed it. We were asked and said "absolutely not." What we weren't asked was whether they could immediately distribute it to him from the plan after it was deposited. Guess what they did? (3) The owner used his account to invest solely for his account. The pooled investments were for everyone else. (4) 5500s? You've got to be kidding. They were lucky because they never filed at all since inception so they were off the grid. Accountant smelled a rat and that's how we got involved in the first place. We helped them do 5 years' worth under DFVCP.
  25. jpod
    A Schedule C filer does not have to make a deferral election by 12/31.
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