client terminated plan this year.  There was never any turnover in this small plan so the only thing the Trust EIN has been used for was to establish their trust accounts with various brokerage firms.  1099Rs completed using Trust EIN are being rejected from filing electronically saying EIN isn't correct.  My guess is actually IRS deactivated the Trust EIN.  What is the solution for this issue?

This comes from a CPA we work with.  I'm not familiar with SIMPLE plans, so hoping others here can help.  The client had a SIMPLE 401(k) plan, with the 3% match.  The owner somehow managed to start automatically sending money from her personal checking account to the SIMPLE plan on a monthly basis.  Normal contributions were made through the company, no excess from that.  No match was made on the personal funds.  It started in September 2022 and she discovered the error recently.  About $5500 in 2022 and again in 2023.  Can this be self-corrected by removing the personal funds with earnings?

This comes from a CPA we work with.  Their client had a SIMPLE 401(k) plan, with the 3% match.  The owner somehow managed to start automatically sending money from her personal checking account to the SIMPLE plan on a monthly basis.  Normal contributions were made through the company, no excess from that.  No match was made on the personal funds.  It started in September 2022 and she discovered the error recently.  About $5500 in 2022 and again in 2023.  Can this be self-corrected by removing the personal funds with earnings?

Not a SIMPLE person, asking for a friend:

"My employer started a SIMPLE IRA plan for all employees in April of 2022 with the required 3% match. I contributed the maximum of $14,000 over the course of the remainder of the year. My salary is $200,000 per year, so I believe that the 3% should be based on my compensation over the whole year totaling $6,000. My employer’s accounting firm only deposited $4,500 as the employer match instead of the $6,000 that would equal 3% of my yearly salary and says that they only owe me 3/4 of the total 3% because the plan only existed for 3/4 of the year. This does not seem to correlate to the IRS language regarding SIMPLE IRAs, which states that the percentage is based on the employees’ compensation for the “entire year”, although I cannot find anywhere that says that this language applies even to plans started mid year. What is the correct interpretation?"

Any comments/suggestions are appreciated.

Thank you.

Maybe I should not ask "why", but here it goes:

Is there a reason ages 73 and 75 were chosen for the RMD age? Was it based on:

• data around life expectancy, such as a specific life expectancy table
• a specific report that shows employees are working longer and delaying retirement
• anecdotal evidence 
• balancing act with the budget and those ages just made the 10 year projections workout nicely
• moving from age 72 to 73 is the easiest change
• the drafters favorite numbers

Thanks for any thoughts/comments.

Curious as to how many Plans you either service, or see, that use the option to INCLUDE Deemed 125 Compensation.

I remember discussing this with a noted ERISA attorney many years ago, - I think it was in regard to restating for PPA - and to paraphrase what he said, was that if you include it you'll probably live to regret it. Very complicated for clients and TPA's alike.

I've seen some old discussions on this, but I wondered how people felt about it now, years later.

Hello, 

I have a few clients who are participating employers of H&W MEWAs. The MEWAs hold trusts but for reasons unknown, they  are not filing Form 5500s. Do the participating employers file 5500s for themselves, and if yes, do they file as a trust even though they are not the Plan Administrator of a trust but sent funds to a trust? 

If an employer wants to offer an election period more generous than the 60 days that is minimally required, does it impact the end date for the maximum continuation coverage period?

Taken to an extreme, if the employer allows an employee to elect continuation coverage up until the end of the maximum coverage period (let's say 18 months in a given case), is it correct to say that the maximum coverage period is still 18 months after the qualifying event, and that while the employer is on the hook for claims arising any time during that 18 month period if an employee so elects, an employee electing on the last day doesn't have any coverage beyond the date of the election? 

Does anyone see any other impacts lurking in that scenario?

In a recent BenefitsLink discussion on how to handle a situation about an absence of a participant’s beneficiary designation, Calavera alluded to some possibility that a pension plan might, if there is no surviving spouse and no participant-designated beneficiary, provide no benefit distributable after the participant’s death.

Even if it’s rare, has anyone seen a cash-balance pension plan with provisions like that?

I haven't seen this before, but I'm hoping it's not a problem.  This is for a large 401(k) plan that is administered by a major payroll/benefits company.  The funds for new loans are withdrawn from several sources, no problem with the amounts taken.  The loan repayments are what I'm questioning.  In most cases (if not all) for the repayments, principal is only applied to one source - the profit sharing source.  No principal is applied to deferral, roth or safe harbor match until the loan balance in the profit sharing source is paid in full.  For example, a participant took a $3200 loan - 75% from the deferral source, 12% from the safe harbor source, and 13% from the profit sharing source.  The payments show that only interest is credited back to the deferral & safe harbor match sources and the profit sharing source is credited with all the principal repayment and some interest.

Is this ok?  I have only seen repayments applied back in the same manner as they were withdrawn.

Thanks!

What do you think?

Can a plan allow Roth contributions to only be made for catch up contributions?

Participants who are under age 50 would have no option to make a Roth contribution - Roth would only be available to those who are making catch up contributions.

A participant has excess deferrals of $2000. There were losses during the year. My recollection, which might be wrong, is that the excess is taxed in the year of the contribution (2022) and the gains are taxed in the year distributed (2023) but how does this work with losses, or am I mistaken?

I have never dealt with this before.   Also, not sure if I should have posted this in "Distribution" or in "Estate Planning".

Here is the situation.  A NHCE participant has passed, never returned a Beneficiary Designation form.   The CB is < $1,000.  What paperwork the client should have in place in additional to a "normal" distribution package?  What should be the process to disburse the funds? I am thinking:

1) Some kind of documentation regarding the estate trust

2) Documentation regarding who the trust administrator is

3) Money should be payable directly to estate with the estate administrator being signatory after the paperwork is on file

4) Anything else I need to thinking about?  You do not know what you do not know

Client told me all assets were distributed by 6/30/2022.

Filed an extension on 1/31/2023 till 4/17/2023

Now found out that still 0.02 is in the account and they will close it this week.

When is the final 5500 due?

Matching contributions fail coverage due to allocation conditions.  Plan has failsafe language.  it is FTW document.  Can you bring in participants who did not defer and give them no match because they did not defer?  Seem right based on plan language but seems wrong to bring in employees for coverage without giving them a contribution.  Thanks.

I have a plan that was a start up plan in 2023. They just notified us through their annual compliance questionnaire that the owner had a soloK that he rolled into the start up plan that was set up with a different name and EIN. Upon further questioning as to why he did not tell us about this prior plan he stated because it was for his other company before he had employees. He did not make any contributions to it in 2023 - he only made contributions in the new start up plan along with his employees.  He only mentioned it because his provider for his soloK told him that he had a problem because of the successor plan rule.  What is the best way to correct this situation?

Plan has three allocation groups, with pro-rata allocations within each:

Owners (2 participants)

Other HCE (3 participants)

Staff (6 participants)

Passes testing at gateway (4.25)

Right now HCE group gets 5% of pay.  They want to give ONE of those HCE 8%.

Can they do an 11(g) amendment giving the HCE 8% and 2 NHCE also 8%?

Has anyone been contacted in regard to FIS declining the project to create change the SGN link from TD Ameritrade to Schwab.  We were notified last week.  Our contact at Schwab informed us and wanted to know how we were going to proceed with this block of business. 

What are others doing about this issue?  

If a profit sharing or 401(k) is a REA safe harbor, and therefore does not require spousal consent, is consent nevertheless required if the distribution is greater than $5,000

Hi

Sole proprietor, farm owner. CPA is asking if can use schedule for Pension purposes. 

Never heard of it but someone may have experience with farm owners.

Thanks