Jakyasar

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.

Hi DB plan terminates and provides all participants their benefits, some rolled over into IRA's and some to the existing 401k/PS plan. The residue i.e. overfunded portion, is transferred to the QRP under the terms of the plan and it will be allocated as profit sharing to all participants. Upon distribution, is the portion under QRP subject to QJSA? If it is, best if all assets are subject to it otherwise nightmare to keep track of the assets. Thank you

IDK, was trying to find some reference and came upon grey book reference. Thank you though.

Hi Mike Thank you for pointing this out. Are you referring to 2015 Gray Book Q&A 16? Have a great weekend.

You know what, totally spaced out before asking the question, long day, brain dead. Obviously, I will have them terminate on 12/31, thankfully one of us has the thinking cap on. Much appreciated and problem solved.

Hi DB/DC combo plans. DC is straight PS only, no other provisions. DB is covered by PBGC. 3 participants, owner/HCE, non-owner HCE and rank&file NHCE. Both the non-owner HCE and NHCE terminated on 6/30/2021 but worked over 1000 hours. Assume each had final salary of 50k for 2021 i.e. the 2021 w-2's will show 50k for each. Sponsor wants to terminate the PS plan as of 9/30/2021. His salary as of 9/30/2021 will be 200k and as of 12/31/2021 will be 290k. He has always been at maximum limits for the past 3+ years. The DB plan will stay active for the time being - no 401a26 issues for 2021. They are asking me to finalize the PS contributions for 2021 now. I have thoughts on performing all on a very conservative level but want to check on the following. What salary do I use for the owner for deduction of PS portion and what salary do I use for testing? If I did not ask the question properly, please feel free to correct. Thank you

Hi I think it is ok but want to see what others say. Calendar plan for 2021. Only PS provisions. It is cross tested with a DB plan. Top heavy provisions only provided by the PS plan 2 rank&file employees terminated with 1000+ hours but plan has EOY requirement for allocation. Only one rank&file in the DB and already accrued the 2021 benefit. Sponsor will terminate the PS plan during 2021. However will continue working for the company. Sponsor wants to provide PS contributions in excess of gateway requirements (combo testing passes easily with minimum gateway). Cannot do that with an 11-g so need to remove last day requirement. I can do the amendment now retroactive to 1/1/2021, correct? I also have a deduction and testing related question but will ask separately. Thank you

Thank you and this is why I said I do not agree with my own statement. I was just curious if I missed something. 100% in agreement with CB and others. 30k extra for all rank&file, sure will be one pissed of plan sponsor.

Here is a question, if they only took deduction for 70k and pay excise tax on 30k, would the 30k be applicable for 2021? Given the allocation above, 70k is not the 25% deduction limit i.e. there was more room for deductions. I am not sure I agree with my own statement though. Any thoughts?

No loan option? No in-service option? Otherwise Bill's suggestion is a good one.

Cushman, I am not sure if I agree with your absolute statement. Different vendors/attorneys I dealt with are of different opinions once the restatement period is open. All depends on when you officially terminate the plan or when all distributions are completed. However I agree with you 100%, always restate if the restatement period is officially open. It is always safest bet. My 2 cents for what it is worth.

Assume 1 hour of service i.e. participant met the requirement. Thank you

Great question, I am also curious if service can be counted with no US based income?

In this case, BOD is fine but still check if you need any snap on good faith amendments.

Actually let me change the above to a DB plan, again with all the above provisions, would I need to prorate the accrued benefit?

Hi Lou Thank you for the additional information but not worried about next year yet. Plan only covers HCE's anyway so 2022 is not an issue neither is 2021. Sometimes we need those plans with no testing issues. Much appreciated.

What type of plan DB or DC? Also, check with the document vendor as they will tell you what IRS mandated amendments (although some are good faith amendments) may be needed to be adopted, if any.

Hi Here is a new one for me. New 401k plan, effective 1/1/2021 (no short plan/tax year) They decided to hire a new employee on 9/1/2021 and will pay 350k salary for calendar 2021. This employee will have an immediate entry of 9/1/2021, a special entry date amendment otherwise plan has 21/1 and dual entry for eligibility. For 401k deferrals, profit sharing allocation and testing compensation, what needs to be prorated? Assume no hour requirements for ps and 401k. Thank you