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Have you asked them for their justification of including them? Maybe they have the cite.

The ERISA Plan Administrator (who is probably the Plan Sponsor in a small plan) is responsible for making the RMDs. While the potential excise tax is on the Plan Participant, failure to comply with §401(a)(9) is a Plan Qualification issue so get the checks issued and sent. Last time I checked the R sands for Required and participant consent is not required. If she just retired or turned 72 and this is her first RMD you have until 4/1/2023 to get it done. If it's an on going thing you have until 12/31/2022.

I was just wondering, since I never seem to find formulas like that in any documents I review. Seems like it would be a great idea for a sole proprietor, where income could fluctuate widely, and that way they don't really have to accrue a more-than-significant benefit until after the net earnings clear some amount the person would need for living expenses. Like, a contribution credit of "5% of compensation plus 75% of compensation above $100,000" where that could eliminate the need to worry about a big obligation in a "bad year". (Okay, maybe throw in a 401a26 failsafe, too.) Plus it's been a decade-plus since I even saw a super-integrated DC plan, and always liked the term.

On one of the detail points mentioned above: Form W-4R (for a nonperiodic distribution, whether rollover-eligible or not) includes, in its general instructions, this statement: . . . . Your withholding choice (or an election not to have withholding on a nonperiodic payment) will generally apply to any future payment from the same plan or IRA. Submit a new Form W-4R if you want to change your election. https://www.irs.gov/pub/irs-prior/fw4r--2022.pdf

I've also seen these formulas "in the wild." There are documents out there that let you do it. For an owner-employee with earned income, I would be worried about the situation where they have a lot of income, so this formula produces a large credit, but then they make a large contribution and it reduces their income to where they now have only a small credit, which limits their contribution. There is probably a way to manage this well but I would be inclined to avoid it.

I agree completely. Advising participants of their right to elect an alternative withholding amount or waive withholding entirely: it's not just a good idea, it's the law! see IRC 3405(e)(10)(B) This I am not sure if I agree with. W-4P is for periodic payments, so clearly that election is designed to apply to an entire payment stream. W-4R though is for a single payment, so my inclination would be that it would only apply to the payment being made at the time the form is completed.

Ok, I wouldn't have a problem delivering the notice on 12/20. It has to be delivered a reasonable period prior to the start of the plan year, based on facts and circumstances. 90-30 days is deemed to be reasonable. So in your case, if they can deliver it to participants and they have an opportunity to make/change elections prior to the start of the year, I would argue it is reasonable period prior to the start of the plan year. If it is late (after the start of the plan year) check the link above. You have to see if it impacted some ones opportunity to make contributions and may have to correct for that. Other than that, you maintain SH status.

Also, the plan can't be a safe harbor plan because deferrals weren't allowed starting 10/1/22.

If it is a sole prop, yes you can make that case, in that the numbers can work out; not saying it isn't somewhat aggressive. We did it once. I don't think it can be made to work in a corporate setting.

Side note: if the individual owns existing pretax IRA's, the conversion outside the plan may not work out as planned due to the aggregation rules.

Because a qualified birth or adoption distribution is treated as not an eligible rollover distribution for tax-reporting and tax-withholding purposes, could a distributee properly complete Form W-R to request zero withholding for Federal income tax? https://www.irs.gov/pub/irs-prior/fw4r--2022.pdf If the distributee’s address is in the USA, is there any reason by which a plan’s administrator or its payer would reject such a withholding election?

From the IRS' website. https://www.irs.gov/retirement-plans/fixing-common-plan-mistakes-failure-to-provide-a-safe-harbor-401k-plan-notice#:~:text=Safe harbor notices should be,beginning of each plan year

I have seen them. They do exist. If you are worried about fluctuating compensation, consider basing the cash balance allocation on a bonus and not the total compensation. The entity must control the amount of the bonus, so they need Board justification to pay the bonus, and the participant can't control the amount, but often the Board and the participant are the same individual who is wearing two different hats. Yes, it can be problematic, but it does solve the problem.

I don't know the cite but I do know that it's been a provision in our prototype document going back at least to the GUST document (and probably earlier) that you could have rollover money available for distribution at any time or subject it to the any other restrictions you general have on in-service distributions.

If they have already forfeited under the terms of the plan, whether by distribution of the vested balance or incurring five consecutive one-year breaks, then you do not restore/fully vest. If they have not yet forfeited under the terms of the plan, then they must be fully vested. The key here is "the terms of the plan" as that governs what needs to be done. If people have been gone for longer than five-years breaks but have not yet been forfeited, then you have an operational compliance issue to fix that is different/independent from your question, such as allocating amounts retroactively to applicable years based on entitlement in those years.

Not an option - more than 6% ER was contributed to DC so there is a 31% combined plan deduction limit for 2022, end of story. Can still do CB for 2022 and deduct up to that 31% total for 2022 and deduct the rest for 2023. Maybe the 2023 total max CB deduction is high enough to cover that residual 2022 plus the 2023 minimum, maybe not - it could be 2024 before deductions catch up. They can try to remove the 2022 PS in excess of 6% and maybe it never gets caught, but if it does, you've got some 'splaining to do Lucy and I don't think IRS will buy the excuse.

Post-severance compensation is different from severance pay. The employee would be entitled to the former if employment continued and its treatment for retirement contributions must be specified in the plan document. However, the employee is only entitled to the latter as a result of discontinued employment and such severance is NEVER considered plan compensation.

Have to agree I haven't seen it excluded before, except possibly by the fact that the employee isn't eligible for the plan until some time after hire or possibly isn't eligible for employer match due to the eligibility reasons. So it was covered by eligibility more than the definition of fringe benefits or compensation.

Let me be more precise. What isn't it wages for a hour(s) worked? Once again you actually have to show up and work your first day to collect a signing bonus. I have never seen a signing bonus that is paid if the guy shows up and says, "I am here were do I sign for my bonus-- oh thanks for letting me sign I quit mail me my check!" You have to actually perform some labor in order to get that bonus. In all the years I have worked in this field this is the first time I think I have had anyone try and make the case this isn't just simple wages. I have never seen someone try and make the case this group is trying to make that you can exclude it as a fringe benefit. To me it is W-2 wages if your plan uses any of the safe harbor definitions of compensation it has to be included.

Why isn't this just compensation? Despite the name you really aren't getting paid to sign on but to show up and work the first day. So why isn't this just compensation for worked performed?