lcollins300

Two employers (A and B) under same control group each have separate plans (Plan A and Plan B). Plan A terminates because employer A shuts down and many participants start working for employer B. Most participants rolls assets from terminated Plan A into Plan B. Plan B has predecessor language for eligibility and vesting for participants from Plan A. They were given opportunity to take their balance or rollover to IRA or another qualified plan. Question: Are the rollovers from Plan A into Plan B considered "related" rollovers for top-heavy testing?

Thank you all! May have to amend the 2019 to fix end of year count.

We have a plan that had 121 participants in 2018 so we had to file as a large plan with audit. In 2019 the participant count fell to 113 (but we found out this year that number was overstated due to employees really terminating on 12/31/2019 that weren't reported as such on the 2019 census). These same employees did not have account balances so if we were to amend the plan's 2019 5500 filing the participant count would be less than 100. As of PYB 2020 the participant count stands at 80. Not sure I'm understanding the 80/120 rule. Do we have to continue to file 5500 with large plan audit for 2020 or can we go back to filing the 5500-SF? This plan also terminated 12/15/2020 and paid out all assets by 12/31 so we really don't want them to have to do another plan audit if not needed. Thank you anyone for clarifying.

I'd like someone's opinion on this subject. We have a 401(k) Profit Sharing Plan that terminated on 12/31/2019. They have still not paid out the participants even though the vendor and TPA have been encouraging and trying to help them to do so. As this plan is now considered "on going" does it have to be restated for Cycle 3? I'm thinking yes!

So the 2019 1099-R should not be coded an "8" but as either a 7 for normal or 1 for early distribution (allowed by the plan). And no 2017 and 2018 1099-R have to be completed? I was reading the below and thought we had to do a 2019 1099-R for year distributed but also one for 2017 and one for 2018 along with amended returns. Under Revenue Procedure 2019-19, Appendix A, section .04, the permitted correction method is to distribute the excess deferral to the employee and to report the amount as taxable both in the year of deferral and in the year distributed. These amounts are reported on Forms 1099-R. These amounts are reported on Forms 1099-R.

We have a situation where an owner deferred fully to his own plan in 2017 and 2018 but had also deferred fully in another employer's 401(k) plan where he was just a participant. CPA is having to amend his 2017 and 2018 returns. We have read that the distributions must be taxable in both the year of deferral and the year oaf distribution. Excess contributions plus earnings were calculated for both the 2017 and 2018 deferrals and distributed in Dec 2019. Question: Unsure what to code the 2019 1099-R? Not P but maybe a 8 which is confusing as this signifies that the excess contribution stems from 2019 deferrals......…. Any help would be great!

Because of the control group situation we'd have to do aggregated testing under 401(a)(4) for the different SH matches even if they had two plans right? Or not, if both plans passed 410(b) on their own?

We have a client that has an existing safe harbor 401(k) plan that does the enhanced match. There may be a new participating employer joining due to control group issue that does not have a current plan but cannot afford the enhanced match. May new employer do the basic match instead and have special language to that affect on their participating employer agreement? Both companies have HCEs.

Thank you all as you are all highly respected for your opinions! After reading and rereading 1.416-1 T-32 we are calling it a related rollover. I would love to her what Uncle Sal would say. :)

Anyone who has any opinion on this one I'd love to hear...……..

We have a key employee (5% owner) whose wife passed in late 2014. He took distribution of her account balance in 2015 and rolled it over within the same plan. Would the distribution from her account to his be considered a "related" rollover for calculating top-heavy status as the $ remains in the plan? If yes, would it drop off after 1 year?

Thank you!

Would like to clarify that when a key defers less than 3% (say 1%) then the top heavy minimum would only be 1% correct? I keep on getting conflicting information that it must still be 3%. Employer is not making any other contributions except THM.

This is what we think but the prior recordkeeper (will not name investment firm) did not have her on test.

Yes as far as K-1. Plan only excludes Union and Nonresident aliens.

We have a 401(k) plan sponsored by a Limited Partnership (Hotel) where one of the 5%+ owners is a working manager taking draws but no W-2 wages. Would she be included in ADP testing? Her daughter also works for the hotel but does receive W-2 wages (she owns 2.5%). Definition of compensation per the plan doc is W-2 (no exclusions).