MGOAdmin

Would you be permitted to have two matches where the first match would go to everyone but the second one would only go to employees employed on the last day (meaning the active employees would get both matches). I am trying to think if there are any discrimination issues.

I have a client that set up a retirement plan in October 2018. One of the employees makes $400,000 and had already contributed to his deductible IRA in early 2018. Since the employee is eligible for the plan, does this make his IRA contributions made in 2018 retroactively non-deductible?

A former partner in a law firm is now just a 1099 employee of the law firm as they are of counsel. This former partner maximized his benefit in the cash balance plan of the law firm. Can we set up a new cash balance plan for him using his 1099 wages or are his 1099 related to the law firm somehow and therefore he has already reached him maximum benefit?

One my plans is under CPA Audit and the auditor doesn't like that they don't automatically re-start 401k after 6 months after a hardship distribution. Is an employer required to automatically re-start 401k for a participant after 6 months? Can they require that the participant fill out new election paperwork?

I have a potential client what's to start a 401k plan. He is open to giving the employees the Safe Harbor 3% (discretionary) but is not sure he will be able to/want do it each year. He plans to only give SH 3% when he decides to participate since the plan will be Top-Heavy. The company is a partnership so I suggested he not contribute anything (including 401k) until after year end when he knows the income of the partnership. The obvious issue is he needs to decide if he will participate, thereby electing safe harbor for the year on Dec. 1, but really won't know his final income until March or so. He was adamant that he really wont be able to decide until after year end. Is it possible to have a plan year from 5/1/18 - 4/30/19 (giving him until 4/1/19 to elect safe harbor), with a limitation year of 1/1/18 - 12/31/18. This way the employees will still be based on W-2 and not some 2018 wages and some 2019 wages. I'm also not sure how deductions would work. Would he have to Pro-rate his deduction 5/12 and 7/12? Are there other solutions that I'm not thinking of?

I have a client that has a hard time keeping a certain employee type to stay with his company. He would like to have a 10 year cliff vesting schedule. This is obviously not allowed but the idea we came up with was as follows: Assuming he wants to give $5,000 per year of service to these employees. In year 5, he would make a $25,000 profit sharing contribution for these employees. Any amount in excess of the annual additions limit will be given as a bonus. None of the employees are HCE's and the plan makes each employee their own allocation group. 1. Does anyone see any issues with the above arrangement? 2. Should he be accruing the expense on the books (I think yes)? 3. Is this a deferred comp arrangement? Are there any 409a issues? Thanks

Facts: Husband and wife each own 100% of separate companies (have a child under 21 so they are related). His is a Sch C, hers is an S-Corp. The husband current contributes to a SEP based on his Sch C income (the max 20%). The wife set up a 401k PS Plan through her S-corp and contributes the max to it. Issue: Are you allowed to have SEP and 401k in same year? If you are not allowed to have both, we thought we would just have the husband contribute to the wife's 401k plan since they are related and figured he could get the same 20% in the 401k PS Plan. Any issues with the above? Thanks in advance for your help.

This applies to a SIMPLE IRA. I can't seem to find anything on a SIMPLE 401k. I'm just wondering if a second plan was set up, would the SIMPLE 401k be disqualified in entirety or just the current year contributions?

What are the ramifications of a company that has a SIMPLE 401k in place, and sets up a normal 401k plan in the same year. I know you cannot have any other plans if you have a SIMPLE 401k. Would that disqualify the entire SIMPLE plan or just the current year contributions? Would it only affect Highly Compensated employees, or everyone? thanks in advance

I saw that thread before I posted - the references didn't really answer my questions. Thanks though.

Facts: 1. Plan year end is 4/30/2017 2.Owner A signed a 242(b) election to delay his RMDs - the 242(b) indicates distributions should commence within 60 days after the last day of the plan year in which he retires 3. Owner A dies in July of 2016 at age 82. 4. Owner has 5 non spousal beneficiaries Questions: 1. When does the distribution need to occur by? Is it June 30, 2017, as per the 242(b) election (60 days after end of plan year)? 2. How much needs to be distributed? Is there catch-up distribution required? The rules are confusing but it seems like you only need to catch-up the contributions is the 242(b) is revoked or modified - this 242 was never revoked or modified. 3. Since there are 5 beneficiaries of differing ages ranging from 30-50 years old, how is the first distribution calculated? (they plan on spitting the account up after the first distribution).

I know you are only permitted to take a distribution from an IRA and re-contribute it back within 60 days to avoid taxes 1 time per year. Is there a limit on how many times this can be done per year in a 401k plan? I would think there are no limits since I can take multiple distrubutions from a 401k plan (assume age 59.5) within a given year, and as long as those distributions are rolled into an IRA within 60 days, it is not taxable ignoring the taxes that were withheld on the initial distribution. I have a potential client that took 5 distributions (taxes withheld) from his 401k plan in 2015, but paid all disitrubitons back with 60 days. I beleive this is OK, please let me know your thoughts. Thanks

I have a client with 3 seperate companies. I won't get into the weeds but here are the facts: Company A is FSO with Company C as the A-Org Company B is FSO with Company C as the A-Org Company A & B are not related through ownership, however employees for both A & B do the billing for A & B making them B-Orgs for eachother My question is, since A if affiliated with C (A-Org), B is affiliated with C (A-Org) and A is affiliated with B (B-Org), Are all three related or... Should A be tested with C, B tested with C, and A tested with B? Is it possible to combine all three for testing?

They just want to maximize each year - they are different ages, so obviously the contributions will be different for each partner

Facts: Owners of company X are selling the assets of the company on October 31, 2015. They will be paid over a three year period for the sale.The tax year ends 12/31/2015. Would there be any issues setting up a cash balance plan starting Novermber 1, 2015, ending October 31, 2016? My concerns are: 1. Combinig with the existing PS plan which has a plan year of 1/1-12/31 2. There will be no employees after the sale, but there are employees until 10/31/15. 3. Would they be able to deduct the contribution for the 11/1/15-10/31/16 plan year in the 2015 tax year?

I have a potential client that has 3 owners and no employees. They would like to set up a plan to defer some of the taxes. Is there any benefit to setting up a cash balance plan vs. a defined benefit plan? Or does it not matter since there are no employees and therefore no discrimination testing? Note - there will never be any employees. Thanks

So can you test on Accruals for the ABT and test on Allocations for the rate group testing?

How do you calculate the Average Benefit if you are testing the plan on both allocations and accruals. I know if you test on accural, you use the ABT for accuals, and if you test on allocation, you use the ABT for allocations, but what happens if you are passing the rate group testing by testing some on alloactions and some on accurals - what average benefit test do/can you use? Do you have to take the ABT for the employees tested on allocations and do a seperate ABT for those testing on accurals? Thanks for your input

Can you set up a profit sharing only plan (not 401k) in the same year that a SIMPLE plan exists? I know you can't have a 401k and SIMPLE in the same year but I was wondering if it made a difference if the second plan was employer only contributions? Thanks

Would student loans count under the safe harbor harship rules as tuition expenses? Even though they are not exactly tuition expenses, the hardhsip was caused by the tuition expenses. Thanks

What happens in the event a company has not filed 5500 for the last few years and is charged penalties for not filing, but the company has gone bankrupt in that time? Who is liabile for the penalties if the company cannot pay?

Employee A elects to contribute $1,000 for 2014. If the employer misses the deferral and corrects it by making a 25% QNEC or $250 in 2015, does the QNEC get included for deduction limit purposes? IF so, is it included for 2014 deduction limit or 2015? Is it included for annual additions limit? What if the employer wanted to make the employee whole by making a $1,000 QNEC? These are violoation correction QNECs not QNEC to pass ADP so I was wondering if the rules were different. Thanks

I know for IRAs, you are only permitted to take distribnution and re-contibute the money within 60 days in order to avoid the taxes once within a 12 month period. Are there similar rules for 401k? I know i can take a distribution and re-contribute the funds within 60 days, but is there a limit to 1 per year? If so, and you have a 401k and IRA, can you take a distribuiton from each and re-contribute within the same 12 month period? Also, I know you are permitted to take a distribution from a 401k and roll it into an IRA to avoid taxes, can the same be done with an IRA? Can you take a distrbution, then roll it into the 401k within 60 days to avoid taxes? If this is allowed, then couldn't you take as many distirbuitons from an IRA in any year as long as you roll it into the 401k within 60 days? Thanks

Say I have 2 plans. Plan A is 401k with no Keys. Plan B is a profit sharing plan covering all the Keys and enough participants from Plan A to pass coverage. Right now, the plans are not aggregated for Top-heavy since none of the Keys are allowed to contribute to Plan A (401k). If we allowed the Keys to contribute only the catch-up in Plan A, would the plans then have to be aggregated for Top-Heavy? The reason I ask is since we would only allow catch-up contributions in the 401k and catch-up contributions are not included in the TH test, do we still need to aggregate? Thanks

Thanks for all the input. Just so we are clear. The participant has to have a minimum balance for us to charge any kind of fees on the distributions. We are no longer going to charge the particiapnt of a DB plan for a distribution - we will charge the plan.