Does anyone have a generic special tax notice that they have been using that doesn;t reference any recordkeeper names?  Something special designed for TPA's for example?  I know Relius Documents spits one out but I think they customize it quite a bit based on plan document elections and we want one for all plans.

The IRS one has two separate notices, one for Roth and one for Pre-tax and that's, well, not workable.

Can a DB plan be amended to permit in-service lump sum distributions and also cease future accruals for any person who elects to take a lump sum?

I've got a plan (only deferrals and SHNEC money) where the employer is undergoing an asset sale on 1/31/24.  We were all set to terminate the plan on that date pursuant to the business transaction (so they can keep the SH for 2024).  Today they asked if, since it's an asset sale and therefore they will 'retain the company' after 1/31, they can pay out bonuses after 1/31 through payroll (since they'll suddenly have a lot of cash and they are very nice to want to share it with some of their former employees) and how would it affect any plan calculations.  It's not clear yet if they prefer it to be counted or not, but first I want to make sure I've got all the pros and cons right.

I think that as long as the 'payroll date' is in 2024, it will get brought in as plan compensation under the post-severance comp rules (which are included for plan compensation).  The employees are considered terminated on 1/31/24.

Also, since they are retaining their entity (they are an LLC taxed as a partnership), they can effectively say it is open until 12/31/24 and therefore the plan also goes along with that.  I'm fine with terminating the plan effective 12/31/24 - it might even give the partners some additional income if they collect money during 2024.  But if they want to terminate the plan, say, 6/30/24, do they lose the benefit of the safe harbor since at that point, the plan termination is no longer connected to the business transaction? I suppose they could give a 30-day notice at that point - there are no active employees to get it, so they could just stick it in their files.

I'm sure I'm overcomplicating this...

Good afternoon, I hope all is well with everyone.  I know Secure 2.0 had initially said that Hardship Distribution could be self-certified.  Was that pushed back, though?  I just want to make sure, as we had a client that had adopted that strategy, but I think we may need to backtrack.  I just want to be sure.

Thanks in advance!

We are working on a 403(b) plan termination with TIAA CREF.  Although TIAA CREF has certified that the plan is terminated, we have plan summaries with assets after the termination date, which, according to TIAA CREF, is attributable to individual contracts.  These plan summaries still have the plan sponsor's name on the reports.  At what point can we say that we have sufficient documentation to say that the plan is terminated and all plan assets have been distributed?

Confused here, IRS notices 2023-66, -72, -76, and 2024-04 showed 2024 ARPA Segment rates as 4.75%, 4.87%, and 5.59%.

Now IR Notice 2024-21 has 2024 ARPA Segment rates as 4.75%, 4.96% (instead of 4.87%), and 5.59%.

Note that they show the January 2024 segment rates as 4.37%, 4.96%, and 4.95%.

Did just leave a voice message with the IRS to figure out if they have a typo on 2024-21.

Holding off on doing 2024 valuations for now.

May a governmental defined contribution plan exclude from vesting service time in which the employee was ineligible to participate in the plan?

More specifically, an employee is in a category of employees excluded from the plan, works for a year or two, then is transferred to an eligible class. May the plan count only the employee's service for vesting purposes from the date he or she became eligible to participate?

Thanks in advance. 

It is my understanding if a specified employee's deferred compensation is subject to a 6 month delay, income tax is due at the end of the 6 months when the deferred compensation is paid. Is this correct? I have an employee saying otherwise.

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?