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Message Boards Digest

October 29, 2020

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

Pammie57 created a topic in 401(k) Plans

Deadline for Adoption of New 401(k) Plan if Deferrals Begin November 1

"Client has a side company -- a one person S Corp. He works full-time for another employer where he contributes $10,500 to his 401k plan. He wants to set up a 401k PSP for 2020 if possible for his S Corp.

Would it need to be effective 11/1, or could it be 1/1/2020 but only defer on compensation paid after 11/1?

I assume he would be limited to $15,500 (he's over 50). Does the plan need to be adopted by 12/31, or by 11/1 in order for him to defer on his W-2 wages starting 11/1?"

3 replies   |    52 views   |    Add Reply
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Matthew created a topic in 457 Plans

Stable Value Fund or Money Market Account Required in an Investment Lineup?

"For 457 plans and section 401(a) plans, is a plan's fund lineup required to provide a Stable Value Fund or a Money Market Account as one of the options?"

0 replies   |    16 views   |    Add Reply

BG5150 created a topic in Retirement Plans in General

Calculating a Self-Employed Owner's Compensation During a Short Plan Year

"Doctor (plan sponsor) gets Schedule C, but is terminating Safe Harbor plan on 10/31 and wants to close up the small plan before EOY 2020. How is her compensation calculated? Is it zero because it's not determined until 12/31? Or is it necessary to wait until next year and take 5/6th of her net income from self-employment?"

2 replies   |    43 views   |    Add Reply

Blue_Sky created a topic in 401(k) Plans

Choosing Optimal Type of 401(k) and HRA Plan Sponsor: S-Corp, C-Corp or LLC?

"I apologize if this is not relevant to this group. I am a software consultant. I work through my LLC. My LLC has a Solo 401K plan in which I contribute $19,500 + 25% profit as per the law. Unfortunately, my wife legally cannot contribute to this plan because she doesn't work for this company. But we want to maximize her retirement contribution. So, we are considering to buy a business (thinking about buying a laundromat at this moment) for her so that she can contribute to the retirement plan. Considering this situation, which type of company should we open to run the business - S-Corp, C-Corp, LLC or partnership? I understand I need to talk with a CPA, but I want to enhance my knowledge even before talking with a professional.

One more thing: We have significant medical expenses. We bought health insurance from the marketplace. We have a HSA account where we contribute the maximum. But that's not enough to cover our medical expenses. I have read about HRAs. I also learned that in some cases HSA and HRA are compatible. Which business type will be good to open a HRA? Are there any examples for this?"

4 replies   |    45 views   |    Add Reply

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