Jakyasar

Hi Having a brain freeze for a change. I have not had the following situation for many many moons. Also having a discussion with an actuary. DB plan, covering husband and wife, both HCE and both key. Both way past NRA/NRD and in their 70s. Both are at 100% of pay and fully accrued in prior years. Low average salaries, in the 30k range. My software tells me that I am failing 401a26 and actuary agrees. I tried to use accrued-to-date method but the software does not allow me to do so. I was told that for 401a26 to use accrued to date, plan must satisfy 410b. What am i missing/not seeing here, sorry cannot think straight today. Thanks

A curious statement "IF the employee is paying social security tax then they would in fact be able to participate". Excuse my ignorance but how can they pay social security tax if the income is not US based? Not an expert, just thinking out loud. Peter asked the right questions. I had employees living oversees and being paid from US company (they were not US citizens) and they had to be included. May be not the same situation as yours?

Can you pass 410b utilizing average benefit test approach by increasing contributions to participants of A which would be done under 11-g correction? As A filed their return without any extension (and so did B), deductible for 2021. Also, which option for correction methodology was selected on FTW document, custom or based on the document provisions? Assuming that it can be corrected by VCP, can it be done by 10/15/2021 deadline (not sure if any deadlines imposed for VCP correction before a deadline)? Sorry if I missed these comments/suggestions and not being viable. Thinking out loud and curious.

Gilmore, depending on the vendor, you may get a different response from different document providers, as I experienced with my various communications with them. I for one believe in full restatement but that is me. I am curious what others will say.

Too many issues here. The penalty for 101j notice itself, which I assume was not provided, is going to cost quite a bundle. Hopefully no distributions were made which is another issue as no AFTAP i.e. less than 60%. If no SB's done, may have serious funding issues as well. And the list goes on.

Thank you Bill, hope all is well.

Hi I just did the calculations and the participant gets $3.25. They will make the deposit into the account for late deposits. @15%, the penalty is 49 cents. Is there any requirement to file 5330? This seems so ridiculous.

Agree with Belgarath and CB . Upon audit, far too many issues plus the monumental dollar amount for penalty instead of $750. The client would blame me if I took the practical approach. Thank you all for your input.

Hi Bird, I for one do not agree with your approach, sorry. Kind of agree though cannot do on corporate extension. Will see if other opinions. Thank you,

Hi Just curious about the following: Calendar plan, final distribution done in November 2020 i.e. final 5500 form is due 6/30/2021. So a short plan year. I was just told about this today which means 5558 was not filed timely. The sponsor is a calendar C-corp which went on extension for the 2020 filing. So the due date of the 2020 corporate tax return is extended to 10/15/2021. Can the sponsor rely on this automatic extension and file the final 5500 forms by 9/15/2021 - extended due date for a November filing? Or it has to be thru DFVCP? The following condition from the instructions may not make it possible: (1) the plan year and the employer’s tax year are the same. Your comments are appreciated. Thank you

The plan is all hce's and family members. All assets in a pooled account. Really appreciate your input. I actually did the higher of the 2 for loss earnings. Thank you

Currently in money market so close to 0%. Was not invested as of date of deposit, money market.

0%, brand new plan

Ah, big difference. A follow up question as I am more a practical approach person. First year of the plan is 2020. Let's assume $20,000 was due on 12/31/2020 as the deferrals and not deposited till 5/31/2021. This was the only deferral for 2020 so no returns on investment during 2020. If I used the VFCP calculator, the lost interest is $500 (making up), payable by 7/15/2021. So, for 2020, what is the sponsor's responsibility for lost of interest and any penalties, in dollars? Thank you

Hi Bri Thank you so much for your input and helping out.

Hi My first one ever. Need input from 401k gurus out there. Scenario 1: One deposit made 3 months late. Did the VCFP calculations. They made the deposit for lost earnings today. Correction under 4975(a). Preparing 5330. Completing Sch C Item 1 is discrete, correct? Completed item 2-a-1-i - date of transaction is when they deposited the missing deferrals, correct? Item 3 is fine Item 4, checked yes Do I need to complete item 5? It is the filer/sponsor listed on page 1, items A & D ----------------------------------------- Scenario 2: This time I have 20 late deposits, 4 participants, 5 different deposit dates. They will write one check i.e. all corrective amounts will be done in one day. I think put in 5 "transaction dates" and put in the appropriate lost earnings for each transaction date, correct? Again, do i need to complete item 5? If yes, do I need to put in 5 times? Did I miss anything else or not asking correctly? Thank you for helping out.

Hi Mike No filing for 2020 or 2021?

I vote SF too. Once you have the participant in the plan, you should report 1 terminated participant during the year with less than 100% vested. Same question in EZ as well but in my opinion, plan is not eligible for EZ. The question I have is what will happen in 2021 when the plan is eligible only for EZ filing and the assets are under 250K? Hmmm

Hi Thanks for your response especially on the expansion of compensation definitions. In my many years, I have never used anything other than job categories (almost never needed to). In few occasions used names but made sure that always passed ratio test. These new exclusions are new for me. I know not to use age related inclusions/exclusions. Thank you again.

Hi Having a discussion with an agent about a category exclusion. I never use it this way but may need to for an illustration. Concerned about BRF issues. Please consider the following 3 possible scenarios: Any eligible employee who is a salesperson and hired on or after 1/1/2015 shall be excluded or Any eligible employee who is a salesperson and making $75,000 or more annually shall be excluded or Any eligible employee who is a salesperson making $75,000 or more annually and also employed on or after 1/1/2015 shall be excluded Are any of the above an issue for BRF purposes? Thank you

If I may ask one more question - hopefully not exceeding my daily quota. Changing the scenario, let's assume John did not work for the past 5+ years at all i.e. terminated. Would he still be considered an employee? Rule of parity rules are a bit confusing for me. Thank you

Yes and thank you, much appreciated

Hi Mike I hope the following is a more simplified way. I tried to provide as much information about the facts and my thoughts. In my many years, this is the first time I came across a situation like this and a bit puzzled. Facts: Newly established db plan 7/1/2020 to 6/30/2021. Same sponsor had a db plan that terminated 10+ years ago. The owner's spouse – John - was an employee and also a participant in the old db plan. I believe the sponsor was owned by John's parents in the past and now owned by John's wife. Never got a clear response on this. John continually works for the sponsor however stopped taking any salaries for the past 10 years. John works between 501-1000+ hours each year for the past 10 years They want to include him in the new plan and he will receive a salary by 6/30/2021 Questions: Does the plan need a special eligibility amendment to have him included as of 6/30/2021 i.e. waiving the 1 year wait? As he had nonforfeitable rights in the old db plan does rule of parity play a role here? John was paid out his 100% vested accrued benefit (lump sum form) Thank you

Hi Need to refresh memory. Looking at a combo plans (DC+CB). Plans are top heavy and top heavy benefits are provided in the DC plan only. Not my typical way of designing. CB has 1000+ hour requirement for pay credit DC has 401k + 3% non-elective safe harbor + profit sharing. Profit sharing portion has no hour requirement but has last day rule. Gateway is 7.5% i.e. 3% safe harbor + 4.5% profit sharing Have a participant (in both plans) terminated during the plan year with more than 1000 hours of service, however not employed at end of year. The participant gets CB pay credit, the minimum to satisfy 401a26. The participant gets 3% mandatory safe harbor. What else does he get? Additional 2% profit sharing for top-heavy (it is 5%) or full 4.5% profit sharing for gateway? Whichever he gets, I think i need 11-g, correct? Thank you

Hi Since the issue just came up again, wanted to follow up and see if any comments? Thank you