Message Boards Digest

May 5, 2021

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

Vinny created a topic in Retirement Plans in General

'Net Earnings from Self-Employment' Calculation for Individual Operating Two Proprietorships

"Assume an individual operates two separate, distinct Schedule C businesses as a sole proprietor. One business has a net profit of $50,000 while the other as a net loss of $5,000. The line for Schedule C on the 1040 would reflect the combined $45,000 as would the computation for the self-employment taxes. However, what is 'earnings from self-employment'? Is it only the $50,000 from the profitable business? Or, the combined $45,000? And, if the $50,000, what is the 'Allowable ... deduction for one-half of your self-employment tax'? Would it be the actual self-employment tax as reflected on the 1040? Or, would it be the theoretical (higher) amount that would have been deducted if the self-employment income was only $50,000 (and not reduced by the $5,000 loss)?"

1 reply   |    23 views   |    Add Reply
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NW529 created a topic in 401(k) Plans

One-To-One Correction with QNEC Allocation of More Than 5%

"We have a failed 2015 ADP test that was not corrected timely. We're now correcting under ECPRS using the one-to-one correction method. Our intention is to allocate the QNEC to employees who were NHCEs in the year of the failure and are also NHCEs in year of the correction. If allocated this way, three NHCEs would receive a QNEC allocation of greater than 5%, while three would not receive a QNEC at all (they are no longer employed). Is this allocation permissible using the one-to-one correction?"

3 replies   |    49 views   |    Add Reply

shERPA created a topic in IRAs and Roth IRAs

Timing of First-Time Homebuyer's IRA Withdrawal

"An individual is a first time homebuyer. His IRA is in an 18 month CD that will mature in October. He expects to close on a home approximately July 31. He wants to take a $10K IRA distribution for the home purchase, but the CD won't mature until after the closing. He can borrow $10K from a family member for the gap period from closing until October. Can he still withdraw from the IRA after-the-fact and count it as a home purchase distribution exempt from the premature distribution tax? If so, is there a time limit? I would assume so. All I can find states that the purchase must occur no later than 120 after the withdrawal, but nothing I've found addresses a withdrawal after the purchase."

0 replies   |    16 views   |    Add Reply

Tom Poje created a topic in Humor, Inspiration, Miscellaneous

The Real Reason I Was Banned from BenefitsLink

"Because I posted jokes like this...  :-)

Most people don't know that back in 1912, Hellmann's mayonnaise was manufactured in England. In fact, the Titanic was carrying 12,000 jars of the condiment scheduled for delivery in Vera Cruz, Mexico, which was to be the next port of call for the great ship after its stop in New York. This would have been the largest single shipment of mayonnaise ever delivered to Mexico. But as we know, the great ship did not make it to New York. The ship hit an iceberg and sank, and the cargo was forever lost. The people of Mexico, who were crazy about mayonnaise, and were eagerly awaiting its delivery, were disconsolate at the loss. Their anguish was so great, that they declared a National Day of Mourning, which they still observe to this day. The National Day of Mourning occurs each year on May 5th and is known, of course, as Sinko de Mayo."

4 replies   |    68 views   |    Add Reply

52626 created a topic in Qualified Domestic Relations Orders (QDROs)

QDRO Situation -- Alternate Payee's Amount Is More Than the Current Value of the Account

"Back in February of 2020, the plan sponsor received a draft QDRO to review. Everything was in order and client was to tell the attorney to submit for signature. The signed QDRO was delivered to the plan sponsor in March of 2021 (signed by the judge one year after the draft was reviewed). In September of 2020 the participant took a COVID-19 withdrawal, which left an account balance of about $1,000. The account balance as of today is only $5,000. [1] Is that that the amount the plan pays to the Alternate Payee? The Alternate Payee would then have to seek legal action against the participant for the balance? [2] Is the plan sponsor responsible for the balance of the QDRO Payment because they allowed the withdrawal in September? Because the signed QDRO was not recorded by the court, was the participant able to access funds from the account? Bottom line, does approving the draft QDRO require the plan sponsor to put a hold on the account and limit any withdrawals, or is the plan sponsor only responsible once they receive the signed QDRO?"

0 replies   |    13 views   |    Add Reply

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