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Message Boards Digest

July 27, 2021

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

Sue B created a topic in Retirement Plans in General

Profit Sharing-Only Plan (No 401(k)) -- Must Wait Until Year-End to Fund It?

"I have an owner-only plan that has no 401k provision, it's pure profit sharing. He W-2's himself $20,000 per month, so he's paid himself $140,000 so far this year. He would like to contribute $30,000 to his profit sharing plan for 2021 this week.

His current TPA is telling him that he needs to wait until after the end of the year; that 'the rules say' he can't fund it during the plan year. I've never heard of this -- is there anything in the regs that disproves this?"

2 replies so far   |    Click Here to Add a Reply
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metsfan026 created a topic in 403(b) Plans, Accounts or Annuities

Can a 501(c)(13) Organization Establish a 403(b) Plan?

"We have a new client that's tax-exempt as a 501(c)(13) company. They are looking to establish a 403(b) plan. Based on what I've read it doesn't look like they're eligible to establish one. Correct? (Instead I'm thinking they could go with a 401(k).)"

1 reply so far   |    Click Here to Add a Reply

austin3515 created a topic in 401(k) Plans

1 'Month of Vesting Service' If 1 or More Hours of Service?

"Plan provision: 'One month of vesting service is provided for any month during which an Employee is credited with at least 1 hour of service.' This seems like one of those unusual circumstances where a provision appears to be quite generous, but just does not check the boxes in the right way. This provision is neither elapsed time nor based on a minimum number of hours in a vesting computation period. So I don't see how it complies with ERISA. Agree?"

11 replies so far   |    Click Here to Add a Reply

BG5150 created a topic in Distributions and Loans, Other than QDROs

Can an Employee Ask the Plan Sponsor to Stop Payroll Deductions for a Loan Repayment?

"Plan offers loans that are paid back via payroll deduction. Is there any reason how/why loan repayments can stop? Can the participant ask the plan administrator to stop loan repayments because they say they can't afford it?"

1 reply so far   |    Click Here to Add a Reply

K-t-F created a topic in Form 5500

Form 5500-EZ Must Be Filed Electronically for CPA's Own Retirement Plan?

"I set up a plan for a CPA. He is a single member entity and files an EZ form. He called me in a panic this morning after reading the EZ instructions.

Mandatory electronic filing. A filer must file the Form 5500-EZ electronically using the EFAST2 Filing System instead of filing a paper Form 5500-EZ with the IRS if the filer is required to file at least 250 returns of any type with the IRS, including information returns (for example, Forms W-2 and Forms 1099), income tax returns, employment tax returns, and excise tax returns, during the calendar year that includes the first day of the applicable plan year. If a filer is required to file a Form 5500-EZ electronically but does not, the filer is considered to have not filed the form even if a paper Form 5500-EZ is submitted.

Now as a CPA he prepares a myriad of returns for his clients. He is telling me that because he prepares more than 250 returns on behalf of his clients that he is required to file his EZ return electronically. I don't think so and tried to explain to him that my interpretation of the instructions is that if his business files 250+ returns on behalf of the business itself then he would need to file electronically. Because he as a CPA who prepares returns on behalf of his clients, those returns don't count. Correct?"

4 replies so far   |    Click Here to Add a Reply

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

New Cash Balance and 401(k) Plan Has a Short Plan Year

"The employer terminated a Cash Balance Plan and 401(k) Plan in 2020. The last distribution in the 401(k) Plan was June 1, 2020. Will start new plans effective 6/1/2021 with short plan years from 6/1/21-12/31/21.

Looking for confirmation: [1] Cash Balance participants will earn full Contribution Credit for 2021. Cash Balance TNC for both minimum and deduction is not prorated and essentially is the same if the Plan was effective 1/1/2021? [2] The maximum annual addition for the 401(k) Plan is prorated for the 7 month plan year. [3] The maximum Compensation used for allocations is prorated for the short plan year. [4] Nondiscrimination testing Compensation can be average of 3 full calendar years? So the Employer Contributions to the 401(k) Plan could be allocated on Compensation after 6/1/2021 but testing is annual Compensation?"

No replies yet   |    Click Here to Add a Reply

Santo Gold created a topic in Distributions and Loans, Other than QDROs

20% Withholding Required on a Hardship Withdrawal?

"For a hardship withdrawal, is the 20% tax withholding required?"

2 replies so far   |    Click Here to Add a Reply

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