Jakyasar

It was not a discovery for me, just shared my experience. Mike, not sure what disclarity you are referring to. Anyway thank you

12/15/2020 if 5558 filed by 9/30/2020 (initial due date)

Hi Going back to what ErnieG said about testing. Let's say HCE benefit structure is 100% of and all NHCE's 0.5% of compensation. The LI is the same for all i.e. 100X of benefit and WL. Does this pass the test for the DB plan as everyone is getting the same insurance percentage? Nothing will be done in the PS plan, just contributions. Just curious. Thank you

Thank you for your response. Calculation of breakdown is not an issue especially with a CB design. I will design each as their own group. So, if I understood what you said correctly, both sole props can adopt the plan separately and contribute/deduct separately (even if spouse's income is coming from the sole-prop). I have done this in the past (but both spouses had their own incomes separately from different businesses). I have also filed 1 5500 form (the filing as an EZ was something I asked IRS 15+ years ago and was told that it was ok to do EZ filing since both entities are spouses). Thank you

Hi Here is a new one for me. Sole prop pays spouse consulting X amount as 1099 income, first time in 2019, can 2019 be considered as date of hire for the spouse? Spouse works for another company and receives a W-2, totally unrelated to all here. Sole prop will do the same for 2020. Sole prop wants to set up a db plan for 2020 and wants the spouse included as well. As the spouse is getting income in form of 1099, she is considered as a sole prop as well, correct? Hmmm, not so sure here. Can a db plan be set up for 2020 and have the sole prop adopt the plan and the spouse adopts as a second employer (assuming that she can be classified as a sole prop)? Each entity will fund their own portion of the db plan. easy to do as only HCE's and different groupings. The sole prop will/cannot fund the spouse's db portion, if necessary, correct? Thankfully no other employees other than their youngish children which are excluded. Something does not smell right here, what am I not seeing? Thank you

Hi Bird We had a discussion back in October, here is the link, I hope it works. Not sure what your question is.

Isn't then subject to non deductible contribution penalty? This is not a minimum required contribution. just curious.

Hi Revisiting the life insurance issues in combo plans. This time not a floor-offset. DB or CB plan combined with a DC plan. All HCE's are at maximum benefit under DB/CB and rank&file minimum to pass 401(a)(26). DC plan, in addition to the deferrals+3% non-elective SH has PS allocations, say minimum 4.5% to pass gateway (SH+PS=7.5% of compensation). Agent wants insurance in the DB/CB only. is this not a BRF issue? If additional insurance is provided under the DC plan, the rank&file is forced to pay from their portion of contributions as their benefit is primarily provided under the DC plan. What am I not seeing clearly here and if there is a way to pass BRF, how is it accomplished? Thank you for you thought/comments.

Thank you Bill

Hi It is SIMPLE, fully funded, per potential client as they used PPP and employees are purring monies in every payroll. 2/3 into the year, not a good idea to deal with the excess IRA issues so will do the plan for 2021. What are the steps to close down the SIMPLE as of 12/31/2020? Never dealt with it before. There is no problem signing 2021 plans in December 2020, correct? Thank you

Hi Looking to set up a combo plan (CB+DC) and I now was informed that the client has a SIMPLE. Scenario 1: Not yet funded the SIMPLE for 2020, can I set up both plans? No deduction issues, correct? Scenario 2: Funded SIMPLE for partial 2020, what can be done if anything? Thank you

Hi Cannot seem to find if for 2020 20% withholding is waived on distributions (not hardship/Covid related, just regular distributions), it is still required, correct?. I am aware of the 10% waiver for 59 1/2. Thank you,

Thank you, will amend the plan prior to termination so that CARES will kick in.

Hi My apologies if this was asked before/missed it. PS plan terminating now. Have a 75 year old participant receiving RMD (none withdrawn for 2020 yet). Because of the plan termination, do they need to receive the RMD or can waive it? Thank you

Thank you Bill, 100% in agreement.

Hi I was asked the following: 401k plan effective 2017 but no deferrals were made nor any other contributions i.e. bunch of participants (owners + rank&file) as of 12/31/17 but no assets. 2018 had deferrals and other contributions. Same for 2019. Client sends data for the first time since inception, last week. They had to file 5500 for 2017, correct? 2018 they did not. DVFC for 2017 and 2018, correct? Thank you,

A follow up question. Now that I have to provide options for RMD that was not provided/calculated, I can only use the AE options available for the initial year of the RMD, correct? The reason I want to check is that I am adding additional options now for the upcoming RMD for the owner nd they can not be available retroactively to the spouse?

In addition, very doubtful, is there a spouse and also spousal consent requirement?

Thank you for your response and I agree. Definitely not my call.

Hi This is a silly question, given the amounts but wanted to see opinions out there. The owner's spouse's RMD for 2019 was $168 in total but $230 was taken out (initially took out $3,200 but refunded $2,970 prior to 12/31/19). What issues are they facing and what are the correction requirement, if any? Thank you

I agree with your skepticism and it is the plan sponsor's burden to prove the validity of prior service. Anyway, my issue was just resolved when they decided to make the DOH effective with the plan year. Good conversation and thank you all.

A qualified replacement plan (QRP) will only work if either participant will be receiving some kind of compensation which requires them to be active again. If they are not working anymore and not receiving any compensation, they are not active employees nor may be able to rollover the excess into the QRP. I have recently did one of these and the document provider informed me that, a terminated/retired participant in the db plan cannot be a participant in the QRP so the participant came out of retirement started getting salaries. Also the amount of the excess can be an issue, can it be distributed with 7 years? I am ok with the partial lump sum as well but that does not solve the over funding issue.

This was not a testing question, simply eligibility and including prior service for additional accrual of benefits.

One more follow up question/confirmation Owner over age 50 2019 w-2 is 20,000 - no other income or employed somewhere else Deferral on the W-2 18,000 Want to maximize PS portion at 5,000 - max at 25% $18,000+5,000 = 23,000 which is 3,000 over the 415c limit Classify 3,000 of the 18,000 as catch-up. So 15,000 deferral+5,000 PS=20,000 - 100% compensation limit Am I correct?

Is my prior TPA forgot to tell me 2 years in a row a reasonable cause - rhetorical question. As the amounts are so minimal, I will discuss with the client and what they want to do. Thank you