Jakyasar

Hi I am sure this discussed way before so my apologies. I was asked for 2021 combo plan designs but now am told that there is a SIMPLE in existence. As far as I remember , they cannot do any qualified plan for 2021. Is there anything I am missing here i.e. something can be done? Thank you

Luke, are you saying, if they took out 10k and now it 7k in the IRA, they can only return 7k and accept the losses, even though if the monies stayed in the plan they would have been worth 12k?

Bito'money, thank you for comments. I am not saying because what I posted is all the information given to me. All I know/told (as of yesterday) is that now they want to make the plan whole again i.e. fix it one way or another and have all the participants return their monies to the plan. I pointed them to rev proc 2021-30 and it is in their hands now. As an update, I was informed yesterday that not all participants have received their balances and also a termination resolution was put in place in August. In my humble opinion, best approach is to rescind the termination, have everyone return their monies to the plan, the sponsor provide additional earning based on rev proc 2021-30, all to be completed/deposited prior to 12/31/2021.

Thank you for the cite as I was not searching using "overpayment". Section 5.01(3)(c) clearly provides the explanation of what is an overpayment is. Section 6.06(4) provides reference to Appendix B, section 2.04(c)(2) provides reference to Appendix B section 2.04(1)(c) Just confirming the sections. Very clear.

Thank you both your comments. Unfortunately, looking for a solution now and I do not think they will be this lucky. Any other thoughts out there?

I was approached for consulting on the following - never saw this before: Sponsor has a PS plan. Sponsor intended to merge (or terminate the existing plan and join - not clear) with another group of plans and add 401k feature. Sponsor, without taking any formal action, provides distributions to all participants, mostly active employees. All happened in May of 2021 Sponsor decides not to join the other group and continue with his PS plan and also amend for 2022 by adding 401k feature. What can be done here to correct all? Thank you

Hi I have almost no experience with missed funding deadlines - dealt with twice in my life time but both deposited prior to December 31st of the same year, following 9/15 deadline. A brand new cash balance/401k-ps plan combo for 2020. Was told that 401k deferrals and safe harbor match was contributed timely. The issues are the CB deposit and PS deposit. I was approached for advice on the following: As the plan sponsor is totally broke, they can not make the 200k CB deposit (assume it is the minimum required - do not have the report to check), whatever the PS amount due (must make it to pass combo plan testing) or the 10% penalty on missed contributions. It is very unlikely that they will come up with the monies by 12/31/2021 and possibly never - business went south suddenly. Possibly covered by PBGC, not even sure if PBGC was alerted about missing contributions - I believe form 10? All participants were provided statements of benefits for both CB and PS for 2020 They want to send the IRS form 5330 with a letter explaining their situation and ask for any kind of relief. Based on my understanding, they may be late for filing 5330 unless they filed 5558 for a possible 6 month extension, but definitely late for 10% excise tax, correct? From what I read, IRS may impose additional late interest charges. Not even sure if AFTAP was done and/or 101j notice was provided by 10/31/2021. My immediate reaction was to freeze the plan asap but apparently they were told by the actuary, not doable. What??? Given that they may never be able to make any of the contributions, what can they do? If anyone has any experience, would appreciate any comments/suggestions. What a mess.

No you do not for the document. Make sure to put in the fresh start date and the new formula p,us any other requirements that your document may have.

Hi Bill I agree with you and thank you for comment. Hope all is well. Best,

With the owner and spouse dead, who is running the business, does it even exist? 5500 forms have been filed? Documents updated? etc etc etc Usually plan documents would say if no beneficiary, all goes to the estate but this is a very general approach. By the way, what does the document say about the excess at the time of termination. Also, if the plan is sellable, the level of the overfunding may or may not attract the buyers. Just thinking out loud.

Hi An EE hired more 10 years ago and worked 1000+ hours each year. In 2014 becomes part-time but working 750/year. Owner wants to set up combo plans for 2021 and wants to exclude this employee. I think this employee is included in all testing because never terminated and never had a break-in-service, correct? He would be excluded categorically. What if, worked under 501 hours since 2014, still needs to be included? Thank you

Thank you, interesting to know. I convinced the sponsor to contribute by 10/15 so only deduction issue for 2021. Phew.

I agree on that. So not reflected on the form as far as I can tell? It was provided on the 500 initially.

Hi First time doing a PBGC termination with excess assets being transferred to a qualified replacement plan - QRP. Just cannot seem to figure out the following: Here is a breakdown All participants: $3,000,000 - all rolled over to the QRP - existing DC plan - not relevant if consensual or not Excess (overfunded portion): $ 300,000 - transferred to the QRP Total DB distribution: $3,300,000 - all to QRP How do you show the $300,000 on 501? Thank you

Me too and thank you everyone for chiming in. PS - they are having nice big salaries for 2021 so deduction and 415 issues (famous last words)

Do not mail, if you can avoid it, it is a mess at IRS. You can only do EZ for 2020 and file away electronically, if you want to continue filing.

Looks like I opened a can of worms here. Bird, referring to the second paragraph, it should be applied towards 2020 otherwise how does one satisfy the 2020 3% non-elective safe harbor requirement? It is deductible in 2021 though. I think the best solution is to determine/limit the 2021 415c limits using both the 2020 SH and whatever is contributed for 2021 and not exceed. The next step is to make sure that the plan sponsor deposits everything timely starting with 2022 plan year end and not deal with any of these issues. Anyone disagree?

Bird & Lou Excuse my not understanding here (not clear to me at least), to simplify, deposit by 12/31/2021 and apply to 2020? Is that what you are saying? Thanks

Your guess is as good as mine.

I do not see any other options, are there?

Hi Lou Thanks for your comments. I thought that you could get in the 2020 SH by 12/31/2021 and till be applicable for 2020 (not a deduction question) but not being a DC person, possibly thought wrong.

Hi all I am asking the following 2 scenarios on behalf of someone who is not my client but asked me about it. They deal with a payroll company for their plan. Scenario 1: 3% non-elective safe harbor for 2020, they do not have the money to make it by Friday. They already missed the 9/15/2021 deduction deadline. I thought that they had till 12/31/2021 to finalize the 2020 SH, I thought wrong? Assuming that it can be done by 12/31/2021 (after 10/15/2021), it will be deductible for 2021. However, it will not affect the 2021 415c limits, correct? Scenario 2: Plan sponsor did not make any contribution for 2020 by 9/15/2021 corporate deadline Plan has 3% non-elective safe harbor for 2020 plus they want to make profit sharing for 2020. For the profit sharing to be for 2020, they need to deposit by 10/15/2021, correct? How about the safe harbor, let's say similar approach as in scenario 1 i.e. can make it by 12/31/2021? In both scenarios, they will have anough payroll in 2021 for the 2020 and 2021 contributions to be deductible. 415c issue, another story. Thank you

Follow up I am fairly certain that no SH notices were provided each year. What is the impact of this? Thank you

Hi I am not a DC person in general and was asked to do a favor to someone for a plan that is in trouble. Plan is a DC plan with deferral, 3% non-elective safe harbor and profit sharing provisions. Plan effective date is 1/1/2015. Only 5500 filing was done for 2015 but under DVFC program. I am assuming the document is a PPA document so should be ok as just needs to be updated for Cycle3 - no confirmed yet. I am not sure if any statutory amendments were required, to be checked. Nothing has been done since then, no filings, no SH notices, no nothing. As no letters have been received for missing 5500 forms yet, i am assuming that it is ok to file all missing years under DVFC, correct? I will have test/check each year for contributions made (or missing) and wanted to see what needs to be done if corrections are required - all may need to be done under VCP unless eligible for SCP: What if SH contributions were missed and/or not correctly calculated? What if any new employees were eligible and never provided deferral elections forms, SH allocations SPD etc? What if PS contributions were made and plan did not satisfy 410b and/or 401a4 - formula is group based i.e. not safe harbor Any other questions I am not asking? I am aware that there are a lot check when and if i get any information for each year. Usually I would like to run away from these but... Thank you

That is also my understanding i.e. must have deferrals option for at least 3 months.