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The plan document will say. Look at the actual adoption agreement (if there is one) not just the SPD. Some are written to limit conversions only to people/sources that are eligible for distribution. This is similar to the older rules of in-plan-Roth rollover. Others are written to not limit conversions to people who are eligible for in service withdrawals. What does the document say?

I am not an expert on UBIT but what I know is if there is leverage used in a plan you need to seek expert advice to see if UBIT will be due. If they have to pay a type of income tax on income inside the plan my guess is this idea will be less popular. I would add finding a CPA that knows how to file a UBIT return of a 401(a) plan is not easy. Because of that it isn't always cheap. One has to really watch out for any idea that makes it look like they are trying to run a taxable business in a qualified plan and if they get clever and try to use Roth dollars so they never pay taxes on the income ever gets the IRS' upset and they can be aggressive. Too many people try to get too clever. If it was real simple to never pay taxes on your business' income more people would be doing it.

Interesting points. As a non-lawyer, I have wondered about the long-term effects of the (Loper?) decision, as to challenges to regulatory rules and interpretations, reliance on those regulations, etc., etc. - with any luck, I'll be retired before the excrement hits the windmill in any major volume.

And I don’t read your note as in any way dismissive. For employer/administrators, third-party administrators, and recordkeepers, this point is much less immediate and less important than many other difficulties with SECURE 2019 and SECURE 2022. And as I mentioned twice, even if the current Congress does nothing, there’s another four Congresses and eight years until a more restrictive interpretation would result in an involuntary distribution. Because Congress’s SECURE Acts and others have so many ambiguities is why I think it’s worthwhile for some of us to think about methods for interpreting statutes. Our norm now is making tax law in haste, often with little or no attention in committee hearings, and—in the throes of when a budget-reconciliation or appropriations bill can move (often in December)—with few days and hours to edit a text. When it’s usual for a statute to bear hundreds of ambiguities, having general frameworks for interpreting them can help. Some of us have a little luxury to indulge some thinking about text-interpretation methods. And I recognize many don’t have that time or taste. By opening a question to our BenefitsLink neighbors, Paul I and Luke Bailey graced me with interpretations and reasoning I might not have thought of.

This is absolutely not intended to sound dismissive or snarky, but on a personal level, I find it hard to care at this point. There are so many immediate and difficult technical and administrative issues to deal with, and this particular issue doesn't take effect one way or the other for many years. Given recent legislative history and trends, there will be lots of tinkering before then anyway...

I think the right answer is 73. A person born in 1959 would attain age 73 in 2032, so there you are. It's 73. Even though the same person will attain age 74 after December 31, 2032, you don't skip 2032 because what is being determined is the "required beginning date" for a continuous stream of distributions.

What does your termination/freeze amendment and or Plan Document say? You may or may not have to give an accrual to anyone employed on the termination date depending on how they are worded. If you only have an HCE accruing a benefit though you still need to pass all testing for your final year. (401(a)(26), 410(b), 401(a)(4), 416, etc.)

By any chance was the employee who did the rollover in - a decision maker ? Owner, director, trustee, HCE etc? Depending on the structure of the service provided by the recordkeeper/custodian - I wonder who approved the rollover. For smaller plans - the participant might fill out a form to let the plan know they are submitting a rollover, and the plan administrator, trustee etc might have to approve that before the custodian or recordkeeper will actually process the incoming dollars. In my experience - when plans are brand new - there aren't a lot of rank and file employees chomping at the bit to get their money into the new plan. The ones who are best positioned to immediately do a rollover in are the ones who have known about the new plan the longest, typically the decision makers or power players at the sponsor. Edit to add: who prepares/maintains the plan document? if a bundled provider it is typically the recordkeeper as well. If is someone else - the recordkeeper might not have any idea when the plan document is actually signed or effective, and just goes off their provision intake form. Not saying that is right. Just saying I see it done that way.

I back up Bill Presson. The recordkeeper is clearly at fault and should be held accountable. You may need an attorney to help, but that could be expensive. I'd press for the recordkeeper to pay your legal expenses. One thing for sure, the recordkeeper is incompetent and the plan's fiduciaries would be breaching their fiduciary responsibilities if they go ahead and use this recordkeeper after the mess is cleaned up.

Before focusing on how to report everything on the 5500, consider getting everyone including the plan administrator, recordkeeper and payroll to agree on what will be done to complete the correction. Some questions to which you may want to have answers are: What happened to the money taken out of participant accounts? Was it held at the trust and taken as a credit against another payroll (if yes, keep an audit trail)? Was it returned to the company? What about earnings? Are participant W-2's impacted in any way? Will participant compensation reported for nondiscrimination testing be impacted in any way? What appears in each participant's plan accounting records? How are the corrective transactions labeled? When you have consensus from everyone on how this is being accounted for across payroll, the trust and the recordkeeper, the 5500 reporting should be readily apparent. For example, the 5500 has a line for Other contributions (commonly used for rollovers but not limited to rollovers). Participants who received distributions should be included on the Benefits Paid line. Participants who had amounts removes from their accounts but not paid out may have the contribution included along with other deferrals (if the extra amount was used to offset a subsequent payroll) or this may be included in the Other contributions if it was not used. The earnings could wind up in the Other income line. Document, document, document everything that was done too make the correction and that should protect the plan from anyone not familiar with the circumstances second-guessing what happened. [Edited for clarity]

Agree that I would likely bring in an ERISA attorney, but I would expand on Paul's comments regarding the financial institution. Ask them how they intend to make this right. They are the ones at fault here.

NOT ADVICE what about the 60 rollover rule? If the trust didn't exist - and the rollover $$ was deposited to an account in December, and then the account converted to a trust account in January, its less than 60 days...

I have never heard of this situation before, primarily because I have never heard of a financial institution setting up an account in the name of trustees of a plan without the institution having documentation that the trust exists. If the account was not titled in the name of the trustees, then consider making an argument that the plan's trust did not receive the assets. If the account still does not yet have any indication that it is owned by the trust, then this argument would also say the rollover has still not yet been made to the plan. It will be interesting to see others comment on this situation.

No

I dealt with a similar situation earlier this year, perhaps involving the same Russian ETF. The assets could not be transferred to the new recordkeeper via ACAT because they are subject to OFAC blocking sanctions. The fund wasn't available in the new SDBA so they could not be transferred in-kind, and these assets legally cannot be sold or traded so they could not be liquified. We discovered one participant had holdings in the Russian ETF during conversion, and we simply left those holdings at the prior recordkeeper. All other assets were transferred. We will continue to track and include these assets for 5500 purposes etc. until sanctions are lifted and they can be transferred or liquidated, or the underlying companies in the portfolio file bankruptcy and the holding can be written down to $0. The only other option we considered was whether the participant could take an in-service withdrawal and roll those assets into an IRA with the prior recordkeeper. The recordkeeper said they could accommodate this, and the participant was interested in doing it. Unfortunately, in our case the participant wasn't eligible for an in-service withdrawal.

First, Dr. X cannot stop the transition by not giving up his position, which I presume is through a brokerage account feature. The trustees have authority over the assets, and they presumably take their direction from the investment fiduciaries. Second, I agree with Austin, his account should transfer easily. I'm not saying you should say who it is, but I'm really curious who RK A. Service agreements seldom get into detail about how the termination of the contract will work, so I'm guessing this function was not addressed in your service contract; however, i would take a look and try to confirm that. At this point, the investment plan fiduciary is in a serious bind. There presumably has been a decision that participants will be better off if you transfer to RK B; however, this move isn't occurring. It can be sort of a cheat on this message board to recommend that legal advice be sought; however, in this instance I think you don't have a choice. You need a legal opinion regarding what to do. Do you prevent the other participants from getting the value of the move or do you prevent this one participant from getting the value of staying until the investment fund liquidates? Get the opinion, then follow it.

it makes no sense to me that they are not doing an ACAT transfer for the brokerage accounts. Someone might have hundreds of positions in their account. I have never heard of these accounts not transferring in kind. I guess that doesn't help much but I guess would just really push back on that position. If Fidelity is the SDBA provider, they can transfer in kind to Schwab, etc. That happens literally all the time.

A May 23, 2023, letter by two senators and two representatives said they were going to correct this: "Section 107 of SECURE 2.0 increases the age at which required minimum distributions from a retirement plan are required to begin. Specifically, it changes the age on which the required beginning date for required minimum distributions is based (the “applicable age”). Congress intended to increase the applicable age from age 72 to age 73, for individuals who turn 72 after December 31, 2022 and who turn 73 before January 1, 2033, and to increase the applicable age from age 73 to age 75 for individuals who turn 73 after December 31, 2032. However, with respect to the increase from age 73 to age 75, the provision could be read to apply such increase to individuals who turn 74 (rather than 73) after December 31, 2032, which is inconsistent with Congressional intent." A draft tech corrections bill was prepared. Those are both pretty clear that 59'ers are age 73'ers, I am personally sad to say. But it appears that IRS is not going to change it until a tech corrections bill is actually passed. Technical Corrections Bill 12-6-2023.pdf 5-23-2023 Letter from Congress to IRS on SECURE 2.0 errors.pdf

Subparagraph (I) sets the RMD at age 73 for someone born in 1959, so regardless of what Subparagraph (II) says the person has an RMD due for the 2032 plan year. The conundrum is (II) says that same person turns age 74 in the 2033 plan year so the person has an RMD due for the 2034 plan year. Arguably as written, a person born in 1959 gets to skip an RMD for the 2033 plan year, or a person born in 1959 must have an RMD for the 2033 plan year because RMDs began under (I). Had (II) been written to say it supersedes (I), then there is a skip. If (II) does not supersede (I), then there is no skip. I don't think any of this has to do with Congressional intent other than Congress was looking at ways to balance out the revenue impact of the overall package. They look at a 10-year horizon for their impact analysis which would explain why the change to 75 was set for year 2033 - 10 years after the adoption of SECURE 2.0. Considering the potential impact of the recent decision on Chevron, the IRS should either hope for a clarifying amendment or go with the skip.

Intent aside, why not a full assault on the statute-writing people (ie, Congress) to fix it? When the statute is clearly in error, or contains a significant ambiguity, a regulatory interpretation is not the best remedy.