Leaderboard

Compensation limit is based on the number in effect for when the plan year begins. 415 limit is based on the number in effect for when the plan year ends.

Jak, I'm not a CB expert, but I'm pretty sure you can still have an effective date of 1/1/2024 and a calendar year limitation year which would eliminate all the proration you're discussing.

1. were deferrals withheld? but not sent in? in that case you have late deposits. See VFCP, and Form 5330, and look up late deposits to retirement plans 2. were deferrals not withheld? but they should have been? In that case you have a missed opportunity to defer. See EPCRS, if there were deferral elections, or no deferral elections, or match or no match, the actual amount will vary, but it all covered in the IRS's EPCRS rev pro. Note: the custodian not being ready isn't a valid excuse. Plans encounter this all the time, and purposely pick a special deferral start date farther out, that is written into the plan document, for this very reason. The give service providers time to get set-up with all the info from the sponsor. Even in the event of an unexpected delay, there is no reason why the deferrals couldn't have started on time, and the plan open up a temporary account, such as brokerage/checking/savings account etc in the name of the plan into which to deposit the deferrals. Then they would be deposited to the trust on time, and then once the regular custodian is ready, the money can be transferred to there.

If deferrals started with payroll but couldn't be deposited because of the custodian, you have late deposits. Simply deposit the payments along with the lost earnings, file the 5330 and decide if you are going to though the DOL late contribution program or not. If the deferrals didn't start you can calculate a QNEC on the missed deferral opportunity and deposit that, but I think you might just be able to self correct and start the deferrals 3/22 as the delay was "short" and folks have 9 months to catch-up the missed deferral opportunity.

An employer or a plan's administrator might prefer not to provide guidance on this question. Unless one has extraordinary expertise, an answer in either direction has a potential to harm one or more of an individual’s interests. Beyond knowing the law, an adviser would need to know everything about the individual’s other and surrounding circumstances. Under the part 416 rules of the Supplemental Security Income for the Aged, Blind, and Disabled program, the subpart L rules on “Resources and Exclusions” are at 20 C.F.R. §§ 416.1201 to 416.1266. These rules begin at 20 C.F.R. § 416.1201(a) https://www.ecfr.gov/current/title-20/part-416/section-416.1201#p-416.1201(a). Those rules are only a few of many that could relate to the SSI beneficiary’s situation. And one would research too the rulings and other nonrule guidance. And the guidance the Social Security Administration provides for SSA’s employees. For example: https://secure.ssa.gov/apps10/poms.nsf/lnx/0501120210. One also might consider that some SSI provisions might allow SSA to not count some elements of a beneficiary’s income or resources. In my experience, it’s impractical to advise an SSI beneficiary unless one volunteers an uncompensated engagement and can afford to put in substantial time and attention. This is not advice to anyone.

How do you enter into a collective bargaining agreement and not keep a copy? Yes you can file a late 1099-R, as you have discovered, penalties apply. The participant is probably fine as the taxable amount will be $0 if it was properly rolled over. But the plan has a duty to file the 1099-R and supply to the participant. At most he'd need an amended return showing ~$1.5M distribution, but report it as non taxable rollover.

I’m not where I can look up a bunch of stuff, but related to item #1, I can’t imagine anyone agreeing to benefits and wages as part of a collective bargaining agreement and not knowing exactly what that agreement said and where a copy was kept. What a stupid way to run a business.

Did they do a formal board resolution declaring the contribution? I believe that can make a difference but a lawyer could clarify that more if needed. Did they allocate it or deduct it? But most likely if it isn't required by the document my understanding they can change their mind. But given how angry people might be it might be better to talk to the plan lawyer and not count on free advice here.

The SPD provided DOES STATE there is a 6-year delay for vested balances in excess of $5k for terminations due to reasons other than age 59½, death or disability.

Ignoring the public relations issue with the employees for the employer changing their mind after notifying the employees they would be getting a PS contribution, unless it's required by the plan document then it's not required to be made. They could give a supplemental notice something like - we regret to inform you but the prior notice of a 2023 contribution was distributed in error, there will be no PS contribution for 2023 - something like that. That said I am not a lawyer and I don't know if the initial notice created a de facto contract obligating the employer to the PS contribution when they notified employees. Were corporate minutes filed approving the contribution? Have they filed a tax return claiming the contribution?

Unfortunately, there simply is not a way to modify that irrevocable election. The irrevocable one-time requirement comes from section 402(g) and related regulations, which limit the amount of a revocable election. In order to avoid the 402(g) limit, the election must be truly irrevocable. If an employee were permitted to change their mind and increase the “mandatory” contribution, the contributions of all employees would then be considered to be elective deferrals subject to the 402(g) limit.