Jakyasar created a topic in Retirement Plans in General
"Hello to all This might be a rhetorical/stupid question but have been thinking about it. Let's assume, the plan year=corporate year aka calendar year 2020. SECURE Act now allows pension plans to be set up after corporate fiscal year end and prior to the due date of the 2020 tax return. Let's assume 9/15/2021 is the extended due date. A candidate approaches for a new plan in July 2021 for a new plan effective 2020. Profit sharing combined with cash balance - no can do on the 401k for 2020. I get a census for 2020 and also thru July 2021. I notice that some eligible employees on the 2020 census are no longer there as of July 2021 i.e. terminated sometime during 2021. With this knowledge, I do not see a problem designing the 2020 plan in July 2021 with the events taken place in 2021. This way, I can anticipate any issues for 2021 and take that into consideration for the 2020
design/testing, done in advance. What do you think? Thank you."
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Sean Macklin created a topic in 401(k) Plans
"ABC LLC is a multi-member LLC taxed as a partnership. One member, John, was incorrectly classified as a W2 employee for many years, and is a participant in the company's 401(k) plan. Beginning 1/1/2021, John is receiving guaranteed payments on K-1 instead of W-2. Is John able to continue to participate in ABC's 401(k)? There has been no match or profit-sharing in the past though there may be in the future. If so, how does this happen? Does John need to set up his own corporation or LLC to receive the guaranteed payments, and to be the participant in ABC's 401(k)? If he is eligible, will he then contribute once a year to the 401(k)?"
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Gadgetfreak created a topic in 401(k) Plans
"An advisor approached me on 12/31/20 with a potential case. Company with no existing plan. Owner, mother, father and two FT employees that would be eligible under even the most stringent eligibility. He asks me to do a 401k/PS plan document so that the owner could participate and defer $19,500 on 12/31. I immediately think this is not allowed. Where is the chance for the other employees to participate? Even if there was an actual payroll on 12/31 for everyone, this certainly doesn't sit right with me on a BRF basis. Definitely violates the spirit of many of these discrimination rules. If the owner participates and no one else does, the Plan is TH and ADP fails so there would need to be an employer contribution anyway (QNEC and TH) which would be very high if it worked at all. I offered a cross-tested PS option but the FA said he found another TPA that provided him with what he wanted.
The case is lost to me so it doesn't matter now but I am curious. Is there a specific reg that would be violated by starting the 401k on 12/31?"
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Dougsbpc created a topic in Retirement Plans in General
"Since Relius is no longer offering software to produce 1099-Rs and 945's, what are others using? What do others recommend? Thanks."
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Carol V. Calhoun created a topic in VEBAs
"Employer has a health plan, and a VEBA. The VEBA permits use of VEBA assets to fund health benefits. However, the health plan is not insured. Rather, a vendor requires that a reserve fund be set up. That fund is used for health benefits, and must be replenished as it is used for that purpose. The vendor will only accept amounts sent by wire transfer. However, the bank that holds the VEBA account will only send money by checks. (This strikes me as odd, but that's the facts we have.) Employer would like to have the VEBA write a check to the employer, and the employer would immediately contribute the funds to the reserve fund by wire transfer. However, for some brief period of time, the money would be in the employer's hands. Has anyone seen the IRS argue that this is an impermissible inurement?"
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Robin Wilson created a topic in 401(k) Plans
"When client severs their relationship with MEP provider and wants to set-up their own plan, should that plan be a "restate" of an existing plan for that employer or the establishment of a new plan? My understanding is that a spinoff from a MEP is a continuation of an existing plan. Is that correct?"
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Lou81 created a topic in 401(k) Plans
"hello - I have a client where the payroll dept allowed an employee defer into the plan prior to meeting eligibility. The Trustee does not want the participant in early. Therefore, i need to distribute the mistaken deferrals. It does appear that a correction method is to have the investment company return the deferrals adjusted for gains or loss. There is no mandatory withholding. I've read that some have done it as EPCRS or as a 402g. Which is correct way to complete? Thank you!"
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In-house Attorney created a topic in 401(k) Plans
"Three companies were members of a control group with employees from all three entities participating in the 401(k) plan. The company that originally set up the plan was sold in a 100% stock sale effective 12/31. The buyer requested the plan be terminated effective 12/30 and the BOD passed a resolution to that effect. The remaining two companies of the control group want to set up a new 401(k) plan with the same structure as the prior plan but only the employees of the two remaining entities. Does this trigger any successor plan issues? Thanks!"
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