C. B. Zeller

True, I suppose I should have added "...unless you want to show an unpaid minimum contribution" to the end of my comment. We might be getting some mileage out of the new PBGC reporting questions on the 5500-SF this year, if that's the case.

If we're only looking at the deferral and match portions of the plan for purposes of coverage, you can use the early participation rule to disaggregate only the otherwise excludable NHCEs.

Plans are not required to offer loans in the first place, CARES doesn't change that. It increases the maximum amount of a loan that can satisfy 72(p) but plans which offer loans are currently free to use lower limits than those stated in 72(p) so I don't believe you would be required to increase to the new maximums.

If they're not eligible yet, then you can prospectively eliminate their eligibility. However 2016-16 prohibits a mid-year amendment which narrows the group of employees eligible for the SH, HCEs or not.

It seems that it's going to be necessary. CARES extended the minimum funding deadline for DB plans to 1/1/2021 and the Schedule SB can't be completed until after the funding contribution has been made.

The language that XTitan posted is from a bill that has not been signed into law yet, so still subject to change. Don't rely on it. That said, the bill as it stands now only contains an RMD waiver for DC plans and IRAs.

One more thought on this, if you're talking about EPCRS then you're talking about qualification failures. You can't adopt an amendment that will intentionally cause a failure and then expect to be able to rely on SCP to fix it.

Federal law doesnt "allow" the wife to be the beneficiary, it requires her to be the sole beneficiary if the plan is going to be exempt from the QJSA requirements. If the participant was married for less than 1 year before his death, the plan is not required to recognize the marriage. What is Fidelity's role in this that they made the decision about who to pay out? Are they the Plan Administrator? The SPD will contain information about how to submit an appeal for a claim of benefits. If the widow believes she is entitled to benefits, she should start there.

Bird, I think the bolded section applies when the employer is increasing the match formula, for example changing from a basic SH match to an enhanced match. What Purplemandinga is talking about is making additional employees eligible retroactively. I am curious what the employer is trying to achieve with this. Why not just make the participants eligible on the effective date instead of messing around with retroactive entry?

A participant is still required to obtain all other currently available distributions from the plan and any other plans maintained by the employer before they can take a hardship distribution. I agree he has to take the $10k from the rollover source (subject to mandatory withholding) before the hardship can be taken from the deferral source.

What was the due date before the recent IRS extension? If it was April 15, then it has been extended to July 15. If the PLLC is taxed as a sole proprietorship then this is probably the case. If it was anything other than April 15, it is unchanged. If the PLLC is taxed as an S corp or as a partnership then its return and contribution were probably due as of March 15, unless an extension was filed timely.

This was in today's BL newsletter: https://www2.ascensus.com/news/industry-regulatory-news/2020/03/19/legislation-to-be-introduced-to-suspend-rmds-for-2020-exempt-social-security-income-from-taxation/

Prior discussion on the topic:

Employee entered the plan and was eligible to defer beginning on their date of re-hire, 8/1/2019.

No. See #3 under "Examples of impermissible mid-year changes" here: https://www.irs.gov/retirement-plans/mid-year-changes-to-safe-harbor-401k-plans-and-notices

I agree with CuseFan, if the CEO being paid on a 1099 then he is by definition not an employee. Even if he should be classified as an employee, the plan probably has the Microsoft language which says it excludes employees treated as independent contractors. You might have a leased employee situation though, or even a management service group.

No, I don't think so. But you should be able to spin off their portion of the 401(k) and then terminate that new plan. I do not know if the successor plan rule would prevent you from immediately adopting a new 403(b) after terminating a 401(k).

The change made by the new hardship regs was that the safe harbor reason for casualty loss now reads "Expenses for the repair of damage to the employee's principal residence that would qualify for the casualty deduction under section 165 (determined without regard to section 165(h)(5) and whether the loss exceeds 10% of adjusted gross income)." 165(h)(5) is the part that limits the deduction to declared disasters. It still has to be a casualty loss, e.g. a flood, fire, etc.

Option 1: If the company is a partnership, make mom a partner. Option 2: Get legally married to mom. Option 3: Get a bond. I will let you decide which of these you like the best

Oh, I agree completely, but for a certain type of client it is easier for them to understand simple instructions like "make your contribution before you file your taxes."

Contributions must be made no later than the sponsor's tax filing deadline (including extensions) in order to be deductible for that tax year. Contributions made no later than 30 days after the tax deadline (including extensions) can be considered annual additions for the plan year. So you can have a situation where, say your tax deadline is March 15, 2019, you make a contribution on March 20, 2019, and count it as an annual addition for the 2019 plan year, but deduct it on your 2020 tax return and apply it against the 2020 deduction limit, which is in turn based on plan year 2020 participant compensation. The safest (and simplest) method, and what I generally tell my clients, is always to have the contributions in before the tax deadline, or better yet before the tax return is filed. If the tax year is different from the plan year, then it gets more complicated.

Thanks Mike and Larry for the input. I spoke with the prior administrator who said that it was in fact a plan account but was labeled as an IRA essentially due to a clerical error. His suggestion if I wanted to fix it (if I felt a fix was necessary, since clearly he felt it was fine as-is) was to do a trustee-to-trustee transfer from the IRA into an account in the name of the plan. I am not sure I buy that argument, if it's labeled an IRA and was not under the control of the trustee then it doesn't have the characteristics of a plan account. If it looks like a duck and quacks like a duck... I would also be concerned that upon examination the IRS would find that the plan contributions were compensation to the employee which should have been taxed, and were also excess IRA contributions. I also spoke with an ERISA attorney who felt that VCP would be the right course of action. He suggested filing anonymously since there is not a prescribed correction for this failure, therefore the outcome would be highly dependent on the agreeableness of the agent assigned. He also recommended that since the participant is currently over age 59.5 (although the failure began prior to age 59.5), not to move the account back in to the plan, but as part of the VCP submission to consider the account to have been distributed when the participant reached age 59.5, and file amended 5500s and a 1099-R.

On a recent takeover, we found that the account for one of the two participants is an IRA. The plan is a profit sharing plan and not a SEP or SIMPLE. Contributions for this participant are being recorded in the IRA as rollovers, however no distributions were reported on the Form 5500 and the value of the IRA was being included in plan assets. The obvious correction is to transfer the IRA assets to an account which is under the trustee's control. Whether this can be self-corrected or needs to be done under VCP would depend on whether the failure is significant, as it has extended well beyond 2 years. It could be considered significant in that it affected 50% of plan participants and a substantial portion of plan assets. It might also be considered insignificant as there was no impact to any participant's financial or tax situation due to the failure. Has anyone ever encountered this type of failure before? How did you handle it?

If the eviction has already occurred, then it can not be prevented, ergo the payment could not be to "prevent eviction or foreclosure." If the plan allows, there is always the "immediate and heavy financial need" facts-and-circumstances determination. Unfortunately the retirement plan may not be the best source of aid for this participant in this situation.

There are only very limited circumstances in which deferrals can be withdrawn - attainment of age 59-1/2, termination of employment, financial hardship, or termination of the plan. If none of those have occurred then you have an operational failure. If the failure is significant (sound like it is to me) then you would have to correct under VCP since it is more than 2 years after the failure. The correction will likely be to have the employees return the overpayments to the plan. For payments that have already been taxed, return of the payment will create after-tax basis in the plan.