Hi

Preparing my first 5500 for 2023. I heard some mixed comments about completing the new compliance questions.

I am answering them but wanted to check what others think out there.

No multiple employer plans.

Thanks

The 1099-R instructions aren't clear to me for my situation below. for this don't seem clear to me.  Maybe it's simpler than I think it should be. 

We have a client with some employees rolling small DB distributions a Roth IRA.  Code H does not apply since the instructions say that is for Roth source to Roth IRA.  I'm wondering if that is just a G code with boxes 1 and 2 completed with the rollover amount.  am I missing something?

Thank you in advance!

Tom

Hi, 

Looking for some guidance. I assisted with a plan termination, As per the plan sponsor's direction all unresponsive participants fund were rolled over to an IRA account however the plan sponsor has now come back stating the funds will require to be rolled over to the acquiring company 401k plan. 

The plan sponsor is ready to connect with the IRA provider to provide direction to rollover the funds to the acquiring company 401k.   I have two questions. 

• I thought funds from an IRA account can not be rolled over to a 401k plan, is that not true? can the plan sponsor direct the IRA provider to rollover the funds to the 401k plan. 
• The plan sponsor will make the account whole ( is ready to do any gain and loss calculation) and send the money to the IRA provider, so that the IRA provider will directly send the funds to the acquiring company record keeper.  My assumption was the funds needs to come into the terminating plan have the correction done and then rollover the funds to the acquiring company is this not true? 

I am seeing conflicting answers to this one.

A client has established a 401k/PSP for 2024, plan allows Roth deferrals and a Safe Harbor Match. The funding institution has insisted on two accounts for each participant making both traditional as well as Roth contributions.

Can the employer SHM be made to each account based on the ratio of contribution to each traditional or Roth - total not to exceed the matching formula in the plan?

Getting conflicting answers

An employer accidentally sent too much money to the 401k custodian. They have not yet claimed it as a deduction for their company return. I know the concept of "once it becomes a plan assets, it needs to stay" but does that really apply to a clerical error? Can the money be sent back to the employer? 

Got a call from a CPA who asked if there is a rule that eliminates the IQPA audit rule for a plan that has more than 100 participants.  He said this plan is a SH plan. I told him I didn't think there is any relief.  Am I mistaken?  Anything?

Hi

It has been many moons since I have done one of these under ... drawing blank

Given that amendments now can be adopted after year, if I want to increase deduction for 2023 and sign the amendment by 3/15/2024 (2 1/2 months), could it be just an amendment or still an election needs to be made under ... drawing blank (I think it 412c3 or something like that)

Thanks

Question is specific to defined contribution retirement plans only:

Assume a plan has eligible, active participants with no balance. Perhaps a deferral and match plan and they have never deferred. 

Please let me know your thoughts:

A large, well respected software provider is telling me that due to the update in how audit status/large filer status has changed to be based on number of participants with account balances, that the definition of who counts as a Participant for reporting on the Form 5500 /Form 5500-SF has changed. and that their reports will reflect the following:

Participants as of begin of year = Participants w/ balances as of begin of year

Participants as of end of year = Participants w/ balances as of end of year

Where the forms ask for "Total number of participants at the beginning of the plan year" and "Total number of participants at the end of the plan year" the provider is saying that only participants with balances are to be reported, and that the numbers on those line will be the same as the number on the other lines that ask "Number of participant with account balances as of the beginning of the plan year' and "Number of participants with account balances as of the end of the plan year" 

I disagree with them.

I have read the instructions to the updated forms and nowhere do I see that the general participant count as of the begin or end of year should only include people with balances. I really can't believe the software provider is taking that stance, but I thought I would ask the collective mind here for input. I've been doing this a long time and still learn new things, especially when the rules change, so perhaps I missed something. 

What say all of you? Do you think the numbers should be the same? or like me, think they should be different ?  Is this a gray area?

Wow, I'm not usually the participant in my posts!

My wife and I are in an HDHP through my work, but due to some less-than-optimal coverage she is looking at enrolling in an individual ACA plan this week to start 2/1. 

I may stay on my work's plan (not calendar year).  If so, does that affect my use of the HSA associated with it?  I'd presume only my expenses would be eligible to be paid from it.  Or does anything conflict such that I lose my eligibility?  And the annual maximum contributions would be what, the individual limit times 1.083333?

I don't know if her plan choice will qualify as an HDHP - if it does, is that fine?  We'd be in two separate plans that qualify, so perhaps we could continue with the HSA (although my work wouldn't care about her plan's benefits or fund anything on her behalf) with the full 8300 limit?

Am I close?  (This is why I stick to the retirement plan side of the boards!)

Thanks in advance.

--bri

Good afternoon everyone, I hope all is well!

I have a client with about 40 employees, and they want to allow all of them to participate in the Plan.  What they don't want to do is give the Match (which is the Safe Harbor) to a small portion from getting any type of match (less than 5).

Generally I didn't think this was allowed, but I wanted to be sure.  I know if it was a discretionary match, it wouldn't be an issue.  SH, I thought would be but I wanted to confirm

Thanks!

"Basically Green" posted an almost-identical question in November, but I have a slightly different scenario. My question is 'basically' (sorry, couldn't resist:)) - does the Code "B" in Box 7 indicate that the entire cash-out distribution was Roth??  If no, then I can safely prepare the 1 1099-R to report everything at once.  Right?

Details:

My participant, age 26, took a cash distribution of his Roth deferrals and ER contributions.  He did not make the 5-year mark to maintain tax-favored status on the Roth portion.  20% was withheld from the taxable portion of his distribution.

May I prepare 1 1099-R, showing the gross cash-out amount in Box 1, the non-Roth/taxable portion of the total in Box 2a, and list his Roth deferral amt in Box 5?  The codes I would use in Box 7 are: 1 & B.

Here are exact details:  

$1414.87 total cash-out.  $539.94 pre-tax & $874.93 Roth deferrals from 2022 & 2023.

$107.99 was withheld.  This is 20% of pre-tax portion.  I'd put $1,414.87 in Box 1, $539.94 in Box 2a, $874.93 in Box 5, and a 1 & B in Box 7.

Thanks!

Plan as-written was participant directed but everything was invested in a pooled account.  For a bunch of years.

Currently, they are with a record-keeper and everyone is directing their stuff moving forward.

What's the fix for the prior years?

I know the Secure Act forces plans to include part-time employees in the Plan.  However, can a plan still explicitly exclude them as a group in the Plan Document as long as it passes all coverage testing?  I thought we could, I just wanted to be 100% sure.

Thanks!

Client's former spouse is a member of the NYC TRS Pension Plan, and refuses to sign the QDRO because the continuing benefit (the post retirement annuity payments following death of plan participant) awarded to my client is not multiplied by the coverture fraction that the other benefits (pre retirement death and annuity payments during the life of the participant)  are.

1)What specific point in the the law prohibits the continuing benefit from being multiplied by the fraction?
2)What is the logic behind the law that may prohibit this?

Thanks in advance.

Hi everyone,

We are currently working on ways to prevent unnecessary churn with our clients and one of the things we were looking at was making clients aware of the IRS Plan Permanency Rule that essentially states a plan must be established with the intent to be permanent,and if it is terminated within a few years, besides any of the approved reasons by the IRS, then they are at risk of violating that rule which could potentially lead to retroactively being disqualified.  My questions are:

1. Is this really something the IRS even checks? In my six years in the industry, which granted isn't a ton of time, this is something I previously never heard of before and I don't believe it's ever been communicated to any of my previous company's clients when they requested a termination. Are that many people just not aware of it?

2. One of the approved termination reasons is a change in ownership. Does simply selling your business fall under that category?

3. Lastly, is the 5310 form actually required or is that only if they essentially want the IRS's blessing that the termination reason is qualified?

The goal is ultimately to make them aware of this rule in the hopes they might delay the termination of the plan, and although it might not save a ton of business, I think it could definitely deter clients from terminating for reasons like " I just don't want one anymore" , or "my wife and I are going to rollover to an IRA (not Simple) and the employees will figure something else out"

Any feedback is much appreciated!

Decedent changed substantial IRA beneficiary designation to name his mental health therapist who he was having an illicit relationship with during his treatment. T.Rowe Price IRA beneficiary designation mixes up therapist's first and middle name and does not include date of birth and social security number. The form was submitted online, but seemingly "accepted" by T.Rowe Price. Therapist wants to claim the money. 

TRP did freeze the account pending litigation. Does anyone know if this stays RMD requirements or the 9-month disclaimer? What is your experience with incomplete beneficiary designation forms? 

Has anyone heard if FIS will be putting on any in-person or virtual seminars for the Cycle 3 Defined Benefit documents?  I attended one for the PPA and found it helpful but have not seen any buzz regarding Cycle 3. 

Thanks!

I'm new to Excess Benefit plans and have an issue I could use some guidance on. ISSUE: Participant in plan received their first statement after more than 20 years in the plan(statement provider sends annual statements to the ER for distribution). Statement said they would receive $20,000 per month for 5 years after retirement. Participant did NOT receive another statement for over 2 years. New statement , two years later, said one time payment of $20,000-(not monthly for 5 years). Participant questioned ER  as well as statement provide. Six months later ER instructed statement provider to replace the 2 year old statement to reflect a one time payment of $20,000 not a monthly payment for 5 years.

After further research, I am concerned that other eligible participants were excluded from the plan. The ER is publicly traded and has made statements in their annual report the plan is governed by ERISA. In house legal team does not believe there are any issues. I am concerned that there may be ERISA violations as well as 409 issues. Any thoughts or direction to codes would be appreciated.

Just wondering...

The 2-year restatement window for 403(b) plans is currently scheduled to open 1/1/2025.

If the restatement window for 401(k) plans opens 1/1/2026,then the two will overlap. Originally, (in a galaxy long, long ago and far, far away) I seem to recall that the "regular" pre-approved plan cycles were going to be timed such that they would not overlap, but I'm not certain of that.

This could create some challenges.

Do you know if anyone has suggested to the IRS (document providers, ARA, etc.) that the 2-year DC Cycle 4 restatement window not open until 2027, to avoid this overlap? And if so, even unofficially, was the IRS at all receptive to the suggestion?

In the event of a common owner that meets the definition of a controlled group buying multiple companies (some with plans, some without plans, some with safe harbor plans, some without safe harbor plans):  how long since the acquisition of any particular company with any particular plan does the new ownership structure have until they must test all plans together and presumably offer the plan to companies it has acquired without one?  Participant notifications?  Any help is appreciated.