LMK TPA

I really want this answer to be true. I'm afraid that what others above are saying is that even if PDQ has income of $350k and typically the retirement plan contribution would be on $350k, it doesn't work that way when there's another sole prop business that has a loss. You start with determining income based on the combined sole props (even if one didn't adopt the plan.) The loss is treated as whatever the negative number is and cannot consider the loss to be $0.00 income.

Thank you! It makes sense that Sally's earned income from both companies is combined for purposes of determining her Schedule C income. Zeller's mention that starting a second sole prop to absorb the losses doesn't fly and David D's example of the 1040 supports the argument that the 2 entities are combined for SE income. However, I'm trying to understand why Section 1.401-10(b)(2) seems to say that they're separate employers for plan purposes. Section 1.401-10(b)(2) "If a self-employed individual is engaged in more than one trade or business, each such trade or business shall be considered a separate employer for purposes of applying the provisions of sections 401 through 404 to such individual. Thus, if a qualified plan is established for one trade or business but not the others, the individual will be considered an employee only if he received earned income with respect to such trade or business and only the amount of such earned income derived from that trade or business shall be taken into account for purposes of the qualified plan." Thank you!

Sally owns 2 separate business, 100% ownership. Business PDQ is the 401k profit sharing plan sponsor. PDQ has been in business for 3 years. 2025 SE income is $350,000 from PDQ. There is 1 employee in PDQ and she is covered in the PDQ plan. Sally started Business XYZ in 2025. There are no employees. This business will have a $325,000 loss for 2025. XYZ did not adopt PDQs plan. I use ftwilliam documents and confirmed that there is not an automatic adoption feature. Her SE income from PDQ is used for plan purposes because PDQ is the plan sponsor. Although XYZ did not adopt the plan, is her SE income from PDQ and XYZ combined for 415 purposes? Is she limited to compensation of $25,000 for 415 purposes even though her PDQ adopted the plan but XYZ did not? I'm getting some conflicting information. One suggestion is that PDQ and XYZ are combined for 415 however, there's Zero income from XYZ (not negative income) and therefore, the 415 limit and plan compensation are $350,000. I appreciate your help. Thanks!

Thank you!

I need someone to explain it to me like I'm 5... Is the Roth Catch Up provision no longer required in 2026 and it's now delayed until 2027? After sending out letters of explanation and next steps to my clients not too long ago it sounds like I'm now going to tell them "just kidding - don't have to do it until 2027".

12/31/2023 was first plan year for an owner only 401k Plan. No 5500-EZ filing needed due to assets under $250k. In 2024, there's now an employee. I will be filing a 5500-SF and indicate it's the first year to file. There will be a 1/1/2024 beginning balance of $50,000. Will the IRS look at a first year 5500-SF filer with a $50,000 beginning balance and send a notice to the employer wondering why a 5500-SF wasn't filed in 2023? Thank you!

Thank you, I appreciate your responses! If there are employees though and the document says the match is calculated on a per pay period basis, would you say that's an issue?

And can make a 401k contribution and match every 2 weeks even if the owner doesn't take w-2 compensation until the end of the year? Maybe what I'm missing is that at that an owner pays himself however much he wants to, whenever, and at the end of the year the w-2 is whatever it needs to be to be reasonable.

The sole owner of an S-Corp is depositing 401k and safe harbor match every 2 weeks. His W-2 for 2024 supports his contributions. I'm fuzzy on this part... I was told that the payroll company processed a one-off payroll for $75,000 on 12/27/2024 in order to support his 2024 contributions. His W-2 showed $75,000 in total compensation and a $30,500 401k contribution. The CPA tells me it's ok because the IRS just wants to see that a W-2 at the end of the year supports the contributions. Is an S-Corp owner not issued an official paycheck each pay period with the various payroll taxes deducted for that pay period? The CPA said it's better from a tax perspective to run one payroll at the end of the year so that the W-2 supports the owner's contributions and the W-2 reports reasonable taxable compensation. Maybe this is semantics but I don't understand how a paycheck isn't process for an S-Corp owner throughout a year and one can be run at the end of the year to report W-2 compensation for the prior 12 months. Is this ok?

Just an issue for 1 participant. Payroll deposited a flat $400 per month as a safe harbor match based on his 2023 year pay and did not adjust the deposit for 2024 compensation.

A participant's safe harbor match for 2024 should be $3,000. Payroll company deposited $4,800. The account had positive earnings for 2024 (1) I assume we calculate attributable earnings on the excess deposit and move $1800 plus earnings to the cash account. Is this correct? (2) What are the options to use the $1,800? Can it be used to fund 2025 safe harbor match deposits? Should it be allocated as a discretionary match for 2024? Could it be used to pay our fees? (3) I feel like the attributable earnings shouldn't be used to fund a contribution. Can it be used to pay our fees? Thank you!

They don't in the literal sense but as ESOP Guy said, they have an interest in each asset.

Nope, not all. I said there are 2 real estate parcels - one valued at $1.4M and another at $750K. The decedent's balance is $1.5M. The proposal was to roll one of the parcels to an IRA and the difference between the value of the real estate and the decedent's balance would be paid in cash.

I felt dirty just submitting the question. 😜

Profit Sharing Plan has pooled investments. There are 2 real estate parcels - one valued at $1.4M and another at $750K. The parcels are valued each year by an appraiser. The remaining plan assets, $4.2M, are in a brokerage account. The owner died - his balance is $1.5M. There are 58 participants in this plan. I've advised the client for years that having 1/3 of total plan assets in real estate is an issue and they should consult an ERISA attorney. They haven't, and now here we are. The beneficiary is his wife. The 2 kids of the deceased owner now own the company. Their first request was to allow the beneficiary to roll the real estate to an IRA and roll the remaining balance in cash. Because this is a pooled account, each participant owns 1/58 of the real estate. Allowing the beneficiary to roll the real estate to an IRA seems out of the question. The new owners were talking to an investment banker friend who said he had a client with a similar situation. The employer sent a form to each participant asking for their permission to forgo their ownership in the asset and allow the beneficiary to take the real estate. This doesn't seem right. Does anyone have any experience with this? (The client contacted the ERISA attorney I referred them to. It might take awhile for the attorney to weigh in on this so I thought I'd put this out there to the TPAs in the trenches.) Thanks!