Jakyasar

Tom Thank you for your input. If I understood correctly, for 2022, could still set up a new plan in 2023 but the plan year had to start on or after 12/29/2022 for 2022 deduction. This was discussed on this platform before but I am not remembering the exact details (sorry do not have time to check this week). I think it may have been for a short plan year.

Correction above "there is a law stating otherwise" Belgarath, I read it the same way you do but it what IRS says contradicts section 317. I do not read it any other way. I do not even accept as an interpretation. They may come up with an additional guidance. I am just making noise here and see if I am actually misreading all.

Interesting, there is a low stating otherwise. I do not have any of these nor will accept IRS' point of view but that's me. I did set up a 2022 DC plan for a sole-prop recently and 401k is effective in 2023. I will also check this out with an ERISA attorney and see they will say.

I am curious, no one is taking a shot at this.

This was just released thru BL today. Issue Snapshot — Deductibility of employer contributions to a 401(k) plan made after the end of the tax year | Internal Revenue Service (irs.gov) Not a 401k expert. Example 5 is an interesting one, is it correct though? SECURE 2.0 section 317 states for plan years after 2022. What am I missing here? Thanks

Does the plan have last day rule for top heavy, thinking out loud? Hours will not matter. Totally agree with Lou, do not lose sleep unless there is a very specific language in the plan document that requires contributions. My 2 cents.

Never a bother, clients do not always like to provide complete/correct information, for whatever the reasons are😀

Was the return done with extension?

I was asked the following (this is out of my realm): Partner A in Plan Origin terminated and had assets that required some attorney's involvement for liquidation (do not know the details) and Plan Origin is located in State A. Now ex-Partner A moves to State B and starts a PS plan - Plan Destination. While in Plan Origin, with the help of the attorney, ex-Partner A was able to liquidate the assets within Plan Origin (1M dollars) and the attorney's fee was 20k i.e. 2% of the assets. Once all settled with Plan Origin, 1M dollars were rolled over to Plan Destination. This ex-Partner A now wants to pay the attorney's fees from the assets which are now in Plan Destination. Can he do that and if yes, is there a cite for it? My comment would be, no, as all events took place within Plan Origin and once rolled over to Plan Destination, it is no longer a Plan Destination related expense. Curious what others have to say. Thank you

My 2 cents. Yes you do need it but there might be an exemption, I am sure others will chime in and correct me. You are correct on the second paragraph and it even includes children of the owners if and only if the sponsor is an s-corp - it is in the 5500EZ instructions.

You need to check the compensation determination period in the plan document as it may have different results for 404 deductions. This could be an issue with the 25% deduction especially if you have multiple plan years deducted in one fiscal year. However everything else is based on the plan year i.e. testing, contribution deadlines etc.

I am only concerned about DB and PS. Cannot have retro deferrals anyway.

Hi Did a proposal for 2022 for a one lifer. They said to go ahead, asked for w-2 and when I got it, there were 2 listed. CPA said the other was part-timer and terminated in 2022. Insisted on DOH and DOT. Surprise surprise, DOH early 2021 with DOT late 2022. I asked for hours and of course, full-time employee. Can set up the plan with 3 year cliff and/or 2/20 with no prior service before 1/1/2022 aka effective date of the plan. Not sure how the partial termination would play here as employee is not replaced. What do you think on this? The question here: Is it ok to set up the plan now with 2 year wait (100% vesting is not an issue as it is only the owner)? This is unchartered territory for me and not sure about discrimination issues. Thanks

Thanks Lou, 1563e is where I am thinking about. Definitely needs to go to PBGC Much appreciate it.

Agreed on that. Corp X only employs the spouses, not the owners. Would that make a difference?

Hi Veterinary, PLLC, 10 participants, 2 owners (50/50) and their spouses Controlled group with Corp X, LTD, employees are the spouses only and it does not perform veterinary services nor any other professional services. Is the DB plan covered by PBGC? Thanks

Thank you all, just wanted to be sure.

Hi Drawing a blank here. Fiscal plan, plan year 7/1/2022 to 6/30/2023 Owner and spouse only Limitation year is plan year=fiscal year 415c limit is based on 2023 They take salary once a year and as of 6/30/2023. The 401k deferral portion, is it based on 2022 or 2023 limits? Do not worry about the multiple deferrals within plan year as all deferrals are always done as of 6/30. Thanks

25% deduction based on above is 55.25k, owners getting 54 leaves only 1.25k which clearly exceeds ee total of 4.5k therefore fails deduction. Not even going there with the ACP test as Lou said.

What is elected on item 9, "entry timing for plan participation"? Sorry not listing here as I am not sure if permitted. Entry dates themselves are not enough to make a determination. IMHO

Hi This is a general question. A DB (one lifer) plan did not fund the 2021 MRC - minimum required contribution - by 9/15/2022. The MRC was 25k as of 9/15/2022. It was not funded by 12/31/2022 either. Let say they want to fund 2021 MRC by 7/1/2023. How is the amount calculated? Using EIR (effective interest rate) for 2021 all thru 7/1/2023 or 2021 EIR until 12/31/2022 plus 2022 EIR? Assuming that there will be room for it under 404, this amount can be deductible for 2022, correct? (assume corporate tax return is on extension) --------------------------------------------- As for excise taxes, from 5330 under 4971, it is very clear. It would be 10% for 2022 plus 100% for 2023. Schedule D. Tax on Failure To Meet Minimum Funding Standards (Section 4971(a)) In the case of a single-employer plan, section 4971(a) imposes a 10% tax on the aggregate unpaid minimum required contributions for all plan years remaining unpaid as of the end of any plan year. Additional tax for failure to correct. For single-employer plans, when an initial tax is imposed under section 4971(a) on any unpaid minimum required contribution and the unpaid minimum required contribution remains unpaid as of the close of the taxable period, an additional tax of 100% of the amount that remains unpaid is imposed under section 4971(b). So is there anyway to have the IRS accept 10% for each year or 2023 has to 100% which is very steep? ----------------------------------- As for penalties for late filing 5330 Penalty for late filing of return. If you do not file a return by the due date, including extensions, you may have to pay a penalty of 5% of the unpaid tax for each month or part of a month the return is late, up to a maximum of 25% of the unpaid tax. The penalty will not be imposed if you can show that the failure to file on time was due to reasonable cause. If you file late, you may attach a statement to Form 5330 explaining the reasonable cause. Penalty for late payment of tax. If you do not pay the tax when due, you may have to pay a penalty of ½ of 1% of the unpaid tax for each month or part of a month the tax is not paid, up to a maximum of 25% of the unpaid tax. The penalty will not be imposed if you can show that the failure to pay on time was due to reasonable cause. Interest and penalties for late filing and late payment will be billed separately after the return is filed. ------------------------------------ So, looks like the penalties are (is the MRC based on 9/15/2022 amount or the date of actual deposit) For late deposits, 10% for 2022 plus 10% to 100% for 2023 plus possibly 25% of MRC for late filing of 5330 plus 25% of MRC for late payment of tax. Any corrections/comments to above? Thanks

Forever as you never know what will come later and bite you in the derrière

In addition, one participant 5500-SF's are not published on EFAST

Any courageous comments?

Hi CB & DC plan combo, DC has 3% NESH 3% Controlled group, 2 schedule c, both entities adopted the plans. Employees, some paid from both and some separately from each entity. Sch X had 500k net c Sch Y had 200k losses There are mandatory CB, SH & PS contributions attributable to both entities. Q1, for all purposes,need to combine the income, correct? Q2, should each entity fund its own portion of contributions? Q3, as to deduction, cannot exceed combined sch s, correct? Anything else I didn’t think of? Thanks