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Message Boards Digest

March 10, 2021

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

thepensionmaven created a topic in Retirement Plans in General

Use PPP Money to Reimburse Employer for Earlier-Made Contributions to Plan?

"Client has made his 2020 profit sharing and safe harbor contribution. He's just received some PPP money and wants to know whether he can reimburse the PC. I know he can use PPP money to make the contribution, but not sure about reimbursements."

6 replies   |    57 views   |    Add Reply

Jakyasar created a topic in Retirement Plans in General

Cash Balance + Profit Sharing Combo Deduction (Non-PBGC Plan)

"Husband & wife (owner and spouse - no other employee). Virginia Sub-S corporation. Investment advisors just found out that they may have deposited over 6% of profit sharing limit during 2020 (not in 2021). The 31% test does not work because it's a large CB contribution. 6% PS was supposed to be $34k but possibly put in $50k during 2020, thus 16k overage. This is separate from the 401k deferrals. CB was $300k. 31% limit is $176k. If they made the excess $16k PS contribution during 2020, can they simply pay 10% excess tax and still take $334k deduction? What other solution(s) can be recommended?"

0 replies   |    13 views   |    Add Reply

Jakyasar created a topic in Retirement Plans in General

Can a Qualified Replacement Plan (QRP) Pay for Retiree Medical Benefit?

"Terminating overfunded defined benefit plan (DB) -- small plan covering husband & wife -- both over age 72. Overfunded portion will be rolled over into a QRP (a profit sharing plan). Can they pay their retiree medical benefit directly from the overfunded portion?"

6 replies   |    54 views   |    Add Reply

Chris123 created a topic in 401(k) Plans

Merging a SH Plan with a Non-SH Plan -- What to Look Out For

"My question concerns the merging of a safe harbor plan with a non-safe harbor plan and the potential pitfalls which may arise. We have a client who is currently involved in a corporate acquisition, not yet known whether a stock or asset sale, and their company is acquiring another company who currently sponsors a SH plan. Note, our client's company currently sponsors a non-safe harbor plan. I would like to provide them with a few bullet points of what to look out for and potential issues which may arise as a result of the merger. Based on my research, the IRS hasn't really provided guidance in this area and it appears the safest thing to do would be to move the participants of the seller's plan to the buyer's plan at the end of the year. However, playing the devil's advocate, what if they were to merge mid-year? Also, how would deferrals be treated with respect to the safe harbor plan?"

0 replies   |    23 views   |    Add Reply

Renee H created a topic in Plan Document Amendments

Cycle 3 Document is Delayed

"We are using Datair for our Cycle 3 plan documents. They advised us they should become available by end of March but I'm not sure I trust that timeline. What do I do with new 401k plans effective 1-1-21? Draft using the old document, then restate next year? Seems unfair for the company to spend the extra money on 2 documents a year apart. Is there any way around this? My answer may lie with the investment firm handling the investments but I am wondering what others are doing in this situation."

4 replies   |    52 views   |    Add Reply

HC2020 created a topic in Defined Benefit Plans, Including Cash Balance

Retroactive Amendments as Affected by the CARES/SECURE Acts

"Our interpretation of the CARES/SECURE act enables the adoption of a DB (or CB) plan effective 1/1/2020 as long as it is adopted no later than their tax filing. Does this also apply to a retroactive amendment increasing benefit formula or unfreezing plan? Adopt as late as tax filing rather than the 'normal' 2.5 months?"

2 replies   |    32 views   |    Add Reply

katdmin created a topic in Retirement Plans in General

W-2 Issued with No Pre-Tax Deferrals

"I am working on a new plan for 2020 that has 4 employees, husband and wife and 2 NHCEs. I received the census and there were no deferrals in Box 12 and Boxes 1, 3 and 5 are the same (telling me that no deferrals were deducted). Roth is not permitted in the plan. When I received the brokerage statements, I noticed large deposits and when I questioned the employer, he said that was $19,500 for both him and his wife. I'll call the CPA and discuss it with him. I think I remember something to the effect that, even if it's not on the W-2, they can report it on their 1040 and still deduct it. Is that right? I want to make sure before I tell the CPA that they have to file corrected W-2s."

2 replies   |    29 views   |    Add Reply
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