Leaderboard

Agree with this. I don’t think it’s a thing. You just don’t post the notice for the upcoming year.

Can you find the reg for that? Meaning, if a SH is NOT ending mid-year, but is ending exactly at year end, a reg says you have to issue a 30 day advance notice to stop the safe harbor from continuing into next year?

Agreed. There's no deferral election if employee just writes a check to the plan, which must happen under the 415 timing regulations that BTG referenced above if they want to count it for prior year.

Another potential primary reason to include the staff in the plan is whether or not you want it subject to the PBGC (depending on industry) to get higher deductions for the combo.

There are several non-discrimination tests that must be satisfied. 410(b), 401(a)(4), and 401(a)(26) are the big ones. The 40% rule is in 401(a)(26), so yes, you can create a DB plan that only benefits 2 HCEs, but you still need a way to satisfy 410(b), 401(a)(4), and the Top Heavy rules of 416. IOW, you will need a generous DC plan for the NHCEs. I wouldn't recommend creating an HCE only DB plan with a group this small. If/when someone leaves, or they hire a few more people, you will need to add people to the DB. Typical design would be include everyone in DB, give small benefit to NHCEs in DB plan (enough to "benefit"), and use the DC plan to satisfy the other requirements. Also, make sure that no one is "otherwise excludable", which might lower your count.

That's one of the gotchas in the maximum deduction calculation. Another variable that might be causing variance could be the interest crediting rate you're using versus the other firm.

Thank you everyone! The Plan does permit permit in-service, in-kind for loan balances, and partial distributions at age 59.5. To sum it up: Participant is going to request an In-Service Withdrawal equal to the Loan Balance, using the proceeds to payoff (offset) the loan in its entirety. There will be no remaining funds for tax withholding purposes. Form 1099-R will be Code 7 (but no M). Agreed?

Another consideration is how the value of the policy is being measured, whether it's by the cash value or some other measure. Shouldn't have a transfer for value issue since the policy is being transferred to the insured, and the company will still need to withhold taxes on the value of the distribution (whether from the policy or other sources).

If this proposal constitutes a form of payment that is not in the plan, the PA will refuse to qualify the DRO. If this is "horse trading", where the participant wants to pay less to the AP, the PA will be indifferent to what label is attached by the participant and AP.

As a general rule, 409A does not govern the medium of payment (i.e., cash vs. in-kind). See 1.409A-2(a)(1) and Section III.D.6 of the preamble to the 2007 final regs. That assumes, I think, that the amount of property transferred is of equivalent value, fully vested, etc. In other words, there may be other issues involved.

Internal Revenue Code § 7503 refers to “the last day prescribed under authority of the internal revenue laws for performing any act[.]” There are many possible interpretations of the statute and the Treasury’s rule. See 26 C.F.R. § 301.7503-1 https://www.ecfr.gov/current/title-26/chapter-I/subchapter-F/part-301/subpart-ECFR94f366dd75fae71/subject-group-ECFRd06c5ed639eb8dd/section-301.7503-1. There was a BenefitsLink discussion about this in July 2022. https://benefitslink.com/boards/topic/69382-effective-date-of-cycle-3-restatement-1-day-after-deadline/ If I may summarize: No one expressed a conclusion about whether the holidays rule applies to signing a document amending a retirement plan. Practitioners suggested getting one’s client to sign before the specified date, without a Saturday-Sunday tolerance. I mentioned the holidays statute as a face-saving argument an advocate might research and might consider presenting. That the IRS might be called to explain or consider an interpretation sometimes helps avoid an issue or negotiate a closing agreement. Perhaps David Peckham’s client won’t need to argue a Saturday-Sunday tolerance if no one asserts that the 2022 amendment was not timely.

The instructions for Code 2 say "Any other distribution subject to an exception under section 72(q), (t), (u), or (v) that is not required to be reported using Code 1, 3, or 4." Code 72(t)(2)(M) says "(M) Distributions from retirement plans in connection with federally declared disasters. Any qualified disaster recovery distribution." Codes 1, 3, and 4 respectively are 1—Early distribution, no known exception, 3-Disability and 4-Death.

Notice 2024-02 describes several situations involving plan mergers and indicates that if the surviving plan includes a pre-enactment qualified CODA, then the plan is not subject to the automatic enrollment mandate. In this case there is no plan merger, simply another adopting employer. So it seems to me that since there is only one plan involved, and that plan includes a pre-enactment qualified CODA, that the plan is not subject to the automatic enrollment mandate.

Self-employed individuals have to complete a deferral election before the end of the plan year. Whatever they put on that election will determine how much their deferral is. The safe harbor non-elective contribution will be 3% of their net earned income. That will be a circular calculation, so it's not generally possible to know exactly how much it will be before the end of the year. If earned income is expected to be well above the 401(a)(17) limit then it might be reasonable to use that. Assuming profit sharing is discretionary, it will be whatever amount the employer decides to allocate, within the constraints of sections 404, 401(a)(4), and 415.