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Are the earnings taxable to the beneficiary? . No Can the beneficiary rollover to an Inherited ROTH-IRA? Yes. But for a spouse beneficiary, it is better to roll to her own Roth IRA ( no RMDs while she is alive) if yes how quickly must the beneficiary exhaust the ROTH? Do you mean 'what are the RMD requirements? If yes, see No 2. Does the answer change if the beneficiary is a spouse v non spouse? Yes. The only option for a non-spouse is an Inherited Roth IRA. Also , must be a designated beneficiary to be eligible for the rollover. Beneficiary is spouse and is over age 73. Can she roll to regular ROTH IRA and treat as her own thus escaping all RMD requirements while alive? Yes Beneficiary and Participant were married less than 1 year at time of death but she was beneficiary for many years before they were married and I assume for IRS purposes the fact that they were married at time of death is the only relevant piece to the tax questions and ability or inability to stretch the distribution as long as possible. Yes.

Wow. @Carol V. Calhoun has posted (12/04/23) a thoughtful treatise/practice note on Substantial Risk of Forfeiture. https://benefitsattorney.com/articles/substantial-risk-of-forfeiture/

I find myself wasting too much time explaining to the owner of a firm with a 50 life plan why Mega Back Door Roth won't even work for that plan due to ACP Testing (among other issues), because the client's broker read some article that this is the ultimate way to save for retirement. Oh, and that owner often tends to be close to retirement already.

https://www.colonialsurety.com/insurance/

JProehl, I will elaborate a little on what CuseFan means by "original vested total from year 1 AND the applicable portion of earnings attributable thereto" means, In other words, for the second year, the earnings on the entire $22,166.66 that vested at end of Year 1 is not subject to FICA. Similar concept for third year.

Fundamental point: a cash balance plan is NOT a type of plan (ala DB, PS, MP), it is a type of DB formula. Thus, you have a DB plan where you are going to change the formula. It is not a plan termination, just a type of formula change.

And never use the word backdate; that implies you are doing something illegal. You are establishing a plan witn a retroactive effective date.

I think you are always allowed to change to BOY, it's changing to EOY where you need to meet certain conditions to get automatic approval. See Rev. Proc. 2017-56 which I don't think has been superceeded but you can double check. I think Section 3.02 is the relevant one.

Sure you can have an effective date of January 1, 2023. You just cant start the deferrals until after the plan is signed and you'll only be able to defer on pay earned after the 401(k) component was put in. But no problem having an effective date of 1/1 to get full 401(a)(17) and 415 limits, especially if they are also making a PS contribution. If you have NHCEs and/or non-Keys testing and top heavy are both issues you'll need to consider. And too late to do a safe harbor plan for 2023.

I have not done one but, Datair has the capabilities of the conversion. Keep in mind that A+B method should be used where is the converted opening balance and B is the additional pay credit. FTW document supports this as well.

if you follow the simpliest way to convert (bypssing all bells and whistles) it should pretty straightforward. In the worst case you would just feed into the system the Opening Balance (even if it has be calculated outside in the spreadsheet) and move forward. I think Datair Plan Documnt system also allows for conversion.

I think there are some complexities with converting traditional DB to cash balance and if you are using a pre-approved document you may want to read the fine print on whether or not your opinion letter covers the conversion. But like FTW, Relius Doc also has a spot in the checklist to convert from DB to CB. You might also want to double check with your software that it is able to handle the conversion from DB to CB. Not that that is an IRS code requirement, but something you might want to know before you take on the client.

I think this seems reasonable. Though if you freeze Company B, you should be able to merge it into Company A at any time in 2024 no need to wait until 2025. I think you'll want to get the SH match notice out to Company B ASAP and document why it isn't be distributed 30 days before the plan year. Document why you think the notice was given in a a reasonable time and let sponsor A make the call since the IRS could take a different position based on facts and circumstance. I think to the extent that most of the employees in Company B contribute in 2024 and get the full SH Match the better your argument that the notice was reasonable and timely is likely to be accepted by the IRS should the issue come up.

I don't think there is anything magical about the first of the month. But you do have some prorated limits if you run a short plan year. Though i think those limits are prorated on month with any partial month treated as full month with 1/12th the limit. Is there some reason you don't want a retro effective date to get the full 415 and 401(a)(17) limits? Like trying to keep out terminated employees so you pass coverage?

I know the FT William cash balance document has a spot to say that it is a conversion from a traditional DB. Check your document; it may have a similar option.

Agreed. As long as the ICHRA covers the premium for children (very likely) it should be subject to the QMCSO/NSMN requirements in the same manner as any other group health plan. What makes the ICHRA interesting in this scenario is that by definition there are no employee contributions to an HRA. So the NSMN should basically just require that the child have access to the employer reimbursement level available for child premiums for the individual policy (and anything else covered by the ICHRA for children, such as cost-sharing). Any amount not covered by the ICHRA for that individual policy premium will presumably be the child's (and therefore likely the custodial parent's) responsibility to cover. That's a big shift from a traditional group health plan where the employee is required to pay the employee-share of the premium (up to the CCPA/state limits) for the child. I have a feeling that OCSS will be quite confused by this scenario. Given the limited ICHRA infusion into the mainstream still, they might not have much experience with ICHRAs. It might need some back and forth with them to get everyone on the same page for how to handle. Here's an overview I put together on how to approach NMSNs generally that may be helpful: https://www.newfront.com/blog/employer-responsibilities-upon-receipt-of-a-nmsn Here's the cites confirming a QMCSO/NSMN can apply to any "group health plan," which includes an ICHRA. ERISA §609: (a) Group health plan coverage pursuant to medical child support orders. (1) In general. Each group health plan shall provide benefits in accordance with the applicable requirements of any qualified medical child support order. A qualified medical child support order with respect to any participant or beneficiary shall be deemed to apply to each group health plan which has received such order, from which the participant or beneficiary is eligible to receive benefits, and with respect to which the requirements of paragraph (4) are met. ERISA §607: (1) Group health plan. The term “group health plan” means an employee welfare benefit plan providing medical care (as defined in section 213(d) of the Internal Revenue Code of 1986) to participants or beneficiaries directly or through insurance, reimbursement, or otherwise. Such term shall not include any plan substantially all of the coverage under which is for qualified long-term care services (as defined in section 7702B(c) of such Code). Such term shall not include any qualified small employer health reimbursement arrangement (as defined in section 9831(d)(2) of the Internal Revenue Code of 1986). DOL QMCSO/NSMN Guide: https://www.dol.gov/sites/dolgov/files/ebsa/about-ebsa/our-activities/resource-center/publications/qualified-medical-child-support-orders.pdf 1 As used in this booklet, the term “group health plan” refers to that term as defined in section 607(1) of ERISA and means generally any welfare plan established or maintained by an employer or employee organization (or both) that provides medical care to employees or their dependents directly or through insurance, reimbursement, or otherwise. Q1-1: What types of plans are subject to the QMCSO provisions? The QMCSO provisions apply to “group health plans” subject to the Employee Retirement Income Security Act of 1974 (ERISA). For this purpose, a “group health plan” generally is a plan that both: Is sponsored by an employer or employee organization (or both) and provides “medical care” to employees, former employees, or their families. “Medical care” means amounts paid for the diagnosis, cure, mitigation, treatment or prevention of a disease; for the purpose of affecting any structure or function of the body; transportation primarily for or essential to such care or services; or for insurance covering such care or services. ERISA does not generally apply to plans maintained by: Federal, state or local governments; churches; and employers solely for purposes of complying with applicable workers compensation or disability laws. However, provisions of the Child Support Performance and Incentive Act (CSPIA) of 1998 require church plans to comply with QMCSOs and National Medical Support Notices, and state and local government plans to comply with National Medical Support Notices. [ERISA §§ 4(b), 609(a) and 607(1), Internal Revenue Code § 213(d), CSPIA § 401(f)]

If an individual-coverage health reimbursement arrangement’s only benefit is an amount of money the employer reimburses for the participant’s purchase of individual health insurance (and does not vary that amount following a number of dependents), an ICHRA group health plan’s administrator must respond and meet procedural requirements, but might find relatively little to do regarding the plan’s essential provisions. An order can be a qualified medical child support order “only if such order does not require a plan to provide any type or form of benefit, or any option, not otherwise provided under the plan[.]” ERISA § 609(a)(4). But a QMCSO might set up some duties regarding an individual health insurance contract’s issuer. That’s because a QMCSO may command beyond-the-plan provisions “to the extent necessary to meet the requirements of a law relating to medical child support described in section 1908 of the Social Security Act[.]” ERISA § 609(a)(4), 29 U.S.C. § 1169(a)(4). ERISA § 609 [29 U.S.C. § 1169] https://uscode.house.gov/view.xhtml?req=(title:29%20section:1169%20edition:prelim)%20OR%20(granuleid:USC-prelim-title29-section1169)&f=treesort&edition=prelim&num=0&jumpTo=true. 29 C.F.R. § 2590.609-2 https://www.ecfr.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-L/part-2590/subpart-A/section-2590.609-2. Further, a National Medical Support Notice might set up some duties for an employer as an employer, rather than as a group health plan’s administrator. For example, an employer might have some duties to determine whether a needed amount can be withheld from the employee’s wages. If Brian Gilmore sees your post, you might get more help.

Are you suggesting they remove the class exclusion for both deferrals and match? If so, those working <1000 hours will be eligible to receive the match once they meet the 3 month eligibility condition and reach their entry date. If participants become eligible for deferrals and match under the 3 month elapsed time rules, they are not LTPTs. If you are suggesting they amend to allow all employees to defer after 3 months elapsed time and keep the 1000 requirement for match (e.g. dual eligibility or allocation conditions), then I think you have to test the plan as you would any other plan with dual eligibility or allocation conditions.

We need a "go directly to ERISA Attorney, do not pass go, do not collect $200" card for these situations...

"marital share" will be defined by the QDRO, but it is typically 50% of the benefit earned during the marriage, or attributed to service during the marriage. It typically applies to all rights and features of those benefits, including death, disability, early retirement, etc. Different ways to handle all of that. There are "shared interest" and "separate interest" QDROs that can produce different outcomes. As David said, these are very significant legal issues and if you attorney isn't familiar, find one that is.

We do full administration work mainly to track the different sources. This ensures we have the data to monitor when assets exceed $250,000.

For a governmental plan designed to be an eligible deferred compensation plan within the meaning of Internal Revenue Code of 1986 § 457(b), Federal tax law allows (with 2024) a plan to provide these kinds of distributions: § 457(d)(1)(A)(i) age 59½ § 457(d)(1)(A)(ii) severance from employment § 457(d)(1)(A)(iii) unforeseeable emergency § 72(t)(2)(H) qualified birth or adoption distribution § 72(t)(2)(I) emergency personal expense distribution § 72(t)(2)(K) eligible distribution to a domestic abuse victim § 72(t)(2)(M) qualified disaster recovery distribution This is a deliberately incomplete list. For any of these, a plan might limit the amount of a distribution, and for some of these a plan must limit the amount of that kind of distribution. That Federal tax law allows a plan to provide something does not mean a particular State or local government employer’s plan provides that thing. Consider asking your plan’s service provider which provisions your employer’s plan includes or omits.

Given the number of years and the number of participants affected by the failures, you should file a VCP. There are operational and document failures. After a closer look, you may find demographic failures, too. The DOL alone cannot address this range of issues including the document issues. The reporting of late deposits on 5500s is cumulative which means you add each year's late deposits to this year's late deposits and report them until they are fully corrected. Similarly, the 5330s are cumulative with each year added to the next year's 5330 until all the taxes are paid. Essentially, you pay each year's tax over and over again until there are no more late deposits associated with that year. Filing amended 5500s once this is cleaned up is a good idea to formally set the record straight. The 5500s are used by the agencies to identify plans with deficiencies so not amending them is inviting future agency reviews, audit or investigations. The amended returns supersede that prior filings. Note that when the plan files the VCP, the expectation is that the VCP will cover all deficiencies. Take time to look at employee census data for each year. You may find failures to implement deferral elections, missed deferral opportunities, ineligibles getting contributions, eligibles not getting contributions, unpaid benefits, unpaid RMDs, and more. The process not only will involve fixing participant accounts but will also communicating to the plan sponsor and to participants what is happening inside the plan. Be sure to prepare a service agreement documenting your fees to do this work, and include provisions for progress billing throughout the engagement. Plan remediation over a long period of time compounds the effort needed to get a plan in compliance.

We treat these plans like any other - use our document, collect data, prepare a val, with or without tax return as needed. Yes there are some shortcuts - maybe a simple phone call to collect data, confirming no employees and income. We charge less than for a "regular" plan. But sometimes they are a timesuck because these are often people who think you can read their mind and can't be bothered to answer your data collection request. In theory, no "admin" is needed - just a simple doc and have the accountant calc the contribution and put it in, right? But we've seen accountants who think you can pay a salary of $100K to an S corp owner and max out (dollarwise) on contributions. And accountants who use their own software and don't know how 401(k) contributions work vs. profit sharing. Or we see here on the board where someone has been making Roth contributions and now wants to take a distribution but the money is all commingled and no one has been tracking it separately.

I'm not a practitioner in that area, but I would expect (hope) whatever service agreement the employer has with the FSA TPA delineates the TPA's responsibilities, if any, in adjudicating claims.