Jakyasar

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.

As a follow up, is there a de minimus amount of interest? I used the calculator based on above assumptions and got 23 cents of interest. How to tell a client to make the 23 cents of deposit. Thank you

Apologies for the 100 level questions as my first time doing this. Client made the 2019 deferral deposits pretty much 15-30 days after the payroll dates. Assuming 7th business day as the safe harbor deposit date. Document is silent on when the deposits need to be made. This seems to be the standard. I am aware of the "as soon as feasible" clause which varies from employer to employer. My understanding from the VFCP section 5(b) and the questions based on the "online calculator" page Principal amount is the per payroll deduction e.g. 3/1/19 for $200 Loss date is the 7th business date from payroll date 3/11/19 (included 3/1 as the first business date) Recovery date is the date of the deposit 3/18/19 i.e. 6th business days from loss date Final payment date - assuming the same as Recovery date - I could not find anything on this as a definition. Questions: Are the dates correct as calculated above? The interest added by the employer to make up the missed dates, are they deductible. If yes which year (assume 2019 tax return not yet done) As this additional interest correction added to the assets, for which plan year's 5500 filing should reflect them? Assume 2019 5500 filing is not yet completed. What if during 2019 assets had a negative return or 25% return, does it matter how the assets perfomed? Any comments/suggestions are appreciated. Thank you,

Thank you both for your comments/insights, never a dull moment. Be safe and have a great weekend.

Hi Client files the LLC (single member - schedule c) tax return on 4/15 with no extension but the actual return was extended to 7/15/2020. I just got the info and found out that additional contributions will be required for 2019. As the filing was extended to 7/15/2020 with no extension filing requirements, I believe the client can make the additional contribution and deduct for 2019 i.e. redo the tax return. Thank you for your comments.

Hi all My apologies if this was discussed before. The normal 5500 filing was due by 4/30/2020 which was automatically extended to 7/15/2020 (if 5558 was filed, would have been the same deadline). What is the deadline to certify AFTAP 6/30/2020 or 7/15/2020? Have a great weekend and be safe.

Can you 11-g contributions for the terminated employees? I am assuming that the plan passes the ratio test under 410(b) but not necessarily ABPT? Failing ABPT usually may require that 401(a)(4) passes utilizing ratio groups. Have you tried accrued-to-date method as well? How about restructuring? Just thinking out loud with a fried brain myself.

Hi Looking at a takeover PS plan. The formula is cross-tested and has 3 groupings (no everyone in their own group option), each identified for a specific job category. Sponsor adopts a resolution each year on how to allocate the contribution. Sponsor hired a 4th category employee, became eligible for 2019 but does not fit in any of the categories. It is not an excluded class job category. How to allocate for this new job category, may be 11-g?? Thank you

Thank you for your responses. I miswrote when I said SH match, meant NESH, sorry for the confusion. It is very clear only NESH @ minimum 3%. So the corrected question I have is, what happens to the discretionary match contribution deposited to each person's account for the first 6 months? Just tested for ACP? And this would be in addition to the full year NESH, correct? Regards

Thank you for the response. Looks like only 3% non-elective can be added, is that correct? What happens with: "How will the plan satisfy SH for 2020 and is there any testing that needs to be done? How are the salaries considered for the first part of the year and second part of the year? Assume that the discretionary match is made at the time the deferrals. So for the first 6 months, they made the match which is way less than the actual SH match amount would have been."

I am sure this was discussed and it is a very basic question: My situation is reverse of what is going on, sponsor wants to add SH rather than eliminating it. Existing 401k plan with deferral and discretionary match options. they provide 10% of deferral as match. Plan consistently fails ADP for the past 3 years. Sponsor wants to proceed with a safe harbor match, let's say effective 7/1/2020, standard 3% of the first 100% plus 50%..... How will the plan satisfy SH for 2020 and is there any testing that needs to be done? How are the salaries considered for the first part of the year and second part of the year? Assume that the discretionary match is made at the time the deferrals. So for the first 6 months, they made the match which is way less than the actual SH match amount would have been. Thank you

Fantastic and really appreciate your time and explanation. To Mike as well.