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The biggest obstacle to these is that the plan sponsor and the broker never realized that VAT is subject to ACP testing. So while the owner might have the extra bucks to contribute as VAT, the employees likely won't (and there's no reason for them to 'defer' as VAT as opposed to Roth) and therefore the testing fails. Even including SHM in the ACP test may not be enough to pass. I only use this with one-person plans; I have yet to encounter a situation where it will work otherwise. I'm sure they exist somewhere, just not that I've seen. And for a one-person plan, depending on the compensation it might just be easier to do it as profit sharing and then convert it.

No, I don't think it matters based on that assumption. Of course there may be a possibility of a match in the 401(k). Assuming no match, I'd still vote for maxing out the Roth IRA first - that extra flexibility can be a wonderful thing. When you want available funds for that once-in-a-lifetime opportunity for the cabin on the lake, the ability to access a chunk of money without paying tax on the distribution is a pretty important feature. Just my personal bias - at my advanced age it doesn't make any difference!

Tax treatment of distributions? FIFO for the IRA?

Going back to the beginning when the plan started seems necessary here- to ensure all compliance requirements are met. Questions that need to be answered include the following: Were employees notified and given an opportunity to make/change salary deferral elections during the 60-day period (for 2022)? Were employees notified and given an opportunity to make/change salary deferral elections during the 60-day period (for 2023)? Did the employer elect the matching or non-elective contributions? This would determine if employees were required to receive employer contributions. How was the $14,000 handled by the accountant who filed the tax return?

Also, if you allow new benefits to accrue based on COLA limit increases, does that create a 401(a)(26) issue in that you don't truly have a frozen plan?

Beyond using Appleby’s suggestions for fact-checking: The shareholder-employee might want his lawyers’ and accountants’ advice about whether the ostensible Form 5304 or other document was a false document and about whether the account someone imagined might be a SIMPLE IRA never was a SIMPLE IRA (and might never have been any kind of IRA). If the account never was an IRA, what tax consequences result from so amending the holder’s 2022 tax returns (removing mistaken exclusions and deductions, and recognizing whatever capital gains, dividends, and interest the taxable brokerage account paid or otherwise distributed)? Nothing here is tax or legal advice; it’s time for each person involved or affected to get his, her, or its professionals’ advice.

I concur with AlbanyConsultant’s observation about too many people reading or hearing about the idea without recognizing how a plan provision fits with coverage, nondiscrimination, and top-heavy rules. Beyond a one-participant situation, allowing employee contributions might fit if all employees are highly-compensated employees. That sometimes happens with a professional-services firm if the firm uses no support staff and even a beginner gets pay above $155,000. I concur also that within-the-plan reallocations to Roth often meet enough of the interest in Roth-ing to make employee contributions unnecessary.

As my early Christmas present, on December 21 the Joint Committee on Taxation released its General Explanation of Tax Legislation Enacted in the 117th Congress, a bluebook. This explains eight Acts of the 117th (2021-2022) Congress. The subpart on SECURE 2022 is pages 295-530 [pdf pages 307-542]. https://www.jct.gov/publications/2023/jcs-1-23/ But I’m still looking for a nongovernmental publisher’s classifications and indexing.

And the daylight hours start s l o w l y getting longer again. Woohoo!

Then I don't see the issue here. You're not even having to do an -11g amendment.

If the divorce decree was entered in Maryland, as Mr. Stevenson has said in his previous posts, the answer is that his ex-wife will be entitled to 50% of the marital share of his retirement annuity, but not his survivor annuity benefits. In Maryland there is a case, Potts v. Potts, decided in 2002 that is very clear and it's holding that if you do not mention specifically survivor annuity benefits in the agreement of the parties, or in the judgment of absolute divorce, the former spouse/alternate pay does not receive them. If ex-wife is planning to submit a QDRO to the court at this late date, you have to make sure that she does not include survivor annuity benefits. THE QUOTED LANGUAGE NOT ONLY DOES NOT REFER TO SURVIVOR ANNUITY BENEFITS, EVEN IF IT DID, IT DOES NOT REFER TO THE PERCENTAGE OF SURVIVOR ANNUITY BENEFITS TO WHICH SHE WOULD BE ENTITLED OR WHICH PARTY WOULD PAY THE COST OF SUCH BENEFITS OR WOULD SUCH COST BE ALLOCATED BETWEEN THEM. SINCE MR STEVENSON SUGGESTS THAT HIS DIVORCE DATES BACK PRIOR TO 2002 THERE WILL BE A QUESTION OF WHETHER OR NOT THE POTTS CASE IS RETROACTIVE TO HIS CASE OR NOT. If Mr Stevenson is serious about protecting his rights he needs to hire an attorney right now. He is not going to find all of the the answers he needs on this blog or be able to represent himself with the little knowledge he has about these matters. DSG

What does the document say about who receives the non-elective contribution?

An HRA provides medical care, so as far as I understand, yes they would be reportable under ERISA. Are they trust funded (VEBA)?

I believe that as the earnings vest they are subject to FICA but then future earnings on vested amounts are not. So after year 1, 1/3 of $66,500 is subject to FICA. Year 2, $74,500 x 2/3 less the original vested total from year 1 AND the applicable portion of earnings attributable thereto. Similar for year 3 on remaining piece.

I don't see why this would not apply to this situation assuming the amendment/merger documents are drafted accordingly.

Relatively confident. The MEP passes payroll data including hours each pay period, so the RK would track it just for this transferred source and update vesting automatically. Would I prefer that it all have to be 100% vested? Sure.

And even if the multiple-employer plan’s governing documents might allow a participating employer to specify less than 100% vesting for what happened before a merger or transfer-in, how confident are you that the MEP’s administrator will capably collect and use records to apply such a vesting provision?

What does the Plan document say?