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Well, I hope they hurry up with the guidance since this is a huge reprogramming job. Of course any hope that this will be provided promptly is pure foolish thinking on my part.

I agree with Bill that we likely will see guidance that uses in-plan Roth conversion rules to re-characterize amounts as Roth catch-up. I think this logic also will be used as guidance for administering an employee election to have non-elective contributions or match treated as Roth. There is a convenience to having one set of rules apply in at least 3 different situations (in-plan Roth conversions, test recharacterizations, NEC/match elections). If so, then tax event would occur in the year the conversion occurred. It will be interesting to see where the IRS comes out on these topics.

Code Section 3121(a)refers to the social security tax and how to calculate the self employment tax, so the self employed are snagged.

but only until regulators focus on intent...

I raised this issue the first time I heard that it was a possibility and I thought it was really stupid then. But it's a provision that "raises funds" so it had to be included to make the whole thing happen. I would expect guidance late this year and anticipate that it will be treated like an in-plan roth conversion. My hope is that we can "convert" just the recharacterized amount and leave any related earnings alone.

We are a recordkeeper and we've been discussing that for a while and have heard it mentioned - but no solutions other than we can no longer do that. Roth rules require the "contribution" to be designated at time of deferral - so, if the contributions that cause a test to be failed, theoretically, they can't be recharacterized as Roth to correct the failed test - leaving the only option of refunds. We've talked with our trades (ACLI, SPARK, ARA, etc.) and their comment letters to the IRS have raised this issue.... Many many problems with Roth catch-ups.... Even more so with Roth employer contributions....

Agree with all prior comments. Big picture: the successor plan rules are in place so a plan sponsor could not circumvent the in-service withdrawal rules by terminating its 401(k) plan, distributing assets and then starting another 401(k) plan in the near term. If none of the events resulted in an in-service pre-59.5 distribution of assets then I don't think you have any successor plan issues but it certainly doesn't hurt to get legal opinion.

If you met the §410(b)(6)(C) transition rules (I think that's the correct cite), and your documents allow you can test them separately for 2022 and 2023 under the transition rules.

I would consider it a mistake (which violates exclusive benefit rule) and have the plan return the rollover to it's source. It shouldn't count for any purposes under the plan and should be corrected as soon as possible, in my opinion.

Good point on the first comment; although we don't know what actual eligibility is and he might be (have been) eligible if we assume he was in fact hired. I guess I would hope this one account would not tip the scales. And the second point might work, with the "if" you note.

Wouldn't you it think might not count as an account towards the audit threshold, if the guy is deemed to be only a "limited participant" as someone making a rollover before the regular eligibility kicks in? And hey, if the plan has forceout language which disregards rollover balances, easy enough to get him right back out, too.

Unless you really want to make a big deal out if it, I think I would consider it a rollover while the guy was employed, and then he terminated. It doesn't impact testing and it does count as an account.

If Congress abolished an individual-account retirement plan’s coverage, nondiscrimination, and top-heavy rules would that solve most of the difficulties about long-term part-time employees?

The poor recordkeepers and payroll providers have to program their systems starting now to be live 1/1/2024 with no guidance. And since we STILL have no guidance on the LTPT rules I am not optimistic that the guidance will reach us in any sort of time frame that will be of any use when we most need it. We need it by the end of April at the latest. This LTPT thing especially needs tons of clarifications.

Yeah. I think ASPPA rotated a long time ago from having the back of small TPAs to siding with the giants of the industry, in particular the investment companies.