Basically

Thanks!!!

XYZ CPA is a small CPA firm that employed Bob, Sue and Dick. Bob and Sue are husband and wife, Dick is just the other partner. No rank and file employees. Dick decided to retire so XYZ is changing to Bob & Sue CPAs LLC. B & S CPAs has its own EIN. Questions: - I'm pretty sure that I don't need to terminate the old plan... I can just amend it to change the plan sponsor... correct? - On the 5500-EZ, would I make the necessary changes and file? (put in the new sponsor and EIN?) Thanks

Yup! Thanks for your help. I know all this but don't deal with it every day. Tend to second guess myself. With time it will become second nature with experience.

Circling back to this plan... And I appreciate everyone's help immensely. Here it is... full disclosure: 8 employees comprised of: Owner (100%) - earns 500K+ Daughter 1 - earns 60K Daughter 2 - earns 30K HCE 1 - earns 500K+ HCE 2 - earns 500K+ HCE 3 - earns 500K+ HCE 4 - earns 500K+ NHCE 5 - earns 30K First... ownership attribution is lineal... Dad is the owner so each daughter owns what he owns (100%). That makes them HCEs, correct? Second... HCE 1-4 all earn 500K+ which makes them also HCEs, correct? Third... NHCE 5, if she works 1,000 hours or more will be the only one who will be required to get a contribution in the Xtest allocation. That is to say, if Owner decides to give himself an NEC, she will be the only one who must get a NEC. Forth... Once the plan is TH then all HCE EEs will need to get the 3% TH allocation Am I making sense? Is this a no-brainer? Works out pretty good for the owner

Well... but if it is setup today then they would have until 9/15 to fund. It can be done. That's great! Thanks

Does this hold true for DB plans... all plans? Tax Status Adoption Deadline Extended Deadline S-Corporation (or LLC taxed as S-Corp) March 15 September 15 Partnership (or LLC taxed as a partnership) March 15 September 15 C-Corporation (or LLC taxed as C-Corp) April 15 October 15 Sole Proprietorship (or LLC taxed as sole prop) April 15 October 15

Yes. But I am being told that for 2024 they (IDK how many) will probably go over the 1,000 hour mark. And that would mean that any who do would enter 1/1/2025 so for 2024 the NHCEs would not be eligible.

That's great! So the owner can discriminate against the other big shot high earners who are not key employees. But when the plan becomes TH (which it will) he has to give them (the HCEs) a 3% minimum if he makes an NEC for himself. In the end he is saving 2% because there are no NHCEs. Make sense?

Yes. The plan was established in 2023 and so far only deferrals have been made. So far the plan is 39% top heavy Big question... IF the plan is solely HCE employees and we only allocate an NEC for the owner, will that pass? Does that work? (and I get, once the plan is TH which will be the following year probably we will need to give all eligible EEs a 3% TH minimum

I will in the end... I just happened to do it this way to see what might happen True, and the plan will most likely become TH eventually. IN that case, the non-key HCEs would only need to get the 3% TH minimum... no 5% gateway test, right?

Doing a proposal: I have this plan... all of the EEs are HCEs except for a couple of NHCEs that don't work more than 1,000 hours (at this point) I put the owner in group 1, the other HCEs in group 2 and the NHCEs in group 3. (Remember, Group 3 typically don't work 1000 hours so they aren't eligible for the NEC) I made the owner max out, gave the other HCEs nothing and as I said, the NHCEs just aren't eligible (at this time). Ran the general test and it passed. Great huh.... or am I missing something? If I'm not missing anything then all I need to worry about in the future is if an NHCE works more than 1,000 hours they need to get a contribution Thanks

Title says it all... the first year of the plan the only employee with 1,000 hours is the owner. File a form 5500-EZ and then the following year switch to a 5500-SF?

Thank you. The employer reached out to me and said to hold on, they were going to bonus the employee some $$ to help him out.

As my mom always said to me... Tough Beans. Got it. Thanks

A participant's wife is applying for SSDI. In the meantime the participant wants to take a hardship distribution of close to his plan balance. He has roughly - 1/3 ROTH deferral account 1/3 SH Match 1/3 PS 100% vested in all accounts. 1 - I would think he qualifies for a hardship dist... right? 2- If the dist happens, he must cease his deferrals for 6 months? Was that repealed? (well, you would think if he needs the $ he would stop deferring) 3- Taxes must be withheld (20%) and the 1099R would be coded as premature so will be subject to the 10% excise tax. What am I missing?

Question... if they made the election before the end of the year and then when all the dust settled they decide they don't want to go through with the full amount... they decide they want to reduce what they thought they wanted to ... is that ok?

A client received a letter that I have never seen. The notice tells them that the IRS has made changes to the form 5500 and as a result the client owes $49,500 + interest (see attached). What is this?

Just a simple clarification... A client with a 5 participant 401(k) plan asked about the mega backdoor roth option. I explained that every year we max out the plan to the 415 limit, there is no room for a voluntary after tax contribution. Can she convert the PS contribution to ROTH each year with an in-plan conversion?

Really? That's ridiculous. I assumed the agents in both audits were local. If we can't arrange a time that works I guess we will reach out to the supervisor. Thanks!

In the past 2 weeks 2 clients have received plan audit notices. Thankfully they are only PS plans, nothing more. But get this....I just received a call from the 2nd client who got the audit notice. He is in the hospital following a blind fall down the stairs in the dark in the middle of the night. He is in rehab with a concussion, 2 fractured vertebrae, and cracked ribs. Poor guy, he just retired last month! 80 years old! So he called the agent conducting the audit explained the situation and requested the audit be postponed and the agent said no! He said to give someone power of attorney. Is it unreasonable to request the audit be postponed? Is this normal that the IRS would not grant a postponement based on these circumstances?

A plan came to me asking what is the next step. They received an IRS notice with a penalty. A response was sent in April 2023. The IRS never responded and no follow up notices were ever received. Should the client assume the IRS closed the case? Should they call the IRS?

So in the end there is no such thing as a defer only plan. There could always be an instance where a THM is required. 3% at that. Brings up waiving out of the plan all together. If the girls waive out would I need to worry about THM?

Here is the situation.... EE1 = 100% Owner (HCE) EE2 & EE3 = daughters... HCEs by attribution? EE 4 ~ 6 = Employees who earn on average $500k+ (HCEs) Owner only wanted a defer only plan... didn't want to make any kind of employer contributions, no SH or PS. If daughters are HCEs due to attribution and don't defer then no ADP problem.

I understand that a participant can opt out of the plan . And that if they do they can not return. If a participant opts out, they no longer are part of plan testing.... correct? EDIT: I meant "Waive out" And Dang... meant to mention this.... This guy has 2 daughters. Would they be considered HCEs due to attribution? I'm guessing they are both older than 18. My thought was they may screw up testing so have them waive out... take them out of the equation. But if they are HCEs by attribution then no issue if they defer very little or nothing at all.

Thank you!