On The Couch Friday Afternoon Bourbon Edition, Special Prosecco Edition!
Christopher and Katherine go over a quick sales tip today – If your clients’ 401(k) plan is failing the 2020 nondiscrimination test, you may be able to add on a 4% Safe Harbor. And, you can still add on the 3% Safe Harbor contribution for 2021. It’s not too late. Kristina has a Washington Update about electronic filing. Christopher and Katherine start a new sub-segment “Hollywood Lies” where they take a quick look at things that the movies have wrong about retirement plans.
Three Key Take Aways:
1. It’s not too late to use a Safe Harbor contribution to pass a 2020 401(k) test
2. It’s not too late to add Safe Harbor to a 401(k) plan for 2021
3. The sooner you do it, the less expensive the contribution
Washington Update by Kristina Kananen:
On 7/23/21, the IRS published a request for comment on mandatory electronic filing. The most shocking part of this is that the IRS is transiting from the term ‘magnetic media’ to ‘electronic form’. Other than that, the Taxpayer First Act of 2019 made a change in who must electronically file information returns. Currently, if the taxpayer, such as the plan sponsor, files 250 information forms in a year, they must electronically file their information forms. This will change in 2022 when the number goes down to 100 forms, and then in 2023 the number of forms will be reduced to 10. Some of the forms impacted for qualified plans are the 990-T for unrelated business income, Form 5330, Return of Excise Taxes Related to Employee Benefit Plans, and the Form 5500-EZ. So, for 2023 a one participant plan that files 10 information returns will be required to file the 2023 5500-EZ electronically.
If the plan sponsor is required to file electronically, but files on paper, it will be treated as a failure to file and penalties will apply.
#proseccoweek #safeharbor #safeharbor2020 #sbjpa #erisa #401k #401kroth #roth401k #washingtonupdate #HunterBenefits #HBCG
