Leaderboard

Correct. Correct. Note, however that the dollar limit will exceed the comp limit somewhere between 67 and 68. Thereafter the comp limit will control.

I want to see if this is just us, or are others encountering similar things, and also to get other perspectives on the issue - maybe mine is skewed. This week , we have received notifications from a couple of vendors/recordkeeping platforms. To paraphrase succinctly, they are saying that due to the fact that Trust Provisions are no longer in the IRS pre-approved documents, that we need to notify them (the vendor) and send them a copy of the PROPOSED plan restatement provisions, at LEAST 30 days prior to sending them a copy of the restated plan. This so they can "review the provisions" to make sure they can handle the plan. For all I know, this may be something that many vendors are doing. And these are plans where the employer is the Trustee, or it is a corporate Trustee. My feeling is BS on that. It is hard enough to do these restatements and coordinate with the employer, without getting the VENDOR to approve the choices. As far as I'm concerned, we do the restatements as usual, (after getting employer approval of any changes) and send the completed document to the vendor afterward. If they have a problem with it, we can amend the plan, or the employer can find anther vendor if the vendor won't handle the employer's desired provisions and it is important enough to the employer. I should also state that the changes that employers are making are nearly always basic things - maybe eligibility, or adding or removing hardship withdrawals, etc. - normal things that are handled all the time by vendors when plan amendments are completed anyway. Maybe I'm just grumpy and unreasonable this morning. Have you been seeing anything similar, and if so, any thoughts? Thanks.

We got the same request from a large platform recordkeeper, for which the platform company also serves as the plan's trustee. We told them essentially what Belgarath is saying, and asked them what they were looking for. They sent back a list of about 6 specific items that they would be looking for when reviewing the plan documents. I'm not sure how we will handle this yet...

If so, could/would the 403(b) plan be a “deferral only” plan, exempt from 5500 filing, is that also your question?

I think this should work. 26 CFR § 1.401(m)-1(a)(2)(ii) provides that The clear implication is that an employer contribution made to a defined contribution plan on account of contributions made by an employee in a plan that is intended to be a qualified plan or other arrangement described in § 1.402(g)-1(b) is a matching contribution, even if the plan to which the employer contribution is made is separate from the plan to which the employee deferral is made. In the context of governmental plans, it is common to have a 457(b) plan with matching contributions made to a 401(a) plan. Obviously, this doesn't work in the private sector, because a private sector 457(b) plan can cover only highly compensated employees. But it does reinforce the idea that matching contributions can be made to a plan other than the plan under which the employee made deferrals.

While eligibility is not a protected benefit I don't believe you can retroactively amend the plan back to 1/1/2021. The Eligibility change would have to be prospective, that is a date after the amendment is actually signed.

Is he reporting it as taxable income on his 1040 (or whatever schedule attached to 1040 it is this year I think Schedule 1 but don't quote me)? Is he paying Self Employment Taxes on it? Was it for services rendered to the Partnership? If the answer to all 3 questions is yes, then you can use it as earned income for an IRA contribution.