coleboy

Hi, Employer has 2 companies. One company grows cannabis and makes cannabis products. The other company sells the products. I was told that a 401k plan could be set up for the store but not for the company that produces the product. I can't seem to find anything on this topic. Has anyone else had this scenario? TIA!

Umm, am I missing something? I thought if the plan had a safe harbor match that satisfied the ADP and ACP, it is exempt from the top heavy rules.

We have a number of clients that are considering suspending their safe harbor match due to COVID-19. There are a couple that, after doing their 2019 year-end review, would be Top Heavy for 2020. If they suspend their 2020 SH Match, will they have to owe the Top Heavy contribution for 2020?

One thing that i see happening is that some of my safe harbor match clients want to suspend the match for the year. Of course, it will subject them to the discrimination and top heavy testing which they fail. The top heavy contribution alone will be a lot to come up with. How are other TPA's handling this?

My company set this plan up and it's noted in the plan document that it's an S-Corp.This is the 2nd year. I was not involved in the 1st year as I was out on disability. Last year those partners did get a profit share contribution based on an email from the client that the partners received distributions of a certain amount..

As a follow up to this, the client states that these 2 individuals do not receive income from the company, only profit distributions. They said they had made it clear when they set up the plan. I was not aware of this at all. This is an S-Corp.

Hi, According to the payroll system, these people received no W-2 income yet they want to be included in the profit share allocation. Hence, the reason why they sent these K-1's. Should tehy have Sched. C income?

Hi, We recently received K-1 for the partners. I'm not as familiar with the K-1's For the Form 1120-s as I am with the others. That being said, I'm not sure where to find the earnings that I will need to be used in the profit share allocations. Can someone direct me? Thank you!

One of my clients is going through an IRS audit and is getting frustrated. We have been supplying her with everything but she now wants us to take over speaking with the auditor. Years ago, I would complete the Form 2848 as an unenrolled return preparer and using my CAF number. Looking at the 2848 now, it appears that I can no longer do this? Do I need to apply for a PTIN? Am I no longer allowed to speak with the auditor at the client's request? Any advice would be appreciated.

Hi Luke, I was unaware of this change until a client brought it to our attention. Of course this client is a tax-exempt client so was worried about the tax consequences. They currently have a fringe benefit plan that allows for employees to pay for their transportation expenses on a pre-tax basis. They are considering stopping the plan because of these new rules. Can you point to these "generous valuation rules"? Their plan was in place during 2018 so I'm wondering if they paid the tax. Thank you.

Hi, I was wondering if there's any updates on this topic. Has the new law actually passed? Are tax-exempt employers now required to pay income tax on transportation fringe benefits? Any insight is appreciated! Thank you!

We are currently doing the administration on this plan. The company is owned by 2 people split 70/30. The 70% owner did not partake in this plan for 2018. He does want to start taking a salary and participate for 2019 to be able to be part of the profit share contribution. This same owner has 50% ownership in 3 other companies who also have 401k plans. He contributes to one of those plans and participates in the profit share of the other 2 plans. My question is whether he can be eligible to get a portion of the profit share within the plan that we are administering if he's getting a portion of a profit share in the other companies of which he is a 50% owner? Of course, we cannot forget his 401k contribution in one of those companies. Thank you for any insight anyone can give.

Client wants to leave the the PEO's 401k plan and start their own. The PEO plan is a safe harbor. Does the client's new plan have to be a safe harbor as well? Do they have to continue with the same plan provisions?

Thanks for this amusing tale! I needed that laugh!

Basic HCE 101 but I'm getting old! Employee A owns 90% of a company, employees B & C each own 5%. Employee B makes over the compensation amount for an HCE. Employee C does not. However, employees B & C are married. Is employee C considered an HCE though she does not own ore than 5% and does not meet the HCE compensation requirement?

Thank you! I just needed some backup since the company's bookkeeper is bound to argue with me!

We have a client that is an S Corp. Census information from payroll co. reflected a salary for the owner. Bookkeeper said that the salary reflected was wrong because it contained share holder insurance premiums. Plan uses W-2 income. Should these premiums be reflected in the the compensation for 401k purposes? This plan has a SHNEC.

We are in the process of taking over a plan that is currently a QACA Safe Harbor plan. Client would like to switch to a traditional safe harbor. Can this be done?

I work for a payroll company that uses 3 ( and soon to be 4) different payroll systems. They all allow for both pre-tax & ROTH.

Exactly! I was told it goes back to the "old" safe harbor limit of 3%. I said that is for the non-elective safe harbor not the match. Apparently Kronos has this set in its system. Am I missing something here?

I think that's for HSA's not FSA's.

Hi, A participant is deferring 6% of pay and receiving the 4% safe harbor match. His match suddenly dropped down to 2% then to 0%. Upon questioning the payroll rep, I was told that it was because the participant reached the annual safe harbor compensation limit. So his match was capped at $8250.00 even though he had not reached the $275,000.00 limit yet. I have never heard of this. Is this correct? Thank you!

Any idea when they coming out? Have been holding up the open enrollment process waiting for the new "official" rates.

The splitting of the plan into 2 separate plans is a new concept for me. Can you really take a plan and make it into 2 using last names as the determination for who is in what plan? How is that entered into an adoption agreement? Please tell me more!

Hi, New potential client wants to start a 401k plan. Client is a day care/ pre-school located within a church. The church looks upon the day care as a "ministry" of the church. They use the same EIN as the church but their fiscal year is different. Is there anything special that needs to be done for the set up? Shouldn't they have their EIN? Thank you!