Bob owns his own RIA 100% pushing investments. He also owns a 50% stake in an insurance business.  No control group.

The insurance business has 4 EEs.  If they setup a 3% SH 401(k) plan I don't have to worry about Bob exceeding the 415 limit if he maxes out the RIA business.  Correct  

Of course I need to watch the 402(g) limit.

What is the correction method for an operational failure to exclude rollovers when applying the $5000 involuntary cashout distribution rule in a plan to termed participants?  The plan has operated since 2018 as if rollovers were included. Do we go back to each prior plan year and look at the small accounts that should have been cashed out and cash them out now in 2024 even though the  vested balance could now exceed $5000. Thank you for your thoughts. 

An RMD was requested on 12/29/2023. The fund company didn't process it until 1/2/2024. They said a 2024 1099-R will be generated since the distribution wasn't actually done until 2024.

How is the handled by the participant regarding his taxes? He is expected to reflect a 2023 RMD but will not have a 1099-R to show for it. in 2024, he will end up with 2 1099-R's.

We have a Safe Harbor Non-Elective plan that wants to terminate the plan in January of 2024. The plan's only participants at this point are the owner and his spouse.

 

What would be the requirements to terminate the plan? The owner would like to terminate the plan as early as possible.

 

Thank you.

Plan provides for immediate entry for deferrals and Safe harbor non-elective.  Profit Sharing requires 12 months of service.   Plan is not top heavy. 

In 2023 an owner's son got hired and deferred and is getting the safe harbor along with 6 other NHCEs.   They all are getting the 3% safe harbor.  I am testing the plan using cross testing.  This passes non-discrim testing for the >12-month group but fails for the <12-month group.  I'll have to allocate profit sharing to the <12-month group to pass testing.  Or does it need to be allocated as QNEC?  In hindsight, the plan should have excluded HCEs from the safe harbor non-elective.  But that is obviously too late.

Thank you in advance for any comments.

Tom

For those of you who use either Quickbooks Desktop or Online for your finance/invoicing software, how do you handle clients with multiple plans? With desktop, we used "jobs" for each plan under a single client. It is possible with Online, but getting the job onto the invoice is proving very difficult. I was thinking maybe someone has a better way to track this. Thanks.

I am new to the issue of Cross Testing, but started my career in Pensions (Entry Age Normal..anyone?) and am now using this concept for my own SEP Plan.

Can anypne point me to the latest Excel in the public domain, I can use to sort out the EBAR for a situation where there is a 401K and a SEP? Thanks in advance 

Ken.phillips@benefitscape.com

Plan has a 1- month of service eligibility provision.

They are increasing that eligibility provision up to 1- year as of first day of next plan year.

I believe then, anyone hired within one month (ie from 12/2-12/31 of a calendar plan year) before the eligibility change would be required to wait for the full year, since not being participants, plan rules don't yet apply.

If a plan terminates, and the plan had heretofore stipulated a concluding day of the plan year condition for eligibility for an allocation, and the effective date of the plan termination occurs prior to the hitherto calibrated end of the plan year, prima facie the last day of plan year employment eligibility condition resynchronizes to the effective date of plan termination. Please provide guidance on this situation.   

NHCE Participant in a small, successful office where all other employees are HCEs. Eligible for entry into the 401k Plan in July 2022.  Terminated employment in October 2022.  Participant claims they were never offered the opportunity to participate in 401k.  No automatic enrollment, Safe Harbor Non-Elective contribution was made for the participant for the Plan Year.

IRS Guidance says correction is a QNEC for 50% of the missed deferral, calculated on ADP of other NHCEs and applied to their compensation from the period of time in which they were excluded.  How do I calculate that amount if there are no other NHCEs?  Do I use the ADP for the HCEs, since they are the only group?  Or is there a Safe Harbor percentage that I would use?

3 software developers worked 10 years as independent contractors for “Business Software Company” that was 100% owned by “Investment company”.   There were no Employees of Business Software company or “Investment company”.   In 2022 the 3 developers, as a new partnership “Partnership”  purchased 75% ownership of Business Software Company, each partner now owns  25% and the remaining 25% still owned by Investment Company. 

 

 

The Software company appears to be unrelated to Investment Company.   

The 3 independent contractors may/may not have had individual 401(k) Plan (we were told one possibly has one).

One of the partners of the new partnership came to us looking to start a new plan.  

Should we be concerned about the successor plan rule?

Thanks in advance!

Curious to know what action (if any) should be taken in this case.

Employee makes an annual DCFSA election of $4992 back in January of this year.  Given the timing of this election, the benefits system calculates that $208 per pay should be taken from the employee's check based on the 24 payroll deductions.  Unfortunately. the deductions don't start from the paycheck immediately and only 22 deductions were made.  Only $4576 was taken from the employee's paycheck.

This error was only discovered after the last paycheck of 2023 was processed, so there is no easy way to catch-up on the missed contributions.

Given that every dollar that was taken from the employee's paycheck was properly deferred to the DCFSA, is there any action needed?  With no additional payroll cycles left, what options would be available to correct 2023?

 

So can I conclude that what the LTPT rules found in the Secure Act 2.0 are saying is this :

•  If you work between 500~ 999 hours for 2 years then you become eligible to make a salary deferral contribution
•  And... If a LTPT employee does make a deferral we don't need to include them in the ADP test
•  And... they are not eligible for the SH contribution or a profit sharing NEC 

What it is doing is giving them (LTPT ee's) the ability to put some money away for themself if they want when normally they wouldn't be able to due to plan eligibility requirements?  With no real effect on testing?

AND, should the LTPT'ee become eligible eventually (because they meet the plan's eligibility requirements due to working more than 1,000 hours) they would enter the plan as normal?

Wow.  @Carol V. Calhoun has posted (12/04/23) a thoughtful treatise/practice note on Substantial Risk of Forfeiture.

https://benefitsattorney.com/articles/substantial-risk-of-forfeiture/

Can anyone recommend a company that offers E&O insurance specifically for TPA firms? I am having trouble..

 

Thank you!

Now that a plan with Roth 401(k) amounts can be amended so after 2023 no during-life minimum distribution is required from those amounts, is there a remaining reason an individual might prefer contributing to a Roth IRA rather than to a Roth 401(k)?

Or is a choice between Roth 401(k) and Roth IRA in equipoise?

Assume the amount the individual can afford to contribute is less than the IRA limit.

Assume investment choices and access to investment advice do not favor an IRA.

Hi

Setting a new plan effective 1/1/2023 and want to exclude service prior to inception for vesting purposes.

Prior plan was terminated during 2017, all assets distributed in 2018 (10/15/2018) and final 5500 was filed in 2019.

If I recall correctly, year of termination should be used i.e. 2017 and therefore plan termination was more than 5 years since 1/1/2023.

Thus, the new plan can exclude YOS for vesting prior to 1/1/2023.

Agree?

Happy holidays to all.

A friend established a Keogh/HR10 in 1984 for his self-employed, sole-proprietor, no-employee business. He has filed informational 5500 returns properly as required. Charles Schwab and Co., Inc. is his plan document provider and account custodian. He does not have a copy of the original plan nor intermediate restatements for the first 30 years, but has all restatements since 2015. Contributions stopped in 2002.

 He wants to convert the account to a rollover IRA. He believes (as the administrator of his Keogh) to do the conversion he must have all restatements and original plan document in his possession.

 Only by trying multiple support calls to Schwab, lengthy through their tiers of expertise, can he sometimes get one more plan restatement that is missing, sometimes not.

 

He is quite anxious about exposing his retirement account to disqualification, and would like to avoid penalty if possible. Is his situation a) ignorable – he does not need original and all restatements, b) do you know of a knowledgeable, direct Schwab contact for his situation, c) amenable to the IRS employee plan compliance resolution process (Rev. Proc. 2021-30 and later, voluntary correction program), or d) how does he find a third-party retirement plan administrator (TPA firm) that could provide historical Schwab Keogh plan restatements? Or other options?

Is a new registration statement required where a portion of a top hat plan is spun-off in connection with the spin-off of a subsidiary whose employees participate in its parent's top hat plan?