Pammie57

Thanks just wanted confirmation!

Plan is on an off-calendar plan year 10/1/2020 - 09/30/2021 Participant defers $34,500 during the plan year - divided as follows: 18,000 from 10/1/ through 12/31/2020 & 16,500 from 01/01/2021 through March 31, 2021 when he quit. Does he have a 402g issue or is he ok. He was not in another plan before this one during 2020. However, we do not know what he did after he quit. Thoughts??

I was asked today if a new 401k plan can cover employees with W7#s instead of SSN. I have no idea and am not sure what information I need to get to make a determination. Anybody have any experience or guidance on this? Thanks!

so if they are not age 50, they are stuck with $14250 in deferrals - not the 19500?? That is my question that I had posed to me today?

short plan year beginning 10/1

Ok so as long as they don't exceed 19500 in that year they are good?

If a client plan starts 10/1 - are they able to defer the max 19,500 as long as they have adequate compensation? Is the safe harbor basic match -the full 4% or is it pro-rated? Thanks!

A 401k was effective as July 1, 2020. It had only two participants (non-spouses). They put deferrals into the plan for a couple of months , but then terminated the plan as September 15,2020. They took distributions before year end (12/31)... .Do we have to file a 5500-SF? If so, do we file it as the first and final all on the same form?

We got a new client this year. The owner gave us his information and he took huge losses (due to COVID) on his Schedule C. He did have a net profit on his rental income on Schedule E. If I am thinking clearly though - passive Schedule E rental cannot be counted for compensation for a retirement plan? Is there any loophole? He deferred every week and maxed himself out for 2020. Any guidance is appreciated.

I just got a call from the plan sponsor's controller. The company was purchased by an Investment Group. the current owner is retiring. It is my understanding that they bought the stock and not just company assets. the company has sponsored a 401k for many years, and is a large audited plan. The corporate attorney sent an email to the controller saying ' the sale is final today - notify payroll and the TPA to shut the plan down today." Geez - apparently no thought was given to the 401k during the sale negotiations. I got the impression that the Investment group will not be sponsoring a 401k but I don't know why they would want to terminate this benefit for 100's of employees. Anyway, I am not an attorney, but need some guidance. It is my understanding that whenever a plan terminates, there must be notices sent out (like 30 days?) and the plan amended to current law. I assume the new company (investment group) has the right to terminate the plan, but I don't think they can just shut it down as of today. Thoughts and advice from you who have dealt with this type of mess/opportunity before. Thanks for any insight.

I am preparing a Form 5500-SF for a 401k plan with only 47 participants. The asset platform provided information for Schdule D & C. I know I don't need to attach a Schedule C, but I am second guessing about whether I need to prepare and attach the Schedule D to the 5500-Sf. Thanks for feedback.

It is my understanding that at one time - forfeitures were not allowed to be used to fund safe harbor contributions. I can't find when/if that changed and is it ok to use forfs now to reduce the safe harbor contribution to employees.

A company started a safe harbor 401k for 2020. They and their payroll provider misunderstood how the safe harbor match worked....They over-matched a participant who only deferred 1% - they gave him 4% so his match was way more than his deferrals. Should this be moved to the forfeiture account since it wasn't supposed to ever be given to this participant or can it be returned to the employer. I have looked at their adoption agreement and don't really see a clear answer. Thanks for any insights.

I have a client whose home was destroyed in March by tornado. With the cost of lumber going up so much - they need to take a distribution from their 401k to pay the additional expense to rebuild that insurance did not cover. Could that be a reason for a hardship withdrawal or just an inservice with 20% withholding? Rebuilding on the same lot. Thanks!

Ok good so he can write himself a big ole check and defer from it before year end? .

Client has a side company - one person S Corp. He works full-time for another employer where he contributes $10,500 to his 401k plan. He wants to set up a 401k PSP for 2020 if possible for his S Corp. Would it have to be effective 11/1 or could it be 1/1/2020 but only defer on compensation paid after 11/1? I assume he would be limited to $15,500 (he's over 50) ....Does the plan have to be adopted by 12/31 or before in order for him to defer on his w-2 wages from 11/1?

A client's Profit sharing plan was terminated as of May 31, 2020. All employees other than the owner were terminated as of 12/31/2019. He wants to know if he can contribute a final profit sharing contribution for 2020. If so, do we just need his compensation through 5/31, and can he wait until due date of his return to fund? He has already rolled over his balance that was in the plan to another qualified plan of his new employer - started there in July 2020. Need thoughts and advice. Thanks!

We have a plan where the owners did not contribute the full allowable safe harbor match for themselves for 2019 (4% basically). They did max out deferrals for 2019. We have always though that the owners SH was just like everybody else - had to be trued up at year end. they get K-1s..... Has that changed? I was thinking I heard a discussion recently on a Relius webinar.

An employee of a participating employer in a plan gets a W-2 and defers on it. They are also a partner in the other participating employer and have a large net loss. Do I have to net the two incomes and show them with a loss for the plan purposes? They did defer on their wages.

For 2019, both partners of a company deferred $13,000 each during the plan year based on their draw. Once we received the K-1 from the CPA, it is evident that both partners had a loss for the year of -41,500 each (no guaranteed payments either). Do they receive a distribution of the ineligible deferrals plus earnings or does it forfeit and stay in the plan? What code section does this violate - 415? or something else?

So did they violate 402(g) or 415? I have a client who did the same thing.

Is there anything that prevents a plan sponsor from Lowering the age requirement to age 14? I know max is 21. He wants to let his kid participate...not sure he'd work 1000 hours but I guess if he changes it to NO eligibility requirements -....as long as every employee is treated the same - can he do this?

Our client's document says deferral election applies to irregular pay. However, they often issue very small second checks for some reason. (like under $100); an issue arose when the payroll company withheld FIT on a small check and no 401k deferrals....they quoted the OHS (OFFICE of HUMAN SERVICES) that FIT withholding takes precedence. Anybody seen it handled differently? The plan was audited by a CPA firm and they took issue with no deferrals being calculated prior to FIT. So an impasse.....

Yes I meant do they become 100% vesting. and YES is a good answer.

Client acquired another practice in 2016. They did not give credit for prior service with prior employer for purposes of vesting, etc. Three doctors attained NRA (which is age 55 in this plan) during their employment with Client. However, all of them worked less than 5 years before either retiring, quitting, etc. Would they still be 100% since they met NRA while employed? Plan document just has checked "specific age" age 55 - doesn't have the age/participation box checked. So I am just asking if you agree that they would be 100% based on that? It's a LOT of money as they fund their Profit Sharing every year. Thanks!