"Tax Talk" - Winter 2021

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In this issue of Tax Talk, we update you on important upcoming compliance deadlines for defined contribution plans as well as provide a quick reminder of the SECURE Act’s ruling on part-time employee participation effective this year.

Upcoming Compliance Deadlines

March 1, 2021

  • The Pension Benefit Guaranty Corporation Form 1-ES estimated premium payment is due by the last day of the second month in the premium payment year. (The last day of February falls on a weekend in 2021, so filing on the next business day is permitted.)

March 15, 2021

  • Employer contributions due to the retirement plan’s trust for S-corporations and partnerships with December 31 fiscal year-ends, in order to take deductions with no corporate tax extension.
  • Forms 1042 and 1042-S due to the IRS to report income tax withheld from and retirement plan distributions made to nonresident aliens.
  • Deadline for distributing ADP/ACP refunds without incurring a 10% excise tax on the employer (due 2½ months following the plan year-end).
  • Deadline to apply to the IRS for a waiver of the minimum funding standard for defined benefit and money purchase pension plans (due no later than the 15th day of the third month after the close of the plan year for which the waiver is requested).

March 31, 2021

  • Electronic filings of Form 1099-R for 2020 distributions are due to the IRS.

Reminder: Part-Timer Participation

Effective for 2021, the SECURE Act created a new rule for 401(k) plans that requires them to allow part-time employee participation in the following situations:

  • Part-time employees who have worked one full year and 1000 hours during that 12-month period.
  • Long-term, part-time workers who have worked at least 500 hours annually for three consecutive years and are age 21 or older by the last day of that 3-year period. Plan sponsors are not required to take into account years prior to January 1, 2021.
  • This new rule does not apply to collectively bargained employees.

We Welcome Your Questions

Your ABG Southwest trusted advisors are standing by to support you and your employees through and beyond these ever-changing times. Please contact you ABG Southwest primary relationship manager for additional information or assistance in meeting some of these important deadlines.

Challenging times require making tough decisions, quickly. You can count on us to keep you briefed on new funding sources, compliance updates, planning resources and more essential updates regarding the COVID-19 health crisis. Access REDW’s COVID-19 Resource Hub.