Jakyasar

Cusefan, correct however, even if the key is not getting any PS allocation? There is only PS provision, nothing else in the DC plan. Lou S. t/h is provided by DC plan only and key employees are excluded. In my case not getting any PS allocation. The reason I am asking is that, is 5% required for the non-HCE because the key is getting over 3% of accrued benefit under the DB plan which is equivalent of 5% in a DC plan? Bonus question, what if the key was getting only 2% under the DB plan? Thank you both for your input.

Hi Having a bit of brain freeze. DB/DC combo, both plan t/h. DB does not provide t/h and also no t/h for key under DC. Plans tested together I have owner, a non-owner HCE and NHCE, total 3 participants. Non-owner HCE gets 0.05% in DB for 401(a)(26). NHCE is only covered under DC. For 2020, gateway requirement is 5%. The owner does not want any PS allocation and will only get 3.5% of compensation as AB in the DB plan. Under gateway, NHCE gets 5% in DC. What is the minimum t/h I have to provide to the non-owner HCE under the PS plan? 3% or 3.5% or 5% Thank you

Hi all I am with Peter on Bill's contribution of knowledge. Thank you all for confirming my approach i.e. cannot be changed though I need to think about the 2 plan approach, very creative. To answer B. Parvarandeh, I am dealing with an ERISA attorney and I am not budging. Be safe all and have a great week, 3 more days to 10/15.

Hi You can do either, instructions from 2019 EZ. It is also valid for determining 250k limit, if I understand it correctly. The cash, modified cash, or accrual basis accounting methods may be used for recognition of transactions in Part III, as long as you use one method consistently.

Very good point, thank you for sharing. In this case, would 5310-A filing for merging plans be required?

Hi Having a discussion with an agent and attorney for a plan of theirs and I am not in agreement with what they are saying. Current document's ps provisions are: - No last day rule - No hour requirement - Comp-to-comp allocation The attorney states that, since no ps contributions were made during 2020, the allocation method can be changed now or by end of year so that, each participant can be their own group. The contribution will be made after the plan year. Can they? Just want to check others' opinions and see if i am missing something here. Thank you

Indeed Thank you all

Thank you for your time/comment

If I recall correctly, it is a non deductible amount being subject to any taxation/RMD in the future upon distributions/terminations/rollovers. A topic for another time.

No 415(c) limits are violated on both the dollar limit as well as 100% compensation limit. The problem of course is in the future when it comes to distributions. Trying to get the CPA change the tax return. Thank you for your time and input.

Actually one follow up, what happens to the 2k, is it allocated in 2019 or 2020? Thank you

ESOP Guy & Bill, thank you both for your comments

Hi Thank you both for comments. I need to add the fact that the overall deductible limit for 2019 for 120k. So, even though they did not exceed the deductible limit, they under deducted and will not be changing. Based on above, is the 2k subject to any penalties? Any other issues? My apologies as I did not make it clearer before. Thank you

Hi If 110k is contributed during 2019 and only 108k is deducted (CPA is not changing the deduction), is the excess 2k considered excess for 5330 penalty or can it be applied towards 2020? Thanks

Hi Preparing distribution election forms and not possible to get notarization. 3 participants, father, spouse and daughter. Daughter owns company 100% and can witness both parents signatures on the distribution election forms. Father is the president of the company, can he witness his daughter's spouse's signature on the distribution election form? Thank you

Any takers

Believe me, I am trying but to no avail but the year is still young.

Hi Takeover plan. First time for 5330. 2 shareholders - both HCE 2018 salaries 200k each thus max 100k deduction limit. Deposited 110k during 2018. Each got 50k allocation and suspense account got 10k (5330 penalty was paid) 2019 salaries 220k each this max 110k deduction limit. Deposited 110k during 2019. CPA informed me 108k was deducted and does not want to amend the return for 2019. Assume no earnings for 2019, to simplify. Is the 2019 amount for 5330 penalty 12k? Any other way to reduce? As the 415(c) limit of 56k is not violated, can any of the excess amount be allocated to the shareholders even if not deductible? I do not think so as not deductible??? Thank you for your comments.

Hi My apologies if this was discussed before. Existing 401k plan with SH match. Looking into adding a CB plan for 2020 Can it be switched to non-elective for 2020 and if yes 3% or 4%? Any other issues not asking? Thank you

Very interesting comments and thank you all.

Updated info. Client was an employee of X, Inc. and received a W-2 with full traditional deferral. After leaving, client started her own company Y, Inc. S-corp. Gave herself a W-2 and did Roth deferral, again full amount. Other than I told the CPA to have each document checked, any other method for correction i.e. which one should be corrected first, traditional or Roth? This is important for taxation purposes. As the client just disclosed this double deferral, I doubt X, Inc. may do any corrections? Any other suggestions? Thank you

I will certainly bring this up and see if there will be any provisions to overwrite the other. Thank you

Hi I was asked the following by one of my CPA's for 2019. "I have a client whom who has two W-2s and whom who is allowed to make catch-up contributions on her 401(K) contributions. On one W-2, she has made traditional contributions of $25,000 and on the other W-2, she has made Roth contributions of $25,000. Since she is limited to the $25,000, can she just have the money distributed to her in 2020 and have a 1099-R prepared" Since one is deductible and the other is after taxes, how is this handled/corrected? I believe it is all for 2020 but which deferral is to be corrected? Thank you for your comments.

Thank you both for your input. Have a great weekend.

Hi Looking into designing a new CB plan for an existing 401k plan and trying to determine if Joe is an HCE or not for 2020. Joe was 50% owner in 2019 and received 75k in salary. Joe terminated in 2020 (not informed about the hours yet but let's say over 500) and sold his share to the other owner on 5/15/2020. The new plan will be effective 1/1/2020 but adopted in November 2020. The val date will EOY. As Joe was an HCE as of 1/1/2020, is he an HCE for all year by ownership? Anything I am not thinking of? May be top 20% rule (not sure how it would apply here and effectively when). Thank you