We have a small plan whereby each participant has a separate broker account.  We directed the financial advisor to deposit into each person's account their 2022 employer contribution in Sept 2023 and actually again in Feb 2024.  It did not get done until May 2024.  The contribution was made to the plan on time for tax purposes - deposited into a general fund plan .account.  The financial advisor has agreed to deposit lost earnings.

The FA is now getting into areas that in my opinion they should not -asking us if Form 5330 is needed and if the 2023 5500 needs to be amended to reflect the earnings receivable.  I do not see anyway to report this on Form 5330.  The employer did not benefit so it is not a prohibited transaction.   As for the 5500, I lean toward just showing the earnings on the 2024 5500 since that is when they will be deposited.  I suppose we could split our calculation between Oct 1 and Dec 31, 2023 and show that as a receivable and amend the 5500 but that seems unnecessary.  It is filed on an accrual basis since we add in the employer 2023 contribution receivable even though not paid until 2024.

Thoughts?

I know that SECURE 2.0 allows you to terminate a SIMPLE IRA and start a 401k/SH plan in the same year after 1/1/24 (got to love those pro ration calculations!), but what about the other way around?  The fact that I'm not finding that you CAN do it makes me think it's not allowed.  Thanks.

Can someone explain to me why fees associated with Insurance Services would fall under the new line 2(i)5 "Investment Advisory and Management Fees"? No where in the 2023 5500 Form Instructions does it say this nor in the 5500 Regulations site. Shouldn't insurance service type fees just fall under "Other" for expenses on the Schedule H P2?

Thanks!

Sort of an Angels dancing on the head of a pin item here.

The 401(k) regulations are very clear that the sole prop (or unincorporated partner, for that matter) must complete a deferral election no later than the last day of their taxable year. Very common for such a deferral election, if it doesn't specify a specific dollar amount or percentage, to  say "maximum" or something similar.

Now, suppose a sole prop has an election where s/he specified "maximum." But once Schedule C income is known, s/he does not want to contribute the maximum, for whatever reason. Is this a problem? If instead, the deferral election said something more along the lines of, "an amount from zero up to the maximum allowed" or something along those lines, is this an acceptable election? Curious as to whether anyone has EVER seen or heard of the IRS opining on the issue - I have not...

And please don't beat me up with arguments about how stupid the regulations are on this - I absolutely agree that it is foolishness, but I don't make the rules - just try to play by them!

Thanks in advance for any thoughts.

Can a partner who receives a k-1 from a partnership participate in an HRA? Partnership is setting up a fertility HRA and would like all employees and partners to be eligible. 

Has anyone come across guidance regarding whether Code section 72(t)(2)(A)(v) applies to distributions made to rehired employees.  Any guidance is greatly appreciated. TIA.

Safe Harbor 3% plan for controlled group.  We have a location that we have been excluding and now cannot pass coverage or average benefits (unless a significant profit sharing is made to the staff of the eligible location).

My question is, can we bring in the staff needed to pass the 70% coverage test at the excluded location? Would we have to allow them to defer since they would now be considered a plan participant?

If someone wanted to freeze a Cash Balance Plan, what is the deadline to do it?  Like if they wanted to freeze the Plan for 2025, when do they have to make that decision by?

Thanks in advance!

I received an email from a client over the weekend.  An employee thought they were participating in the plan, thought deferrals were being taken and thought they were getting the 5% match.  This employee did notice that nothing was being taken from  their check... didn't see the deferral on the W2.. and is still crying foul.  Paperwork was provided to her be she never completed and returned it.  The employer is willing to make her whole in some way.  What is the best way to handle this?  

edit:  I read that a QNEC can be made on behalf of the employee.  If that is the answer, do I need to go back and issue one each year, amend each year's 5500?  OR, can it be done all in one year and only amend the last 5500?

Damn, another edit:  The IRS link I am looking at states that the correction QNEC would be 50% of the ADP.  So I need to determine what the ADP/2 is and that would be the corrective QNEC.  It is a SH Match plan we need to make that contribution as well I would think.. right?

Thanks

My soon to be ex has a 401K which he has almost nothing left in it due to him empting the account. The state where he filed doesn't seem to care. He has about 200,000 in his pension (which seems odd for working there since 2007.) I am worried about my future since I wasn't allowed to work for 30 years, so nothing in retirement myself. I have asked my lawyer several times about his pension and if I can roll it over to something I can have in my name. She doesn't seem to understand the question. She did send me a copy of paperwork from a subpoena to Fidelity stating different scenarios one being if he was terminated in July if he was terminated in the year he turns retirement age. I didn't understand the termination part of it. Anyway, it didn't state anything about being able to take (I am assuming 50% out) So I am in the dark about what should I make sure the QDRO states. I know its up to the plan administrator along with the court. I just want to make sure I have all the info I can. I have reserched about being able to cash out (meaning after the QDRO is filed I get a cash out and not having to pay the 10% tax fee) but I am not sure if this is just a 401K or if that includes the Pension as well? TYA 

An individual met the 1 YOS/1000 hours requirement in the past and was employed for 15 years.  He did not contribute to the plan and has never had a balance.  He leaves for 2 years (has 2 BIS) and then returns.  The 401k plan does not use the rule of parity and does not use the one year hold out rule.  He would be eligible to re-enter immediately, is that correct?

Can we ever disregard YOS for eligibility in a situation like this?  What if he left after 3 years, was not 100% vested (he did not have a balance regardless), has 3 BIS and then returned?

I've checked the document and it is confusing.  This has to be addressed in it but without having anything specific to point to that says "disregard the following service..." I do not think we can ever disregard any eligibility service.

Any comments are appreciated.

I am a Law Student, and I am working a case assisting an elderly women who was due Alimony from her ex-husband as part of a Judgement of Absolute Divorce. I am not working with the woman to obtain Alimony through a QDRO for the ex-husband's 401k benefits. This Case is in MD and I am aware that unless a party waives their rights in a Judgement to receive the accrued interest in a Defined Contribution Plan, both parties will share in the interest generated over the years. My question is does relate to Alimony that is being awarded pursuant to a QDRO; should I write up that she is entitled to interest accured over the years on her share?

This impacts things like number of employees, revenue (as represented by TOT INCOME on the 990 and Revenue on 5500), liabilities, cash on hand, etc. Can anyone help me understand why I'm seeing those differences?

 I had a question regarding an amicable divorce for medical reasons, in which my husband is already receiving his disability benefit as a 75% Joint spouse option. If I state on the divorce decree that his Annuity remains his now, to avoid the split, is a Qdro still needed for my benefit upon his death or the pop up upon my death. The lady at the plan says no, but will want the divorce decree which will state the pension remains my husbands. Why else do the need the decree now. I do not trust them.

Preface by saying the company is a small S Corp.  In recent years the evaluation of our company ESOP shares versus what the board sets as a price for all other shareholders has grown substantially different, with ESOP market value being now 20% less than what other shareholders value is.  Is this common within privately traded company’s with an ESOP.  

Hello Everyone, I have been informed that the Schedule C can be used for a large plan that is not under a trust if there are non-monetary funds/commissions to a broker of a $100 or more. I have always felt a Schedule C can only be  used for a funded/trust filing. What are your thoughts? Is there any official written instructions on this? Many thanks! 

401(k) Safe Harbor ( 3% Non Elective)

Compensation is defined as W-2 wages - the only exclusion are fringe Benefits.

Participant has GTL wages -

The auditors agree  GTL is subject to salary deferral however, their position is this is a fringe benefit and not included in the 3% safe harbor.

In addition participant received Short Term Disability benefits - paid by the employer and included in W-2 wages

Again the auditor agrees this payment is subject to salary deferral, however, it could be deemed a fringe benefit and therefore not included in the safe harbor calculation.

Thoughts from the group? Are these wages really deemed fringe benefits and not subject to the 3%?  

Problem will be solved for 2025  for GTL will change to 3401(a) compensation. 

Very strange situation.  Participant dies with no spouse.  He does have minor children.  The Plan document (FIS prototype) provides the order of payout.  Since no spouse, the payments will go to the children.  The Plan Trustee reached out to the parents of the deceased participant assuming that they would be the legal guardians.  The Parents will not respond to the Trustee.  At this point the Trustee wants to send the death benefit to the state's (Ohio) unclaimed funds.  We cautioned the Trustee that this was not the appropriate action to take.  The Trustee is totally fed up with the situation and is asking what he can do.

Does anyone know if there is an agency that can be contacted to obtain information on the legal guardian of the deceased Participant's children.  At least this would confirm who the Trustee needs to contact in order to pay out the death benefits. 

Any other suggestions would be greatly appreciated.

I've never had this come up.   Two related employers both with their own 401(k) plans, tested together.  Employee terminates with one and starts employment at the other.  She is asking about moving her money from one plan to the other or possibly taking a distribution.  I see no treason to move from one plan to the other because as soon as she does this, I can see her going back to work for the other company.  This brings up another question - if she is considered terminated from one sponsor and has less than $7,000 in that sponsor's plan I suppose she would need to take a distribution or be forced out.  Or does the $7,000 rule apply to both plans combined in a controlled group?  

Thank you.

S corp, State of CT, H&W, Husband is 100% Owner of the business, both H and W are receiving W-2.  The client wishes to decrease the benefit formula for 2024 (<1,000 hrs as of now).  Is 204(h) Notice required?  I do not believe so, am I wrong?