DDB BN

Yes, we recommended that the Plan Sponsor amend this to allow a change in deferral at any time.

Plan Doc indicates that deferrals can be changed semi-annually and at year end may increase the deferral over the last 2 months to increase the deferral to the maximum. It makes no reference to increasing deferrals at year end for someone who wants to put in more at year end but not the maximum. The Plan Sponsor has a participant who is a sales person and he wants to increase his deferral for the next 4 weeks by $500 per pay period. He currently contributes $100 per weekly pay period. They do not pay bonuses at year end to anyone. Based on the way the plan is written, can he increase his deferral for the last 4 weeks of the year even though he will not be anywhere near the maximum?

The Husband and Wife are both Fiduciaries of the Plan. I informed the client that we will not provide advice regarding investments of any kind, especially ones that pertain to real estate. The 401k plan has participant directed accounts and the Plan Document allows investment that may be selected by the participant and approved by the Plan Sponsor with the exception of collectibles. We have already informed the client that the other participant in the plan must be offered the ability to invest in the mortgage. Good point regarding the Husband and Wife accounts. We stay away from determinations regarding real estate in retirement plans which is why we always recommend they seek the advice of an ERISA Attorney well versed in real estate.

The Plan Sponsor has a DB and a 401k PS plan with individual accounts. Husband, Wife and 1 employee participate in both plans. The husband currently has an investment in his 401k account for a mortgage to an unrelated party. Repayments are made to the husband's account in the plan. The Plan Sponsor called today and would like to issue another mortgage to another unrelated party for $200,000 from both the Husband and the Wife's accounts. The Husband has approximately $990,000 in his 401k account and his Wife has approximately $400,000 in her account. (They originally wanted to invest in a mortgage of $1,000,000 between them but it seemed too over the top.) They also inquired about investing in a mortgage in the DB plan. We do not recommend real estate investments within a plan but if they wanted to proceed with this, how should they go about it? I personally think they should get an opinion from an ERISA Attorney well versed in real estate investments within a retirement plan. Any advice, opinions would be greatly appreciated.

Thank you to all.

We just took this plan over FYE 02/28/19. It appears that the cure period for the participant terminated in 2017 ended in 2017 and the same for the participant who terminated in 2018. 1099-R was filed for those years but did not include the loan defaults. Should we file amended 1099-r for each year? Do not know if the terminated participants included the defaulted loan on their tax returns. They were notified on the distribution paperwork that the loan was in default and was to be reported as taxable income.

We took over a plan that had brokerage accounts, each participant had an individual brokerage account for deferral and SHM contributions and there was a pooled account for PS contributions. The participant loans were taken out of the participant's balance in the pooled ps account and the repayments were also made to the pooled account. We have since transitioned the plan to the John Hancock recordkeeper platform. Off calendar year plan end is 02/28. It has been brought to our attention that 2 participants with loans terminated, one in 2017 and the other in 2018. The deemed loans had not been removed from plan assets on the 5500 filings, should we amend prior year returns or report on the filing for 02/28/19 year end? Since the 1099-R was never prepared for these terminated participants (one has not been paid out yet and the other has received a partial distribution and will receive the remainder of her balance in the next week.), how should we proceed regarding the non-issue of the 1099-R for the appropriate years?

Thank you. Many times the individual handling the payroll does not want to be asked to constantly change employee deferral amounts and would prefer to only allow twice a year. I appreciate your input and will make note when they restate their plan.

401(k) plan allows for entry / change to employee deferral contributions on Jan 1st and July 1st each year. An employee was eligible to start deferring on 07/01/19 and was given notice of their eligibility to defer. The employee did not inform the Plan Sponsor that they wanted to defer until the end of September 2019. The Plan Sponsor starting withholding with the next payroll. Would this be ok based on the SH brief exclusion rule or should the employee deferral contributions be refunded and the employee informed that they may start deferring on 01/01/20?

Thank you. I appreciate your assistance.

A self employed individual has net income of 29,725. He also has unrelated employer W-2 income of 192,884.90 and employee deferral of $6,000 contributed to the unrelated employer's retirement plan. Is the catch up contribution, which will be contributed to his self employed 401k, subject to the 100% of comp limit or is it in addition to?

The business has residual income and may wind down in the next year or so, the wife will not be taking a salary or running the business. Sole Prop, the wife is the beneficiary of the participant and is not a participant. There will be no contributions to the plan. The plan allows for in-kind distributions but she does not want to be subject to income tax on the distribution. It sounds to me like she would be subject to the prohibited transaction penalty if she should decide to pay the plan for the outstanding mortgage at FMV.

A self employed owner only 1 person plan has mortgages as investments within the plan. The owner died and his wife continues to take RMD after his death. The plan has not been terminated as the wife beneficiary wants to keep it open until all of the mortgage investments have been repaid. The business still has activity at this time. The wife beneficiary would like to purchase one of the mortgages from the plan personally. Since this is a 1 person owner only plan, is it subject to the prohibited transaction rules? (The mortgage is $150,000 and the RMD is roughly $40,000 each year.)

Thank you. That is what I had concluded, just wanted confirmation as I was informed otherwise by another admin.

There were late deferrals in 2017. The late deferrals were deposited into the plan during 2017 as well. The earnings on the late 2017 deferrals were deposited in 2018. The late deferrals were reported on the 2017 5500-SF. Should they also be reported on the 2018 5500-SF even though the late deferrals were deposited in the prior year (2017)? Is the deposit of late deferrals only considered corrected when the late earnings are deposited?