Jakyasar

Hi A curiosity question. I am looking at an SB prepared by another actuary for a terminated plan. It was a calendar plan with val date as of end of year. SB was prepared with 9/30 year end (term date) which is fine. When SB was filed, this val date change was filed as a funding assumption change. Is this correct? Thank you

C.B. and Mike, thank you both for your educational explanation. Very interesting approach.

Interesting, I am curious, is this because a retiring participant or applicable to any participant just because the plan sponsor wants to give more money? Assume that no test is failing, it is just "I like you and will give money even if you are not satisfying the provisions"? What section that allows this, I probably missed it during my reading (sorry very busy with the AFTAPs at this time, limited time to check all) Thank you for indulging my curiosity.

Hi Mike I reread the 11-g regs again and my take is a bit different than yours, as it has been in the past (11-g(2)) however as I seldomly use it (only when the testing fails), it is what it is, no further comments on my end. If I missed anything else, my apologies. Going back to BG5150's explanation to me "But, say a valued employee who was there for many years "retires" in December at age 62 and the owners want to reward her for her service. If the last day is hard coded, they would have to do an 11-g amendment to give her anything". Out of my curiosity and lack of experience in the above situation as explained by BG5150 (may be I am misunderstanding as well), please note that following question. I am assuming that she retired in December but before the 31st. Let's assume that the plan has last day rule and 1000 hour requirement for someone retiring during the year for an allocation. Unless there is an exception for a participant who is retired during the year (like no last day rule and/or no 1000 hour requirement), can you use 11-g amendment and go back retroactively provide an allocation just because the plan sponsor wants it, based on plan allocation provisions assumed above? Again, i hope I did not misunderstand BG5150's explanation, somehow. Thank you.

I guess I do need to revisit. Hardly use it so rusty. Thank you for pointing out.

Now I see where you are coming from and thank you for the explanation. However, I am not sure you can do an 11g amendment just because you want to give a contribution for the 62 year old even if with individual group approach. 11g is a corrective amendment and used if plan fails testing. I agree that additional contribution can be provided if no conditions. Hopefully I did not misunderstand what you are trying to explain. I like passing ABT as it makes 401a4 testing easier to pass, at least for my plans.

BG5150, could you please elaborate on your statement, trying to understand it (sorry late in the day)

C.B., thank you for your comments. I agree with you that there are different opinions out there. Mine is ok to do so as I have no issues with this approach. It is the SECURE act that bothers me i.e. the plan document was not signed by 12/31/2020. After reading the EOB - ERISA Online Book as well (I am not sure if I can quote the section/language here legally), it mentions that IRS's opinion was, 1.404(a)-14(c) will continue to apply (does not say obsolete - states that the language is not significantly different that pre-2008 rules). There is an example showing that 3 different options can be used for my scenario. Also references to the famous Notice 2007-28. EOB Chapter XVI, Part C is the section I am referring to especially 7.a.1. If I am allowed to provide that section, I will do so but need administrator's permission first. At the end of the day, I will discuss in detail with the CPA and the client and explain to them about the law and the "not so clear" interpretation and let them decide.

I went back and reread section 201 of the SECURE act as well as House Committee on Ways and Means and I see nothing saying that plan and tax year have to be the same. I hope others will chime in as I suddenly have a few of these. Thanks

Lou and Bill, right on the point. I did not see anything to the contrary in SECURE but may have missed. Bri, if I understood what you said correctly i.e. deductible for 2021 tax, as sole-props tax due date is 10/15 and so is the minimum funding deadline if the 2020 plan year starts on 2/1/2020 and ends on 1/31/2021.

I am aware of that, my question was about off calendar plan year for a calendar tax entity. Just wanted to see about others' thoughts on this.

Hi A sole-proprietor wants to set up a db plan for 2020. I can technically set up a db plan now starting 2/1/2020 with PY ending 1/31/2021 where minimum funding is due 10/15/2021. Plan document would read income used for the calendar year ending within the plan year. What is your thought on this? Thank you

Yes but can it be reflected on 2020 SB and 2021 AFTAP which need to be certified by 9/30/2021? Unless I am mistaken/missing anything, no.

So, for any calendar plan, 412/430 funding is still due today, at least to my understanding. Any profit sharing can be done later.

Not that I have seen nor anyone chimed in. I am having all my clients making their deposits by 9/15 even if their return is extended. no headaches, no issues. I am also going to have them file their 5500 forms by 10/15. But that is me.

I posed the same question last month and here is the link. I am switching to accrual.

Hi All As I do not see any comments on the minimum funding yet, here are couple additional scenarios. I am just curious and see what/if I missed anything in the law that is always applicable for disaster areas (I live/work in one and that is why I am trying to learn this stuff) This is for a calendar plan situations. Scenario 1: If (and that is a big if) the 2020 minimum funding deadline is extended under the relief (I am not convinced), under SECURE, does that mean a plan sponsor can set up a new defined benefit plan, say in November, and fund/deduct it for 2020 rather than 9/15/2021? Scenario 2: How about if the sponsor wants to set up a profit sharing plan for 2020, can they do that in November? Scenario 3: The sponsor wants to set up 401k/safe harbor plan for 2021 (deadline is 10/1/2021). Can they do that for 2021 in November? Again, just curious and learning. Thank you all.

Thank you for this. I do not see anything regarding minimum funding deadline extension unless I missed it.

Hi A hypothetical (might be reality soon) situation - never had to deal with it, believe it or not: 2020 required contribution is 150k and sch c income is 0. Client has the money to make the deposit and will do so by 9/15. A few questions: Will this amount be part of 2021 deduction? For 2021, say another 150k required contribution and another loss on the schedule c. What happens, carries over 300k as non deductible for future years and can deduct in future years? 2021 has a good schedule c income and the 404o limit is over 300k. Can he deduct for 2020 and 2021 contributions as the total will be less than 404o limit? Anything else i am not asking? Thanks

Hi This was discussed before as I posed the same question, cannot remember when, you will need to research. It is prior to August 2021 as I had the client file 5330 prior to 7/31 deadline. Hopefully you have a 5558 extension. The 401k gurus out there said the exemption for HCE/owner does not apply. If you are late to deposit, you will need to provide lost earnings, no matter who it is.

Hi Lois Thank you for the link but I am not 100% convinced. I did a quick read and there are some references to pensions related sections 7805((A)(d)(4) and unless I am misreading (with a high possibility), this section is at best ambiguous or not included. If you do a search under "pension", you will get a few hits, too many to disclose here. I would like to hear what others will say/comment.

Hi If anyone saw this, did you notice anything on pensions i.e. extension for 5500 and also 9/15 contribution dates? I browsed quickly. In the past they were specific (Sandy etc). IRS: Tax relief now available to Ida victims in New York and New Jersey; Oct. 15 deadline, other dates extended to Jan. 3 | Internal Revenue Service

Thank you both.

Hi Plan is calendar 2020. 5%+ owner terminates in April 2020 and sells his ownership to the other shareholder. Under HCE, because he was an HCE on 1/1/2020, he is HCE for 2020. How key employee rules, are the same here i.e. he is a key for 2020 because he was on 1/1/2020? Thank you

Mike, thank you The only option in QR P is lump sum so no QJSA.