Message Boards Digest

November 22, 2019

Here are the most recently added topics on the BenefitsLink Message Boards:

Lou81 created a topic in 401(k) Plans

failed adp test and statutory exclusions

"I have a plan that uses prior year testing. Eligibility is 2 month with monthly entry. For 2018 I tested without statutory exclusions. I passed the testing for 2018. I am running a projected test for 2019. The plans fail the adp/acp test. In Relius I can select the statutory exclusion " test separately" box. Are there any rules for switching between statutory exclusion from one year to another? Appreciate your help!"
Number of replies posted  2 replies      Number of times viewed  58 views      Add Reply

Pam S. created a topic in 401(k) Plans

Deduction of 401k Contribution for Schedule C Employee

"Hello: I have a 401(k) Plan sponsored by a Sole Proprietorship that terminated on 12/31/2018. As part of the process to get all of the participants paid out, it was determined that none of the owner's 2017 401k deferrals were deposited to the Trust. The owner deducted $24,000 on their individual tax return, and it was reported as a contribution on the 5500 form (and included in all of the necessary testing). The accountant is asking whether it is still deductible on the 2017 tax return if the deposit is made today (2019). I'm thinking, from the plan's standpoint, this will be treated as a late contribution and applicable earnings will be deposited along with the $24,000 and the tax return stands as is. His other option is to amend his 2017 tax return to remove the $24,000 deferral. Any thoughts? Let me know if you need more details to provide your feedback."
Number of replies posted  1 reply      Number of times viewed  46 views      Add Reply

LisaS created a topic in Multiemployer Plans

Terminating a MEP

"We have two MEPs that are merging/terminating. I use both words because that is my question. The MEP sponsor is merging the plans into a larger MEP at another recordkeeper. There are a few adopting employers who are going to merge into another MEP and one or two who are going to spin off to their own plans. The prior TPA from whom we inherited this MEP mess set up each adopting employer with their own plan document and not a regular MEP document with each AE signing a Joinder Agreement. It has been my understanding that an adopting employer has limited choices when leaving a MEP: spin off and continue the plan, spin off and terminate the plan, or merge into another plan. There are the option because you cannot terminate the MEP. The MEP has a few "orphans" (i.e., inactive employers) that are not transferring to the new MEP. Can the MEP be terminated just like a regular plan termination or do the "orphans" have to be spun off and terminated?"

Number of replies posted  0 replies      Number of times viewed  29 views      Add Reply

Flyboyjohn created a topic in IRAs and Roth IRAs

Ugly IRA problem- any VCP like option?

"Ugly IRA excess contribution situation over 18 years and potential $400K excise taxes. Is there a person or department at IRS we could approach to make an anonymous VCP-type application proposing corrective action? Thanks"
Number of replies posted  2 replies      Number of times viewed  53 views      Add Reply

IRA1967 created a topic in IRAs and Roth IRAs

Max IRA contribution - is it considered double in two calendar years?

"Hi, guys. I'm pretty sure I know the answer to this question, but just want to be absolutely certain. Is the max contribution to an IRA limit for the calendar year or the tax year? Since you're allowed to contribute in the following year, 2020, up to the tax deadline, that's another calendar year, but it's the same tax year, if it is to apply to the 2019 tax year. In short, can you contribute the max amount by the end of 2019 and then more or even the max again till April 15, 2020, to be applied to the 2019 tax year? I'd imagine not, but I appreciate your confirmation. Let me tell you the reason I'm asking, in case it makes any difference and such a payment is treated in a different way, which is doubtful, but you never know. I was just laid off and I'll be getting a severance payment. I don't know yet exactly when I'll get it, but it'll be very unfortunate if it happens to be before the end of 2019."
Number of replies posted  2 replies      Number of times viewed  25 views      Add Reply, Inc.
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