Leaderboard

You misunderstand. The most pressing issue for almost all members of Congress is getting re-elected.

It never hurts to develop a relationship with your members of congress. They work for YOU, and if they have a good staff they will also want to develop that relationship. You can also volunteer for Government Affairs Committees for the various industry organizations you may belong to. I know a lot of people here on the boards are already involved, but they are almost always looking for new members. Participating in industry PACs is also helpful.

I have no problem with change, increasing coverage, and so on. The problem is that we are making huge changes on an almost year by year basis at this point. Major changes like LTPT or lowering the statutory age maximum from 21 to 18 cant drop year after with a very limited time until its effective. We need time for major changes or chaos is all but guaranteed.

PS, you note that the plan sponsor is becoming unresponsive, which suggest they are not totally unresponsive. I'm sure you have communicated to them the consequences of not closing out the plan in a timely manner, and the fact that the plan will no longer be considered terminated if assets are not zero within 12 months. The penalties will start increasing exponentially as reporting and compliance deadlines are missed. Hopefully, there is a reason for the lack of a response (other than the plan sponsor just doesn't care), and they will finish the termination. I expect others involved with the plan are aware of the situation (plan's legal counsel, companies CPA, custodian...) since it sounds like there was a formal plan termination amendment that should have been communicated. They may be able to reinforce the message of urgency. You should avoid jumping into the role of the plan fiduciary, particularly if there has been no formal delegation of that responsibility that you agreed to. Further, if you try to keep the plan going on your own, you very likely will not get paid for your efforts. You (or a willing plan participant) can approach your local DOL office and explain the situation. The DOL can follow up informally when it gets this type of information.

The ICI says $9.9 TRILLION is held in defined contribution plans of which $6.9 TRILLION in in 401(k) plans. The BLS says 67% of private industry workers have access to employer retirement plans. With that kind of money in play, there are a number of industries (primarily in the financial services sector) that lobby for expanding the number of people who can participate in retirement plans. They also lobby for encouraging more new plan formation. The financial services lobbyists have very, very deep pockets. We also are seeing a sea change in the perceived role of 401(k) plans. They started as an opportunity for an employee to enhance retirement savings. The emphasis was on retirement and restricted access for other purposes. The pandemic and natural disasters have changed everything. We had massive unemployment and people needed money to live on, so the floodgates were opened to give participants liberal access to their 401(k) accounts. If we look at all of the new and proposed categories of penalty-free "qualified" distributions, many are centered around life events. As the number of these distributions expands, the 401(k) is becoming more analogous to the Depression era cookie jar or rainy-day fund. And the administration gets even more complicated. If there is a path towards restoring the focus on retirement, it must come from plan sponsors. It remains possible to have a plan design focused on retirement and to leave out or avoid a lot of the new features we are seeing. Consider IBM's recent announcement to end the match and add back a traditional DB plan. We cannot turn back the clock on 401(k)s and will have to live with the reality of their new purpose as an employee benefit. We can work with clients to see the difference between providing for retirement and providing for life events.

It's all computerized so what's the big deal, right? I remember when I first started my boss had a cartoon-y series of 3 pictures in the office. The first said "TEFRA" and it showed someone sitting at their desk, all bright-eyed and eager to have at it. The second was "DEFRA" and the guy was a little less confident, sort of slumped over. And the third said "REA" and the guy had face=planted on his desk amidst a pile of papers. Yeah it's annoying to say the least. The behavioral economists have taken over.

Another "Full Attorney Employment Act." And as an attorney - I'M ALL FOR IT! Bring it on!

"The Helping Young Americans Save for Retirement Act is a bipartisan legislation that aims to encourage savings by younger workers in defined contribution plans. The bill would allow employees aged 18 to 20 to contribute to 401(k) and ERISA-covered 403(b) plans after completing one year of service, although employers could exclude them from receiving employer-matching or nonelective contributions." It's too much. They need to give us a minute! Does anyone have Brian Graffs direct dial/email address? If so tell him Austin Powers will make himself available Congressional Testimony for as long as it takes to convince Congress that this has to stop. https://www.mercer.com/insights/law-and-policy/bipartisan-bill-would-lower-dc-plan-eligibility-age-to-18/

I think they need to change the age to start RMDs a few more times! 😁 Part (not the only) of the reason I do ESOPs is I couldn't take 401(k) work any more. All the notices and if you read the law the liability if you are late! The work just wasn't fun any more.

The filing for the short plan year should be checked as the final filing for the plan, and the due date is the last day of the 7th month after the date of the transfer (which is the date plan assets went to 0). That would put it due on 12/31/2023 unless it was extended 3/15/2024. If the filing is late, the DFVCP is a bargain! https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/correction-programs/dfvcp

Here are the links to quickly find your members in Congress: https://www.senate.gov/senators/senators-contact.htm https://www.house.gov/representatives/find-your-representative Dropping them a line takes about as much time a post or 2 on BL.

We just had one that was very timely submitted, (early December) and the custodian botched it. Didn't cut the check until 1/2. To give them credit, they said, in writing, that if the IRS won't waive the 10% penalty, then they will pay it. I'd be a little surprised if the IRS won't waive in such a situation. Historically, at least in my experience, they have been very reasonable about this type of thing.

If it's two employers, it's which ever one he requests the 402(g) refund from. if that Plan had some of both, then it's whatever the Administrative procedures say. Though in this case the employee has to actively request a refund since neither plan is expected to know about the other (assuming no GC/ASG) there really isn't any reason not to give the employee the choice.

It takes a year before one can declare a plan abandoned, although we tell participants when they call to get their money that we can't without a fiduciary, and to call the DOL (and we give them the number). Once the DOL is involved, the "year" wait is often waived.. Once filed with the DOL, we typically see action within 30-45 days, and then however long it takes to find participants and distribute assets.

Ya know, @austin3515, you are also permitted to "call Congress". Try your own Representative and Senators. Also, the various committees receive online comments.

About Paul I’s last point: It’s EBSA internal policy to open an inquiry (not an investigation) if even one participant complains about an unresponsive employer/administrator. That often results in an explain-yourself letter addressed to the person EBSA sees, from Form 5500 reports and other records, as one who might act for the plan’s administrator or at least respond.

The DOL has an abandoned plan program through which the custodian of assets (often a recordkeeper) can become a limited fiduciary for purpose of terminating the plan and distributing the assets. We have a sizeable book of small employer plans and have a dozen or so become "abandoned" (a determination made under the criteria established by the DOL) and yours truly becomes the QTA (fiduciary) for purposes of winding up the plan. Often, the threat of filing under the program or the actual filing will prompt the plan fiduciary (often under urging by the DOL) to do their job....

Definitely leave this up to the employer in conjunction with their legal counsel. The facts smack of retaliation against a terminating employee. A lot will hinge on the wording of communication that was given to the employees. If the wording is definitive (e.g., "you will get $$$", "your 2023 PS contribution is $$$"...) and there is no disclaimer that these are not final numbers, then the employee may be disgruntled enough to challenge a lesser amount. Precedent also could play a part. In the past, if nobody's contribution was reduced if they terminated after the communication to employees was given out and before the contribution was finalized with the employer resolution, then lowering the contribution for this terminated employee reinforces the idea that this a form of retaliation for the employee leaving. Similarly, the perception of other employees about how the employer handles the situation may be a consideration. People talk. Unless there is clear justification for making the change, it may make sense for the employer to avoid the negatives and move on given the potential cost in terms of time and money. That is their decision.

I for one look forward to seeing the exhibits Austin will use in front of Congress... Can you say Groovy Baby! And Brians direct dial is 867-5309... Ill see myself out now.

Hey, if it weren't for changes like these, all our required CE sessions would be the same.....dang.....topics.....every time. I can only hear Derrin talk about net earnings from self-employment or management functions in ASGs so many times! 🔞

The determination date for 2022 plan year was 12/31/2021 (assuming this is a calendar year plan). Let's say for example on the determination date you were considered a Key employee based on having more than 5% ownership in 2021. Assume you were no longer an owner on 1/1/2022 and had no ownership throughout 2022. The next determination date is 12/31/2022 to identify Key employees for the 2023 plan year. On the 12/31/2022 determination date you are now a Former Key employee. A Former Key employee's account is ignored when determining the Top Heavy Ratio. A Former Key is not a Key employee. If the plan Top Heavy for 2023 you will get the Top Heavy Contribution. You will remain a Former Key in future years unless subsequently you become Key again.

Trust me I think about it all the time. If I wasn't so darn busy addressing all of this stuff I just might have...

Sometimes I feel like I'm the only one who sees this. Thank you very much for saying this.

Our determination of whether a non-owner employee is a an officer and a key employee is in the realm of considering the facts and circumstances. Yes, we ask the client to identify on the census who the client considers to be an officer. We look at the individual's compensation and ask for more details if we are not familiar with an individual who is designated as an officer. We do not provide a written detailed explanation of the rules from Q&A T-13. We do factor in our experience, relationships and interactions with long-standing clients. For new clients, we do have a conversation our contacts about our census data request and discuss what it means to be an officer. We do rely on our experience with certain types of businesses and typical management structures. Applying a comprehensive analysis for all clients to determine who is or is not an officer would not be a practical use of our time or the client's time. Sometimes in our industry we get carried away with over-analyzing something when we do not have to be 100% precise. The reality (based on periodic analyses over the years) is the vast majority of plans with more than 15 participants are not top heavy. Further, many small plans now use a design the provides a safe harbor for top heavy testing. Note that Q&A T-39 says: T-39 Q. Must ratios be computed each year to determine whether a plan is top-heavy? A. No. In order to administer the plan, the plan administrator must know whether the plan is top-heavy. However, precise top-heavy ratios need not be computed every year. If, on examination, the Internal Revenue Service requests a demonstration as to whether the plan is top-heavy (or super top-heavy; see Question and Answer T-33) the employer must demonstrate to the Service's satisfaction that the plan is not operating in violation of section 401(a)(10)(B). For purposes of any demonstration, the employer may use computations that are not precisely in accordance with this section but which mathematically prove that the plan is not top-heavy.

I'm not a lawyer but I don't think that "telling" them of their allocation means anything in terms of locking in numbers. IMO the whole issue boils down to "is it worth the potential hassle?" If someone sics a lawyer on you then you've both lost, no matter the actual outcome.

After reading the financial statements of Power Corporation of Canada [TSX:POW] and its indirect subsidiary Great-West Lifeco Inc. [TSX:GWO] (which indirectly holds Empower Holdings, Inc.), I don’t worry about the profitability of the Empower businesses.

But... what is the regulatory definition of "officer"? Hint: title means nothing.

Doesn't have to match, but if it doesn't, you lose your automatic top heavy exemption. Of course, if you have profit sharing contribution, you lose it anyway, so it may not matter.

What does your prospective client do and who paid them the $500k? I'm guessing your prospective client is a consultant or something along those lines, and this payment was from one of their clients who wants to preclude them from providing their services to any of their competitors? So not really a non-compete, but more of an exclusivity agreement? Or maybe something that prevents your prospect from going into business for themselves in competition with their client? If that's the case, then I think it probably is usable for pension purposes, as it directly relates to the services they provide as part of their business. Essentially they received a bonus for doing such good work that their client wants to keep your client to themselves. On the other hand, if your prospective client isn't providing ongoing services to the person that paid them the $500k, then I would feel differently about it. For example if the payer felt that whatever your client is doing might be a threat to their business, so they are paying them $500k to get lost. In that case, the payment is for work they are NOT doing and would probably not be usable income for a pension. Interesting question! I'll qualify my entire reply here and say that this is a bit outside my area of expertise - I would recommend getting an attorney to review the facts.

If you can show the residuals that are paid out on in 2024 as payables as of 12/31/2023 and a $0 ending balance as of 12/31/2023 you may be able to get a way with a final 5500 for 2023, otherwise you're in the situation bzorc describes above with a short year filing.

If the amount was distributed in 2024 then it is taxable in 2024. Sorry to say, but waiting until the last minute caused this individual to miss their RMD for 2023. Play stupid games, win stupid prizes. At least the missed RMD was timely corrected and the excise tax is reduced to 10% under the new SECURE 2.0 rule. They could also request a waiver of the excise tax on Form 5329.

Sounds like you are confusing withholding with taxation. There are several different distribution scenarios, but consider the following, which is the most common situation. Taxable distributions from a 401(k), if they are "eligible rollover distributions," have MANDATORY 20% federal income tax withholding. Withholding just means it is sent to the IRS, and when you file your income tax return, this withholding is applied to the income tax owed. This means that you will either owe the IRS less in a tax payment, or receive a larger refund. For sake of simplicity, assume you have taxable income, after all deductions, credits, etc., of 100,000, which INCLUDES your 401(k) withdrawal of 20,000. 20% mandatory withholding of 4,000 was sent to the IRS. Further assume that we ignore progressive income tax brackets, and your federal tax bracket for all income is 28%. Finally, assume you had 10,000 in federal income tax withholding on your other taxable income. So, total federal income tax owed is 28,000. You have had 14,000 already withheld, so you owe the IRS 14,000. If you had NOT had the 20% withholding on the 20,000 401(K) distribution, you would owe the IRS 18,000. Conversely, let's say you had 28,000 withheld from your taxable income not counting the 4,000 withholding on the 401(k) distribution, so you have had a total of 32,000 withheld in federal income tax. Since you have had a total of 32,000 withheld, you now get a tax refund of 4,000. This is a gross oversimplification to help illustrate the point. You are not having double taxation on the 401k) withdrawal.