FAQ - Using the eQRP

Using the eQRP

When do I pay taxes on deferred income that I’ve contributed to my QRP?

You’ll pay taxes at your current income tax rate, which is determined by all income, including distribution income in the year that it’s taken. Any portion of elective contributions identified to be ROTH (after tax contributions) will normally not have any tax owed, if distributions are done after age 59…Click for more

Using the eQRP

What happens if I want to operate my business as a sole proprietorship now and then form an LLC or corporation later? Can I still use my old plan in the new LLC or Corp?

YES, that’s an option. There is a 2 page adoption agreement that can be prepared for you. Your new LLC or corp can start making tax deductible contributions to the old plan just like you did before. This is complimentary at Total Control Financial for our customers.

Using the eQRP

Who does the bookkeeping for my plan?

The Plan Administrator is responsible for the bookkeeping. This can be done using Quickbooks or other accounting programs for most small plans. Hiring a TPA, Third Party Administrator to serve this purpose is useful as the complexity of the plan increases. Employers often hire outside professionals (sometimes called third-party service…Click for more

Using the eQRP

Do I have to file anything with the IRS when I finally start taking distributions? What is my accountant going to need for this plan?

You will need to file Form 1099R which reports income to the IRS. Your accountant will need Form 5500 annually to report assets, contributions, and number of employees. A one person plan is exempt from filing Form 5500 is the plan assets are less than $250,000.

Using the eQRP

When do I pay taxes on my plan distributions to me personally?

The distributions are treated as income and are claimed on the tax return for that year. If the distributions are received 2016, they are claimed to the IRS along with all other income for 2016 (e.g. April 15th, 2017), and all applicable taxes will be paid at that time. A…Click for more

Using the eQRP

Does the QRP provide asset protection?

Yes, under ERISA (Employee Retirement Income Security Act) laws of 1974, the plan is protected from bankruptcy, creditors, and the IRS.

Using the eQRP

Can I loan family or friends money out of the plan as an investment?

You can loan money to anyone except a disqualified person (see list of disqualified parties), but the loan has to have adequate security. You, as the trustee, must make sure the security is adequate in case of loan default.

Using the eQRP

Can you co-mingle personal assets and bank loans with QRP funds?

NO, never co-mingle personal assets & QRP funds. This will get you into deep water with the IRS and could have your plan disqualified. If you have an investment you’d like to invest with personal funds and QRP funds you can probably do that as long as each piece is…Click for more

Using the eQRP

Can I use debt in my investments from my plan?

Yes, qualified debt is permitted. Qualified debt is any debt that is non recourse used to purchase assets for the plan.

Using the eQRP

Are there any restrictions on what type of property you can invest in?

There are no restrictions. You can invest in any type of property you would like, as long as you don’t already own it or derive any current benefit from it.

Total Control Financial