Was married to CPD officer for 15 years.  Divorced, he got a percentage of my marital portion because I retired also from CPD and he also gets a monthly payment from my pension.  He is still active.  He is retiring this Summer but remarried last summer, will I still get a percentage of his marital portion(lump sum)  AND a monthly amount once he retires?

I am looking to gather data to compare plan enrollment statistics between Safe Harbor Match and Safe Harbor Nonelective contributions. The assumption is that offering a SHNE may not provide employees with an incentive to enroll for elective deferrals, as they would receive the contribution regardless of their participation.

IRS guidance for Catch-Up contributions is scheduled to be published on Monday.  See https://public-inspection.federalregister.gov/2025-00350.pdf for 57 pages of weekend reading.

Guidance for Auto Enrollment is scheduled to be published on Tuesday.  See https://public-inspection.federalregister.gov/2025-00501.pdf for 62 pages of additional reading.

This is only 2 weeks after the effective date of the respective SECURE 2.0 provisions, so we will at least have some feedback on how accurate our guesses have been about the details.

I have a plan that was amended to exclude HCEs from SHNE contributions. None of my current plans have this exclusion, so I want to ensure I understand it correctly. If HCEs are excluded, does this mean that all HCEs would not receive any SH Employer contributions, or does it mean they have the option to be excluded? I assume they would not participate in the allocation since this exclusion is written into the document, but I need clarification on the logic, as the Financial Advisor is questioning this.

Hi

A Happy New Year to all of you. Thank you in advance for any insights on this.

1. Is a veba plan ,  with only $76,000 IN ASSETS. that has not had a contribution for at least 15 years , and all participants in the plan were terminated 10 years ago at least, still required to file a 990 (EZ)? As assets for all plans for this entity are under 250K? Also, in general is a 990 still required to be filed for Veba plans or a 5500 SF is sufficient? 

2.IF YES, must the 990 be e-filed, and mailing it in is not allowed anymore?

3. Can this Veba plsn merged with a mp plan of the same entity...(with of course properly allocating, ie prorating, the assets for each of the 2 plans annually)?

Thank you, as always.  for any insights

A small employer (non-profit) has two employees...the executive director (an HCE) and the president (a NHCE because he only works part-time).  The HCE'a employment contract stipulates that she will receive a $40,000 annual contribution to the SEP in addition to her salary. The NHCE's employment contract stipulates that his annual compensation amount is inclusive of any contribution required to be made to the SEP. 

While the NHCE's salary and SEP contribution total the annual 2024 compensation package, because of miscalculations the NHCE's contribution is a larger percentage of his salary than the HCE's.  The usual self-correction under EPCRS would be for an additional contribution to be made to the participant receiving the lower percentage contribution.  That would mean giving the HCE a larger contribution, which is in contravention of her employment contract.  The NHCE (president) is okay with withdrawing the excess percentage contribution from his IRA by 4/15 and taking it into income.  I'm hesitant to go that route as it seems to be against EPCRS.

Since the operational error is in favor of the NHCE (i.e., receiving a larger contribution than the HCE) can it be left alone?  Or does the simple violation of a nonuniform allocation dictate that a correction is necessary?  And if a correction is needed, must the HCE receive an additional contribution (and perhaps adjust compensation or contribution in 2025)?

Thanks for all comments.

Can a 403b make each participant their own allocation group for non-elective contributions like for 401k plans?

A client mentioned they were considering including the new 60-63 catch-up provision.  I was under the assumption that if a plan included the regular catch-up provision the new higher amount was automatically available.  Is it even possible to have a plan that allows for regular catch-up deferrals but not the new 60-53 catch-up amount?  Will this be in an amendment or is it just effective via IRS regulation automatically?

Thank you,

Tom

A client maintains a defined benefit plan and has requested help in complying with RMD rules.

If a plan participant cannot be located or fails to cooperate in completing and returning a distribution form, can the plan's administrator commence paying distributions in a default form based on file information as to marital status and date of birth?

What can be done to correct the default RMD form if the date of birth and/or marital status turn out to be inaccurate after distributions commence?

If the plan does not have marital status information about a participant to whom RMDs are payable, can the plan presume that the participant is married or single and commence RMDs based on a presumed marital status?

I am creating a form to send to clients to give to all their 100%-vested participants, to elect their 2024 ER contributions be made as Roth.

I understand that a 2025 1099-R will be produced for each participant who wishes to have their 2024 ER contributions go in as Roth money type, since the "allocation" and/or "deposit" is being made in 2025 for 2024's ER contributions.

Here's my operations question:  Am I right to say that the 2024 ER contributions that are elected to be Roth (per person) will be shown that way on the 2024 reports? 

I know that seems like a dumb question, and maybe the better question is:  How long does each participant have to complete their Form saying they want their 2024 ER contributions as Roth?? 

When should we be sending these Forms to our clients for the year we're closing out?  As we all know, there can be a lot of back and forth before an employer makes a final decision on their ER contributions.  Handing a participant a form today might send the signal that they 'will definitely' be receiving a Discretionary Match and/or Profit Sharing etc., when the decision isn't made until March 14th or even Sept 14!

Thoughts?  I'd love to hear how others are operating.  

Are the new start-up plan tax credits only available to employers with less than 50 employees?  I have a restaurant group that wants to start a new plan.  With the new auto-enrollment rules, I would envision them having more than 50 initially.  They have a few hundred with W-2s each year, but only about 40 that are full-time and interested in participating.  They will have to be safe-harbor to pass testing.  Thanks for your insight!  

Hello.  Participant signed up to defer (403(b) Plan) in June 2022.  Her choice was never implemented. This was discovered during the 2023 plan audit (large plan). Participant never noticed. She is going to start deferring this month.  Client never noticed either.  I am working on the correction now, but the auditor says the amount of her missed deferrals has to go on Schedule H line 4a.  I'm not convinced as the they were never withheld by the employer for contribution to the plan so not technically late.  Thoughts? 

TYIA!

RMD's used to be simple.....

I have a participant who i just found out passed away 12/2023.  He was over 80 years old.  He has a surviving spouse who is the beneficiary.

He never took an RMD as he was still employed and not an owner.

Client is saying that they do not have to take an RMD.   Since he wasn't required to take an RMD prior to death, can the 10-year payout be used?

I'm thinking she should have taken the 2023 and 2024 RMD.

I appreciate any help.

Thanks!

For a US tax return or tax payment due today, one may take an extra day, to January 10.

That includes “any federal income, payroll[,] or excise tax deposit due on Jan. 9, 2025, including those required to be made through the Treasury Department’s Electronic Federal Tax Payment System (EFTPS).”

https://www.irs.gov/newsroom/irs-for-carter-remembrance-taxpayers-have-extra-day-to-file-pay-returns-payments-due-jan-9-are-now-due-jan-10

I'm a member of a labor union. As part of my benefits package (which is not my "wages" per say, but it's a dollar amount that is voted on at contract time by the membership), a contribution is made to an HCRA account.
While you're an active member, you're given access to a small percentage (20%) of your yearly contribution to purchase non-prescription drugs and certain otc medical related items. The rest of the contribution goes into the account, and is essentially innaccessible until retirement, when you're supposedly allowed to spend it on any medical costs, including co-pays, insurance premiums, and prescriptions.
The contribution for most members is between $5k and $6k a year (which I'm hearing is a lot for an HCRA, especially when there is already a robust health insurance plan), leaving many members with $130k to $180k in their accounts as they get nearer to retirement. As part of the terms of the plan, if the member dies before retirement, their spouse is only entitled to a small portion of that money, along with 18 months of assistance to help cover insurance, and the plan itself absorbs the balance of the money.  Retired members that pass away can leave the remainder of the money to their spouse, however once the spouse passes away the funds get absorbed back to the plan, and from what I've heard from new retirees it's actually kind of hard to spend the money, with many claims being denied.
Does this sound like an illegal plan? Or maybe just unethical? It seems like the cards are stacked entirely in the plan's favor and it's a large risk with potentially little reward. How would the membership get out of this without forfeiting the money? Or am I being ridiculous and it's a good deal. This plan was never voted in, but was forced on the membership through administrators.

As of January 6, 2025, the plan sponsor’s forfeiture account has a balance of $35,000, which includes $25,000 from 2023 and $10,000 from 2024.

1. Is there a deadline for the use of forfeitures?

2. Is the deadline the same for both the 2023 and 2024 balances, or does each year have a separate deadline?

3. If there is a deadline as per IRS regulations, please clarify and provide the relevant regulations.

4. If the forfeitures from 2023 are not used during the 2024 plan year and remain unused at the end of 2025, would this violate any IRS regulations or compliance requirements?

If participant terminated in 2024, but did not receive distribution until 2025 (beginning of year)

Do you file a 1099r for 2024 or 2025?

My plan has failed the ADP test, resulting in a refund. The HCE receiving the refund has both pre-tax (deferral) and Roth contributions.

Is the refund amount discretionary for the employee to choose between pre-tax deferral and Roth contributions, or is there a specific sequential order for deducting it (e.g., first from pre-tax deferrals and then from Roth)?

Are there any IRS rules governing the sequential order for processing such refunds?

I am not necessarily looking for specific advice but I was wondering if anyone has had this or something similar occur.

Employer was assessed a penalty of $40K under the ACA's shared responsibility provisions (the details don't matter).  At no time did the employer send the IRS any amounts with respect to this assessment.

Employer worked with counsel (me) to abate the penalty, which the IRS agreed to do.  

A few months later, the IRS sent Employer a check for $40K plus interest.  Employer wrote back and said that the check was sent in error and requested IRS guidance on how to handle it.

No response from the IRS.

A few months later, the IRS sent another check in the same amount to the Employer.  The employer responded similarly to what it did before.

A few months later, the IRS sent yet another check in the same amount.  Employer called the IRS and the representative told the Employer to send the checks back.  Employer did so, along with a brief explanation.

All was good until this past November, when the IRS sent a note saying that it was still working on the matter and would respond in 60 days.  Last week the IRS sent another check, this time in the amount of $50K or so, reflecting additional interest.

That is all.

I can't believe that I can't find a previous topic on this...

Pooled 401k plan in a brokerage account.  Participant L (who does not defer) takes out a loan... and the office manager who doesn't know any better codes it as pre-tax deferrals.  It's a 9/30/24 PYE and the loan was taken in August 2024, so we just discovered it 4+ months in.

To the plan, this is a non-issue, right?  L owed $200 per paycheck, and that is what was deposited.  The only 'allocation' is when we do the recordkeeping, so if we say those are loan repayments, then they are credited as loan repayments.  Or do those not count as loan repayments, but rather deferrals... that weren't asked for?

And what about L's W-2?  It correctly shows pre-tax deferrals, because that is what happened.

Any advice appreciated, thanks.