This is new for 2023 and it is covered in the 5500 instructions.  In case I missed something, I thought I'd ask - it isn't optional right?   

Thanks Tom

A 403b  has received a request from a non-resident alien (NRA) to do a direct rollover of his account to an IRA. Up until this point the 403(b) has only had cash withdrawals by NRAs, of which it withholds 30% and reports the distribution on Form 1042-S.

Because this is a direct rollover and assumedly no withholding applies, the 403(b) is wondering how it needs to report this. Does it issue a Form 1042-S? If so, what is the tax withholding exemption code for box 4a? Any direction on this is appreciated. TIA.

These are probably a silly questions, but with such an astronomical penalty, I want to ensure I get this right.

1. Box 1A. reads "This return is: (1) the first return filed for the plan (2) an amended return (3) the final return filed for the plan (4) a short plan year return (less than 12 months)"

For each return, would "(1)the first return filed for the plan" be checked, or does this mean only for the very first return? I.e., does this mean for the plan year being filed, or ever? It sounds like this would only apply to the very first year being filed, but on the form, it looks like this should be checked each year, since this is not an amended return or final return. The instructions say "First Return Check box A(1) if this is the first filing for this plan. Do not check this box if you have ever filed for this plan, even if it was a different form (for example, Form 5500)." But lets say, for example, I file 2021 as the first plan year, and now I'm filling out 2022. I guess another way to ask this question, is it ok to leave Box A blank?

2. When submitting the late return, if box D is available, do I still need to write in red “Delinquent Return Filed under Rev. Proc. 2015-32, Eligible for Penalty Relief” at the top of the return? 

3. If I'm sending these in now, in March, would it be prudent to wait until closer to the July 31 deadline to file for the last plan year electronically, which is not currently delinquent, to avoid triggering a notice for the previous years, if it takes them awhile to process these?

Announced this morning at EA Meeting that Joint Board will eliminate physical presence requirement for continuing education retro to  beginning of this cycle.

https://www.federalregister.gov/public-inspection/2024-05240/regulations-for-continuing-professional-education-requirements-of-the-joint-board-for-the-enrollment

Client was submitting their 1094-C filings with the IRS electronically and two employees’ names kept getting rejected.  The client learned that they were not authorized to work in the U.S. so the client had to let them go.  The client isn’t sure what to do next; I suppose the filing must be incomplete. Any suggestions on how to make sure their 1094C filings are accepted?

I found a somewhat related post here, but what I've got is a little different.

One-person plan, Roth deferrals and profit sharing.  The sole prop (who is age 50+) has 2023 net Schedule C income of $29,000, and he wants to max.  My pension software tells me that his 1/2 FICA is $2,100 (rounding), therefore net compensation is $26,900.

Can he do the entire $29,000 as Roth deferrals?  I think it triggers the catch up rule that it can't cause a failure in the year allocated... but I've never seen it applied to 100% of compensation.

If not, I can split it and make some as profit sharing, but it would be simpler to be able to have it all one money type.

Thanks!

I was recently informed my client "switched to a PEO in December."

I recall this is something like outsourcing.

I think the PEO is the "employer" but wouldn't I use the client's EIN?

I would assume this is just another way AP or PayChex can "offer" their 401(k) administration to the client.

We're currently on hold with our client and a platform that I'll call This Retirement Platform.  The plan has a terminated participant who has a less than $5,000 vested balance.  It's an ERISA plan (there are ER contributions).

It has taken us several DAYS to get someone to accept that this is legal.  I wish I was kidding.

Currently, TRP (by which I mean This Retirement Platform, of course, not naming names) is telling us that such an transaction (a) has to be medallion guaranteed due to "some 2020 law", and (b) must have 20% withheld because it's leaving the 403b plan - yes, even if we're sending it to a rollover IRA.  They can't cite the actual authority for either of these positions oddly enough.

Has anyone dealt with a retirement platform that has tried these tactics before?  Any success pathways (other than "no, give me your manager") or tips to share?  Thank you for allowing me to spill the Tea; it's a hard Row here, but I guess the Price was good at some point.

Thanks.

Question regarding a participant being out on suspension from their job in terms of their loan repayments.

The plan states that repayments have to be made through payroll deduction, so obviously if they are out on suspension no repayments will be made.  There are two options that I see:

1) Re-amortize the loan to increase the weekly repayments
2) Have the employee makeup the missed payments and leave the schedule the same

Is #1 a viable option, or would that not be allowed?  I know we can do it if someone is on a leave of absence, but can we do it for a suspension?

Thanks!

A church, which is recognized as a 501(c)(3) organization, sponsors a 403(b) plan and wants to establish a nonqualified deferred compensation plan for its senior pastor.  The NQDC plan will be designed to comply with Internal Revenue Code Section 409A.

Are contributions to the church's NQDC plan taxable upon vesting, as typically occurs with non-church tax-exempt organization NQDC plans?

If an S Corp has net income of $364,600 and the owner does not take a salary, how much can be contributed to a pension plan? 

Must a COAP be a stand-alone court order like a QDRO? Or could the provisions be incorporated as a section in the divorce judgment and decree? 

Asking for a friend, do not have more details but a general question.

Joe owns 81% of the company.

Joe and his wife Mary were both the in the plan.

Joe stops taking salary and also no longer in the plan but Mary is.

Is Mary still an HCE under attribution rules?

I say yes.

Any comments appreciated.

For an individual-account retirement plan that provides participant-directed investment, an employer seeks a mutual-fund-only window.

It’s okay if the window is provided through self-directed brokerage accounts. But it must be limited to funds, and must preclude individual stocks, bonds, and securities other than shares of registered-investment-company mutual funds.

The selection of mutual funds must not be limited by anything beyond the recordkeeper’s and the broker-dealer’s operations constraints.

Which recordkeepers offer this?

I worked for a non-profit hospital with an ERISA 403(b) Retirement Plan from 06/29/2020 to 07/10/2023.

The employer does not want to vest the total amount in my plan. They say that:

-       In 2020, I worked 968 hours

From 06/29/2020 to 12/31/2020 I worked more than 1,000 hours, but hours worked during the last 11 days of the year were paid in the first paycheck of 2021.

-       In 2021, I worked 1,647 hours

-       In 2022, I worked 1,931 hours

-       In 2023, I worked 762 hours

The SPD for the 403(b) Employee Retirement Plan says:

“Year of Service means a payroll calendar year during which you are credited for at least 1,000 hours of service. For this purpose, an “hour of service” generally means any hour for which you are paid for working for Baptist Health, including payment for vacation, holiday and paid time off hours.”

Regarding vesting:

My question is: How are the years of service calculated in this particular case?

§ 2530.203-2 Vesting computation period.

(a) Designation of vesting computation periods. Except as provided in paragraph (b) of this section, a plan may designate any 12-consecutive-month period as the vesting computation period. The period so designated must apply equally to all participants. This requirement may be satisfied even though the actual 12-consecutive-month periods are not the same for all employees (e.g., if the designated vesting computation period is the 12-consecutive-month period beginning on an employee's employment commencement date and anniversaries of that date). The plan is prohibited, however, from using any period that would result in artificial postponement of vesting credit, such as a period meassured by anniversaries of the date four months following the employment commencement date.

(b) Plans with 3-year 100 percent vesting. For rules regarding when a participant has a nonforfeitable right to his accrued benefit, see section 202(a)(1)(B)(i) of the Act and section 410(a)(1)(B)(i) of the Code and regulations issued thereunder.

I know this has been asked 1,000+ times, but I'm still not clear on the correct way to start the calculation of an individual's net earned income in this situation:

• LLC taxed as a partnership
• Schedule K-1 Line 14A = self-employment earnings (starting point)

Is then Section 179 deduction on Line 12 of the K-1 backed out from Line 14A, or no?  There are no oil and gas depletion expenses, nor unreimbursed partnership expenses from Schedule E according to the CPA.

Plan excludes bonuses. Plan passes 414(s) test, even excluding bonuses - HCES take big bonuses. Plan passes ADP testing excluding bonuses.

Question has been asked as to whether the plan can run ADP test based on full compensation. Well, it CAN, (plan operationally allows for employer to elect any other definition of comp as long as it passes 414(s))  but why would they want to do that? Any ideas as to why this might be beneficial? I'm not seeing it offhand... maybe allowing some shifting to the ACP test by creating more room under the ADP test? 

Participant ina plan took a distribution in early 2023 from his account with Provider 1.  Never cashed the check.  In the interim, the plan transferred to provider 2.

Meanwhile, the check got stale dated and Provider 1 sent the proceeds to Provider 2 who put it in their Unclaimed assets account.  Subsequently, the funds got paid out to his IRA.

The participant is looking for a 1099-R. 

Neither company is claiming responsibility for the 1099-R. Provider said because the check went stale dated, they have no responsibility.  Provider 2 is saying they won’t doing it either since the distribution didn’t happen on their system.

Any idea whose responsibility this is?

normally in those situations we recommend establishing a separate subaccount for Roth money, and conversion is done by election with accompanying physical movement of funds into a separate Roth account within the same plan.  Is there a problem with keeping all sources (both Roth and non-Roth) within a signle account and the "segregation" being done on the recordkeeping level only.  I think it is OK but wanted to hear the wisdom of other practitioners.  Are there any considerations I need to be thinking about?

I'm wondering whether a radio station would be considered a "service organization" for these purposes. I think it is not. There is a substantial investment in equipment, transmitters, etc., etc., and there's no personal service performed by "one or more individuals."

Any other thoughts?