Wife has an LLC with no employees.  Husband has an LLC with no employees. Both own 100% of their own LLCs.  The Wife's LLC pays the Husband's LLC.  It is not clear if the Husband has any other source of income in his LLC.  They both would like to set up a solo 401k plan.  Do they need 2 separate plans or could both LLCs adopt the plan and only set up one plan? 

for Wells Thomas, LLC (Branford CT / West Hartford CT)

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for FMI Retirement Services (Huntington NY)

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for Alerus (Remote)

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I am finding conflicting advice as to whether Form 5558 e file is mandatory, if the Plan Sponsor otherwise has 10+ W-2's, 1099's etc that they file.  I realize that e file capability became a reality last year.  My question is, is e file mandatory when the Plan Sponsor has 10+ information returns that it files.  Thank you.

for JHBenefits, LTD (Columbus OH / Hybrid)

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If CODA provisions are added at this time to a large profit sharing plan that was originally effective in 2021, does it have to be an EACA or is it exempt from this requirement because the plan was initially effective prior to 2022?   Thanks in advance for any assistance.

I listened to a webinar today presented by a well-known industry expert. He made a comment about SECURE 2.0 Section 603 that surprised me. He made the comment that to simplify the administration of Roth catch-ups, a plan sponsor could amend the plan to only allow catch-ups in the form of Roth for everyone. I thought I must have misunderstood him because to me the proposed regs and final regs seem very clear that this is not allowed. However, when questioned, he commented that he believes the IRS will allow this and the third party document providers are preparing for this. 

Does he know something that no one else knows? Has anyone else heard rumors of the IRS taking this stance?

Thanks

for The Benefit Advantage (Remote / Auburn Hills MI)

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Hi all,

On reviewing a Plan Sponsor's payroll records/W-2s, I've identified that the owner's W-2 reflects total deferrals of $24.5k for 2025 (not catch-up eligible). Normally a 402(g) Excess distributions would be relatively straightforward, but in this case, the 'excess deferrals' weren't actually deposited in the Plan trust (to the tune of $5k, $19.5k actually deposited), which is why our system didn't flag the 402(g) Excess (as it would have on receipt). Let's say this was due to a missed off-cycle processed by the Plan Sponsor just for the owner to contribute these amounts.

Another complicating factor, is their payroll report indicates that they added back a positive after-tax deduction of $1k, labeled appearing to be in order to correct this, so the funds appear to have not actually been withheld from his paycheck, but the W-2 does reflect them as withheld.

In order to correct this, is the only acceptable method to fund the late deposit of the $5k EE deferrals then distribute them with accompanying 1099-R from the Plan Trust?

Is there any other permissible solutions that don't include funding the excess amount, such as correcting the W-2 or issuing a 1099-R (no accompanying payment) reporting the $1k excess as taxable for a pre-4/15 402(g) correction?

If the funds weren't actually withheld and the $1k excess was, in fact, paid to the individual, does any correction (other than possibly the W-2) need to take place at all?

for American Trust Retirement (Remote)

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I think I know the answer but I wanted to check the following:

Existing 401k plan for a sole-prop.

The election for deferral amount had to be made by 12/31/2025 for 2025 as it cannot be done by 4/15/2026? After year end only applies for new plans.

Am I correct?

for FuturePlan, by Ascensus (Remote / CA)

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for FuturePlan, by Ascensus (Remote / PA)

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for Ascensus (Remote)

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I've been presented with this situation:
Two spouses own two S-corps -
MS owned by J 51% and her husband O 49%
OC owned 100% by O
It's a controlled group because O owns part of MS.

Each business has only one other employee, an NHCE.
OC has a 401k plan (I don't have any other details yet).

Of course, J wants a 401k plan to cover MS... and only MS.

I want to say that as long as the populations are stable, then this is OK.  No matter what feature I put into the MS plan, I'll either have:
1 HCE benefitting, 1 HCE nonbenefitting, 1 NHCE benefitting, and 1 NHCE nonbenefitting = 1/2 / 1/2= 100%
or
2 HCE benefitting, 2 NHCE benefitting = 2/2 / 2/2= 100%

This seems... simplistic?  Like I'm missing something?  What trap am I unwittingly walking into (other than the one where one of the NHCEs leaves and the testing fails and it's a disaster).

Thanks!

If participant died in 2020 and estate is beneficiary (subject to 5-year rule), CARES act said 2020 is ignored for purposes of 5-year rule. Is distribution due in 2026, or was it due in 2025?

Recordkeeper is arguing that we create a fiction that participant died in 2021, such that distribution is due in 2026.

I don't think that's what CARES Act said but it would be a good result if everyone here thinks recordkeeper is right!

for BPAS (Utica NY)

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This is a profit sharing plan with spouse owners only.  Both are subject to the RMD.  Husband died January 2026. Wife is the primary beneficiary.  The Plan requires the RMD in year of death be based on the deceased date of birth and the beneficiary's DOB in the following years.

Does the wife have the option of waiving the 2026 RMD without penalty?  If she is eligible to waive, will she be subject to both 2026 and 2027 in 2027?

Due to the non-liquid nature of plan investments, I do not believe she will be able to roll the husbands benefit to an IRA at this time.

Thank for your help.

 

for Cetera Retirement Plan Specialists (Coppell TX / West Des Moines IA / El Segundo CA / Saint Cloud MN / Hybrid)

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