Jakyasar

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

Good morning Andy Thank you for your input, what a hassle it is.

Good morning Mike The plan sponsor is not in a disaster relief area (they are in Northeast corridor). Is there another disaster relief that I am not aware of? Thank you

Hi Sponsor is an S-corp. 2019 MRC is 150k and they deducted 200k, all fine, however ( As far I know, S-corp extended filing deadline is 9/15/2020 (not extended by any Acts/laws) but they made the deposit today. They lose the deduction for 2019, correct? Deposit was done by wire transfer so 9/18 date is firm. As for the extended deadline to meet the MRC. For 2019 plan year, assuming that they missed the deduction deadline, what should I use for 2019 sch SB+5000? All 200k or 150k plus a few days of interest adjustment, say 1k for total of 151k? I must be missing something here. Thank your thoughts/comments

Agree that the facts matter. My concern is that what right questions do I need to ask. All of you provided some guidance and will check with the prospect. Thank you all.

Thank you for input, correct on the follow the money.

Actually have one follow up question. If they are like LPL i.e. their assets are invested with LPL or Schwab, what are the consequences? Again, thank you for your comments/expertise.

Bill, much appreciated. Thank you and be safe.

Thank you for your response. As this is an area where I do not know much about, could you elaborate LPL deal?

Good morning all Looking into designing pension plan for a financial planner. Owns 100% of X, Inc. and has employees. Checked the website and see that other names were listed other than the employees. After questioning the additional names, the following response was provided: I own 100% of X, Inc. but affiliated with Y, Inc. (also a financial form) and have access to Y, Inc.'s people. No common ownership or shared employees. What am not asking here to determine any issues? Thank you PS PBGC coverage is another issue - any thoughts?

So, if any portion of the IRA is deductible, it will be in addition to the 56k of profit sharing? I understand that it is not the TPA's issue to determine the MAGI for deductibility of the IRA. But curious about the additional possibility. Thank you for your response.

Hi New client. A partnership, 2 partners, each making over 500k. deducted full 56k profit sharing for 2019. Now I am told that they have been making IRA contributions as well for many years in addition to maximizing profit sharing. Can IRA be in addition to the maximum 415(c) limit? Thank you

Hi Bill Thank you for your response. I am agreement with you. Cumulative is the way to go but agent is asking?? Be safe.

Hi Doing some research for an insurance agent about using seasoned contributions in a 401k plan that has 4 sources: Deferrals, match, safe harbor match and profit sharing. Q1: As all is considered employer monies, I can use 25% of cumulative contributions+forfeitures for universal life policies, correct? Q2: As all is considered employer monies, I can use 49.99% of cumulative contributions+forfeitures for whole life policies, correct? Q3: This is where I cannot tell if I can use all sources as seasoned monies. I am ok with the deferral and profit sharing sources but could not find any example including the match and safe harbor match (checked on EOB and no reference to match or safe harbor match - not that I have seen any). Can the match sources be used for either for cumulative and/or seasoned contribution calculations? Thank you for your comments.

Ok, whatever it is, thank you

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.