Jakyasar

Looking into a new plan. The first plan year will be from 7/1/19 to 6/30/20, same as corporate fiscal year. One employee is in question with the following salaries 7/1/18 to 7/1/19 109k Calendar 2018 105k Calendar 2019 126k 7/1/19 to 6/30/20 125k+ or 130k+ Using lookback, looks like non-HCE for plan year beginning 7/1/19, agree? Is there anyway I can make the employee HCE for plan year beginning 7/1/19. Also, to determine the HCE status for plan year beginning 7/1/2020, his salary has to be at least 125k+ as of 6/30/2020, agree? Or had to be as 12/31/19? Thank you

Hi I am never comfortable with providing prior service for the following situation but there are different schools of thoughts out there. Working on a new DB plan. Have employees and the owner as eligible. I am now told that the owner's spouse have been working for the company and never drew a salary. He has been employed since 2000. Assuming that he always worked 1000 hours, any issues in providing 1 to 5 past YOS (have not totally determined yet on how many years I will need for the plan design) for benefit accruals (under safe harbor rules)? I believe, the lack of salary history will be of an issue especially for 415 and testing but let's put that aside for the time being. I just need to determine if I can provide prior service. Thank you

Trying to determine as this is a takeover for 2019. However, given the plan's funded status and the deductions taken, neither minimum nor the maximum will be affected. I may need to amend the filings/AFTAP/SB/PBGC, just to make sure that I have all corrected. Thank you for pointing out.

No funding issue the plan sponsor deposited the contributions from their biz to the plan. these erroneous deposits were never part of the plan's contribution, required or deductible. As to Bird's question, sorry did not think the math carefully, assume $2,500 loss i.e. 50% of it. Luke, thank you for the additional thoughts.

All good points and thank you

interesting math and thank you for clearly explaining it. Much appreciated.

Good morning all Owner only 401k plan - OwnerCo. Owner also works for another company as an employee - EE-Co. Owner over age 50. Owner will defer $6,000 in the company - EE-Co he is working as an employee. Owner will receive $22,000 salary from OwnerCo and will defer $20,000. So between the 2 deferrals, Owner is not going to exceed $26,000 for 2020. Of the $20,000 deferral under OwnerCo, the owner will treat $6,500 of the deferral as catch-up which will reduce the base deferral to $13,500. Owner will also make a $5,500 profit sharing contribution from the OwnerCo. Therefore $13,500+$5,500=$19,000 will not exceed 100% of pay i.e. $22,000. Agree? Thank you,

Thank you all and happy Father's day.

To all Thank you for your comments/suggestions. Mike, I am leaning towards your suggestion however, what will happen to the stock that was sold within the plan and had 5k of gains? David, I agree, will do for next time. Anyway, have a great weekend and be safe.

Why does it matter of how much goes to the owners unless the SH have the clause of excluding the owners (presumably HCE's). Is there a waiver that I am not aware of? I am just curious about how they can get out of this obligation especially if the company is still in biz. Thank you

Thank you for your input. Here are some responses Let me clarify that the "client" is the client of the plan sponsor and has nothing to do with the 1. Client deposited directly into the plan (no clue they were able to do it as not the trustee or plan sponsor). plan sponsor found out later that these stocks were deposited directly into the pension plans. 2. No, the plan sponsor made the appropriate contributions and never used the stocks as part of contributions/deductions 3. The withdrawals were made within 6 months of the deposits all in the same plan year 4. No, it was only the in owners account, none of the other participants were affected by it, only the owner (all participants have their own separate accounts. This was not a contribution by the plan sponsor (the plan sponsor knows not to contribute anything other than cash). The plan sponsor did not deposit these stocks, their client did. Their client somehow was able to transfer the stocks into the pension accounts and nobody caught this until it was too late, how it was done without the trustee's knowledge is still a mystery. This is all I know. It was simply an error that should not have happened. Thank you

Hi Sponsor has a client who was supposed to pay directly to the sponsor's business fees in stocks. Instead of the monies going to the sponsor's business, they deposited 1000 shares of the stock to each plan and the price of the stock at that time was $50. All happened in 2018. In the DB plan, client sold 500 shares and made a long term gain of $5,000 and never withdrew the money (as far as I know, no taxes were paid for the gain). Remaining 500 shares were later taken out of the DB plan and transferred to sponsor's business account (no cash transaction but I believe the value at the time of transfer was less than $50/share). All in happened in 2018. In the 401k plan, similar situation happened i.e. transferred 900 shares back to the business (not sure if the stock price was over/under $50) and sold the remaining100 shares in the plan but at a loss of $5,000 and never withdrew the money. I never had to deal with this and what is the corrective steps to take? Never a dull moment, best not to check statements! Thank you,

Hi Having a bit of brain freeze. Looking into adding a DB to an existing 401k plan. Sponsor FYE is 6/30 however the 401k plan is a calendar plan. Definition of compensation is plan year. Not designed by me, takeover. If a DB is designed the same way i.e. effective 1/1/2020 and plan year compensation will be used, can the deduction be taken for 6/30/2020 corporate year end? Of course, we will have to wait next year until the salaries are established. The design is important both plan are going to be tested together. In the past I have always used the salary paid for the FYE within the PYE, never salary paid for the plan year in with FY ends. What am I missing/not seeing here? Thank you,

Agreed and thank you

May be, was just curious though, thank you

Hi all Read this, not 100% clear. I checked other resources as well. Looks like it can be however, PBGC may think otherwise so this is a situation where to apply to a determination under PBGC, agree? A question. Let's says PBGC provides an official reply stating not a professional and the client takes 25% deduction under the DC plan. Gets audited by the IRS and IRS says, it is a professional. Who prevails here as IRS may demand deductions to be adjusted? Thank you

Thank you Bill

Looking into a DB plan. Owner, spouse and an employee. Owner is a financial advisor and has CLU, ChFC credentials. I just cannot locate where it says covered/not covered. I remember reading something about this being an issue a few years back. If you have any thoughts/references, would appreciate if you could share. Thank you

Thank you

My apologies if this was discussed before. Clint obtained PPP for payroll. Can they make deferrals? Thank you

Lack of guidance and uncertainty of "if and when" it will be provided is a good reason to get it done timely. Thank you all

Thank you Luke.

Hi Jeff, 100% in agreement with you and everyone else. Thank you for your input.

Thank you for pointing out the glossary section. How about the other points like deductibility etc.

Agreed on the non extension. I still want to do it because I have no idea what future adjustments IRS will come up with once all Covid19 issues go away. Old school approach.