Our Mom passed away just after receiving two 401k rollover checks made out to a new IRA account FBO her name. My sister and I are named beneficiaries on both accounts. We have the checks in hand.

One plan is adamant that because it's a qualified distribution a new check can only be made out to the estate. The other plan is considering reclaiming the check and issuing out proper beneficiary distributions to us but remains to be seen.

It's my understanding that the distribution is a plan asset and ERISA, DOL, IRS would urge fiduciaries to work in our favor? I hope there's some more legal guidance on this that I've missed in researching. These aren't uncashed checks because we're missing or mailed to the wrong address. I know there's been a ruling and chatter from the agencies about taxes on uncashed checks and what to do with them if they stay unclaimed but... This should in theory be straightforward to fix and honor. 

Any thoughts to change their mind?

sole-prop, taxes for 2023 have been already filed.   I am thinking of still implementing a CB plan retroactively to 1/1/2023, funding it now but taking a full deduction for 2024.  Thus, for 2024 there will be doubled-up deduction.  Income is very high so the numbers fit in.  Am I missing anything here besides the additional level of complexity of decoupling 430 and 404 numbers for a year or two?  Had a crazy week so I am afraid I might be overlooking something.

This question is not exactly on point, but here goes:

An old SEP which was established incorrectly, into which an individual made contributions over many years totaling $66k improperly, but for which the accountant never took deductions (because he had advised his client NOT to make the contributions in the first place.) To clarify, the individual is a 1% partner in an LLC, and all of his income is from this LLC, which sponsors a 401(k) Plan for the partners and employees.

Client now wants to withdraw the $$ from the SEP, but custodian is insisting that they must issue a 1099, since the money is theoretically in a SEP.

Can anyone think of a way to convince the custodian not to issue the 1099?.

A plan came to me asking what is the next step.  They received an IRS notice with a penalty.  A response was sent in April 2023.  The IRS never responded and no follow up notices were ever received.  Should the client assume the IRS closed the case?  Should they call the IRS?  

Something I would have been sure of yesterday, but now...

Plan has been around forever and fails ACP this year.  The 2023 match has not been deposited yet, but the affected HCE has plenty of match source money from previous years.  The platform is refusing to process the refund because the contribution to which it refers has not been deposited.  is that a reasonable position to take?

Thanks.

Hello All,

As you know, effective 1/1/2024 most employers are required to file Form 5330 electronically using the IRS Modernized e-File (MeF) System through an Authorized e-file Provider (AEP).  The IRS has a listing of AEPs on its website (even though the link says individuals, it’s for individuals and businesses):

https://www.irs.gov/e-file-providers/authorized-irs-e-file-providers-for-individuals

I've contacted some of those listed and they actually are NOT registered to file Form 5330.  I've also contacted some mid-size and large accounting firms and TPA firms we work with as well as Empower and have found that while they are set up to file as an AEP, they are NOT registered for Form 5330.  According to Empower, they are ultimately going to be able to file, but there is no ETA at this time.

I’m struggling to advise clients how to file electronically other than contacting one of these random providers.  I can’t find anything online addressing the practicalities of this or whether the IRS is even really ready to accept these electronically.  However, per the 5330 instructions, if a paper return is filed when electronic is required, the return will be considered as not filed by IRS.

Right now, I have two clients who need to file, one of which is a $1.7B plan.  I can't tell them to go to the nearest H&R Block listed on the IRS website (which probably is not even registered for 5330).  

What am I missing here?  What is everybody else doing?  Any help is appreciated!

I have a unique client problem. Client (ex-wife) was divorced in 2009. Ex-husband's attorney drafted a QDRO and submitted it to Putnam, the IRA provider, in 2010. Putnam will only give us the QDRO from the file, and states it requested a signature from the ex-spouses on a form letter of instruction in 2010 but ex-husband never signed or did anything further. Client does not recall ever getting a request to sign anything. Further, Putnam told her in 2010 that the amount owed to ex-husband was on "hold" in her account.  At the time she thought little of it. Ex-husband died 4 years ago. Client recently tried to access the funds sitting in her account, but Putnam says there is a hold due to the language in the QDRO that says if the AP dies prior to receiving all the funds and does not designate a beneficiary "such amount shall be paid to the Alternate Payee's estate."

The client gets statements from Putnam that are titled "IRA Rollover for Mary Smith" -- the funds have never been separated into deceased husband's name.  She has no idea if he had an estate, an executor, or anything else. (They had no kids so there was no connection after divorce.) Putnam is telling her the executor can submit forms to request the funds. I am getting nowhere with them. 

For starters, I don't know why the QDRO would govern since this is an IRA (yes, some IRAs accept QDROs but this provider clearly needed other documents to process the division). I don't see what right they have to hold this money in limbo when the ex-husband never signed what was needed to separate the funds. Anyone have any suggestions about how to proceed?

Hello All, one of plan has After tax contribution and there are allocation conditions for match (1000 hours for Active & last day requirement). In ACP test do we need to include all, irrespective of the allocation conditions as everyone is eligible to make after tax contributions which are tested under ACP test. Thanks!

Employer sponsored a 401(k) that allowed union employees to participate.

About 5 years ago ( approx), the Union started their own 401(k) Plan.  Union employees now participate under the Union Plan.

Several of the union employees have a balance in the original plan.

Question,

1. Can the current plan spin the union employees out to their Union Plan?

2. Union employees want access to their funds in the original plan, want to transfer to Union or maybe take a distribution.

3. The Union employees are treated as ineligible class and therefore are not eligible for a distribution ( not 59 1/2, not terminated).

Trying to figure out  a way to get the funds to the Union plan and they can take funds as allowed under that plan.

thoughts??

I have a plan that for the last couple years was required to be audited due to creeping over the 120 eligible participant threshold.  They've never had more than 50-60 with a balance in the plan.  After filing 5500SFs for several years, the last couple years they've had to perform an audit and file the regular 5500 along with an auditor's report.  With the change in regulation counting only participants with a balance and less than 100 participants with a balance, and an audit no longer required, can they just revert back to filing the 5500SF?  Is there anything else that needs to be filed? 

Thanks in advance!

I tried to find this topic addressed, but was unsuccessful.  It seems obvious to me, but what do I know.

Leveraged ESOP, closely held stock, has only one tranche of stock acquired with the proceeds of a single ESOP loan that has not been renegotiated.  Dividends on unallocated shares are used to pay a portion of the stock loan.  In the third year of the loan, 50,000 shares are released per the amortization schedule.  The loan payment was $500,000, of which $100,000 was from unallocated dividends and $400,000 was an employer contribution. There are a few forfeitures that resulted from participants leaving who were less than fully vested.  Therefore, active participants were allocated shares as a result of the loan payment as well as reallocation of forfeitures.  However, only the shares that were released by virtue of the loan payment are using the cost basis of the shares when the loan was funded; the shares released as a result of using unallocated dividends and forfeitures are allocated with a cost basis of the FMV as of the end of the year.  I had always understood that all shares acquired with the proceeds of a stock loan carry the basis at which they were acquired, regardless of release of shares or reallocation of forfeitures.  Am I wrong here?  

Thanks to any all for their wisdom and insight!

I understand that a participant can opt out of the plan .   And that if they do they can not return.  If a participant opts out, they no longer are part of plan testing.... correct?

EDIT:  I meant "Waive out"

And Dang... meant to mention this.... This guy has 2 daughters.  Would they be considered HCEs due to attribution?  I'm guessing they are both older than 18. 
My thought was they may screw up testing so have them waive out... take them out of the equation.  But if they are HCEs by attribution then no issue if they defer very little or nothing at all. 

Still seems funny not having Tom remind us of this. Tom, if you are lurking out there, Happy Pi Day.

Benefits dept found that an employee had overcontributed to FSA ( 2022 )because of an employer error (having 2 deductions  for FSA, 1 was not end-dated). It is now 2024, how does payroll refund the employee?  

We have someone with an old SEP IRA plan that they are looking to roll the money into a Cash Balance Plan?  The value of the SEP is around $1.1 million, just for reference.

Thanks in advance!

I had a CPA ask this question (which is really his responsibility to find the answer) about a predecessor employer:

Dentist A sells practice to dentist B.  Dentist B decides to assume sponsorship even though I recommended that not be the case because the financial advisor did not want to complete new plan setup forms, deal with rollovers, etc.  The question: can dentist B take the new plan credits since this is a new plan adoption for his business EIN?  

Another situation like the above except the selling and purchasing dentist formed a partnership for one year.  So the plan adoption went from Dentist A, to Dentists AB partnership, and then to dentists B for 2023.  A CPA is asking about this one also.   With the partnership in the middle, I told him the credit would not be available in my opinion even though the sponsorship for 2023 is under a new business EIN and this a "new" plan for that entity.  But I told him I'd ask.

I'd be surprised if the IRS would give any attention to this credit given the massive PPP and ERC funds given away.

Thank you in advance.

Tom

Question I'm not clearly understanding. I know that you cannot include LTPT in testing for some purposes, and not for others. Basically "all or nothing" - that is, 401(a)(4),ADP/ACP. 410(b), etc.

What I'm not clear about is, for example, suppose the employer provides that LTPT who defer will also receive a match. Can the employer STILL exclude the LTPT employees, for all the above testing purposes, or must they all now be included for all of the testing? 

I think it is the former, although it seems counterintuitive, but I'm not certain. (P.S. - I base my theory that it is the former on the proposed Regs, and nearly at the end under Section f(3)(i) Example 1((a) and (B).)

Is the new SECURE 2.0 requirement that allows employers to terminate a Simple IRA mid year but only if the employer “establishes and maintains (as of the day after the termination date)” a SH 401k plan to replace the terminated Simple IRA arrangement intended to cover M&A situations (where the SH 401k plan is maintained by Buyer and has been in existence long before the SIMPLE IRA)?   Or does the employer need to initially “establish” the SH 401k plan as of the day after the SIMPLE IRA termination date to rely on this mid-year termination exception?

Thanks.  Apologies if this is addressed elsewhere on the Board.  

Hello there everyone, we have a safe harbor 401k that allows employee after-tax contributions, so I am running some calculations on what the 2024 test results for our plan would look like under various scenarios. I know that in general, if the ADP test passes with room to spare but the ACP test fails then one can shift / borrow from the ADP test to the ACP test to help pass the ACP test. However, how does this work, if at all, in the case of a safe harbor 401k, since it ordinarily automatically passes the ADP test? Would this tactic not be allowed (and hence constitute a significant disadvantage of being a safe harbor 401k), or would it be allowed to calculate what the ADP test would show and shift / borrow based on those numbers should the ACP test fail? I tried looking around but haven't found an answer since it's kind of a corner case.

Secure 2.0 allows mid-year Simple to 401k but is that a two way street?

Section 332, Employers allowed to replace SIMPLE retirement accounts with safe harbor 401(k) plans during a year. Section 332 allows an employer to replace a SIMPLE IRA plan with a SIMPLE 401(k) plan or other 401(k) plan that requires mandatory employer contributions during a plan year, and is effective for plan years beginning after December 31, 2023.

Can I terminate a SH 401k and replace with a Simple in the same year?