PamR

I know NIPA exists but I have no idea what credentials they offer. I have been a member of ASPPA since 1989 and I've always thought of NIPA as an ASPPA want to be, smaller and not as prestigious. I imagine NIPA is less expensive, but there is likely a reason for that.....

Did you check your base document? Many of them have paragraphs regarding "irregular compensation" or some term similar. It's typically under the elective deferral section in the base document and gives you some flexibility on what compensation you withhold deferrals from even if the compensation isn't explicitly excluded in the adoption agreement. I've seen wording like this is many base documents. Regardless of the definition of Compensation shown in Article I, the Administrator may adopt a uniform policy, for purposes of determining the amount of a Participant's Elective Deferrals, of disregarding some or all items of Compensation which are not regularly paid in cash or cash equivalents to the Participant, such as premiums for group-term life insurance. In addition, Participants' deferral election forms may optionally provide a separate election, or for no elections permitted, or for a default deferral percentage of 0%, with respect to all or a portion of Compensation that is not paid on a per-payroll-period basis (e.g., bonuses, commissions, etc.), and may optionally provide that a Participant's failure to make any such separate election shall result in no deferral being made from such irregular Compensation.

We just had a client receive a CP216H denying their extension for the 2020 5500 and the letter from the IRS is dated 2/27/2023. The letter says the 5558 was late. The form 5500 was filed in August of 2021. Is there anything that can even be done at this point?

I agree with msmith, severance pay or pay that you are getting because you are no longer working here, is not considered plan compensation. If you are creating a short plan year, you will have to pro-rate the 305,000 and the Drs compensation will be less than that for SH %.

Would there possibly be a successor plan issue? If he owned the business that sponsored the plan that was terminated, doesn't he have to wait 12 months to start another? Assuming both are 401k

I have called Schwab multiple times and each time I am told that the distribution will trigger the issue of a 1099-r to the participant. I feel like I'm running in circles.

It's a 401k plan, so you can't have another plan in less than 12 months if you create plan 002. At least I don't think you can. It's frustrating because it is NOT a successor plan, it's the same plan. Schwab just won't let go of the money in the account, even to transfer it within Schwab. Seems wrong to me. A trustee should be able to move their 401k to another custodian if they want to.

I know they don't really exist, however, I have a client that has a "solo 401k)" with Schwab. He has hired an employee and that employee is now eligible. Schwab will not allow us to open an account for the employee under the current plan. They say we can open a company retirement account (CRA) for that money. When I asked how to transfer the "solo 401k" account over to the CRA I was given a distribution form, well there is no distributable event and they confirmed it would generate a 1099, etc. Has anyone else run into this situation? Have any ideas how to solve it? We restated the plan on our plan document and I guess we can just keep his "solo 401k" account and combine it with the CRA account for 5500 purposes, just seems like there should be an easier way.

Peter, that is what I was researching, my co-fiduciary responsibilities under ERISA 405. I was hoping you would chime in, thank you!

I have a client that has stopped depositing the employee deferrals. There have not been any deposits since January of 2022. We had to beg and do manual entries to get some of the payrolls in that did go in. It's a very small doctors office and the plan is safe harbor and new in 2020, the year she started the practice. The plan has automatic enrollment and there were employees that have become eligible in 2022. We have emailed, texted and called and we aren't getting any response. We have sent a certified letter letting the doctor know that we are resigning. The question is should we report our client to the DOL for not depositing the payrolls? We are signed on as a Fiduciary on the Investment Advisory side, we are also the TPA, but not a 3(16) so we aren't a fiduciary in that capacity. Part of me wants to report it, but then I guess I can't say with 100% certainty that there were deferrals withheld that haven't been deposited, I guess only someone in the office would know that for sure. I'm curious to hear what others think they would do in this situation. Thanks in advance.

The way I read the OP they have been filing as a large plan and doing the audit, so filing the same as last year would be filing as a large plan and therefore an audit is required. (Assuming you agree that the 3 receiving a true up "count" in the count)

Whatever you decide be sure to document why or why not you thought 8 business days was the earliest time it could be deposited. I would not recommend anything to the client, I would give them the information about deposit timing from the DOL and let them decide whether to correct/report it. This is the Plan Administrator's (usually the client unless you are the 3(16) fiduciary) so it is their decision to make.

I know the deduction limit for the employer part of a 401k plan is limited to 25% but does that 25% limit flow to the partners 1040? I have a partner that maxed out at $57,000 plan does not go over the deductibility limit. However, his accountant is doing his 1040 and he says he is limited to 20% of his SE income. He made less than usual in 2020 so this is the first time I have seen this. I always check for 25% at the plan level, but am I supposed to be checking this limit for each partner in a partnership as well? Does anyone have any insight on this? TIA

Larry, totally agree that this definition of Employer is terrible, but it does exist. I am moving all of my plans to a new document with the new restatement cycle and that is one of the items I verified before choosing the provider. However, I thought it was still relevant to point out just in case the document did use the terrible definition.

My understanding is it is the lessor of $50,000 minus the highest outstanding loan balance OR 50% of their account balance. So, in this case 50% is $45,000 and you subtract the CURRENT loan balance from that, you only go to the highest outstanding when you are using the $50,000. So it may be a bit more than $10,000 if he has made any payments on the loan.

I agree with Degrand. I have worked with many different documents, some define the employer as the Adopting employer AND all companies that are part of the controlled group, so no need to adopt the plan. Others will define as only the adopting employer and therefore even if another company is part of a controlled group they need to adopt the plan as an additional adopter. Although I see no harm in them adopting even if the definition is including the controlled group, it just isn't necessary.

The fee comes out first and is not income to the participant. 1099 should say $900 and you withhold on $900. If you had someone with a balance under $100 and you took it all as a fee, would you send them a 1099? Of course not, they didn't recieve any income.