Last year, someone was generous enough to post the 12/31/2021  actuarial equivalents for a J/S and an individual life annuity for an account balance at age 67.  I was wondering if anyone would do the same for 12/31/2022?

The central issue is whether or not a family member can be excluded entirely from the plan (0 deferral, 0 SH 0 PS)?

An ESOP has a standard distribution policy, 5-year wait, payment thereafter in 5 equal installments (no acceleration below $5K, no segregation of stock accounts, fees fully paid by the Sponsor).  Last year the installments were incorrectly counted and participants who should have received their 4th installment (i.e. 50% of the available balance), their payment was calculated based upon a 3rd installment and received only 33% of the available balance.  While this may be an operational failure for not following the terms of the document, is there a correction to be made?  If future company stock gains are neutral or positive, I don't see that the participants were disadvantaged in any way that would produce a basis for a correction. 

What about a participant who was due their 5th installment(100%) but only received 50% of their available balance and now will need an additional distribution?  Are they harmed vs a comparison to the broader stock indexes? 

How should future installment amounts be calculated, does the missed amount all get made-up in the next payment, or are they calculated normally based on the remaining periods?

We may or may not take over the administration of this small defined benefit pension plan.

I know this is somewhat common but do not know the solution. What happens when a company adopts and funds a non-model SEP on December 1, 2022 for the 2022 year and adopts a qualified Defined Benefit Pension Plan on January 15, 2023 effective for the 2022 year?

Does this work like if a SIMPLE IRA were adopted in the same year as a qualified plan. I think in that case there is an exclusive plan rule where the SIMPLE would be invalidated and distributed under VCP.

A non-model SEP and qualified plan cannot be maintained at the same time. Is the SEP or the qualified pension plan invalidated?

Thanks.

Hi

Here is a new one never dealt with before.

I found out that the client (over age 50) has an excess situation and not sure how to tackle it

The plan has the following features: 401k+NESH (3% mandatory)+PS.

The plan is also used as a QRP - qualified replacement plan

During 2022, $136,000 was deposited with the following breakdown

• April 2022 - $6,500 - from biz - 2021 catch up
• July1 2022 - $58,000 - from QRP - 2021 NESH+PS
• July2 2022 - $6,500 - from biz - 2022 catch up
• November 2022 - $65,000 - from biz - towards 2022 NESH+PS

The July2 and November deposits created a $4,000 excess deposit during 2022 i.e. over the 415(c) limit. (71,500-67,500 (max 2022 415(c) limit) = 4,000

How is this to be corrected?

Any suggestion/pointing to the right direction is appreciated.

Thank you

Plan defines compensation as 3401(a) wages.  Participant receives payment under a state paid leave law.  Payment is actually made by the insurance company, but the income will be reported to employee on a W-2.   It is my understanding that this would generally count as compensation under the plan even if paid by the insurance company.  Does that sound correct?

Plan does contain 414(s) exclusions, but I don't see that a paid leave program is a fringe or welfare benefit.  Does that sound correct?

Thanks for any guidance.

When are 457(f) contributions actually payable? I know it depends on the document, but under the regulations, when can a 457(f) plan allow for distributions? Is it permissible to distribute  upon full vesting, if the participant is still employed? I don't see anything in the regulations that allow actively employed participants to withdraw vested amounts, other than for unforeseeable emergencies, taxes, or attainment of age normal retirement age, or at a stated event. 

Would becoming fully vested be considered a "Stated Event"?

I have an expansion of the work force as of January 1.  These newly covered employees were previously excludables. Is it reasonable to disregard them with regard to the prior benefit structure under 401(a)(26) since they were not eligible to have accrued anything prior to 1/1. The cash balance book I have discusses this issue with regard to new plans; the same issue is involved here. Hard to imagine the force of 401(a)(26) is somehow to require the granting of past service credits upon entry to satisfy the prior benefit structure test. Short on time to research this in depth so any existing knowledge or thoughts would be appreciated.

A collective bargaining agreement calls for a regular hourly contribution to a multiemployer profit-sharing plan. A contributing Employer is having difficulty with employee retention and would like to negotiate a lump-sum payment for each employee. This mandatory payment would be made 90-180 days after the new CBA is signed and only for those actively employed on that date.  Are there any issues with this payment?

Thanks in advance.

If a company has a 401(k) plan with safe harbor contributions, and the company wants to implement a one (1) year of service requirement for said safe harbor contributions, can we implement this requirement retroactively to January 1, 2023 or do we need to specify a date in the future, since there are 2023 hires who are eligible under the current requirements - or lack there of?

Coming from an insurance company pension department, if a profit sharing plan was funded with individual bundled annuity contracts and  a participant terminated employment and wanted to keep the same underlying investments, it was advised to change the ownership from the XYZ profit sharing plan to the individual and the beneficiary to a non-plan beneficiary. Plan does not require spousal  consent regardless of over $5000.

Insurance company, of course, told the plan trustee no 1099 required as this is a rollover, even though same contract.

We all know insurance company personnel can be and usually are giving out wrong information and IRS requires 1099s for any money leaving the plan, whether rolovrr or cash distribution with withholding.

Question, is this transaction truly a "rollover".

I am inclined toward a "yes" and the participant is due a 1099, code G for rollover.

Startup Plan has owner and spouse, both employed over 1 year.

Their 3 employees have less than one year of service.

I'm curious which of these approaches is preferred:

• Immediate eligibility for all 3
• Immediate eligibility only if already worked one year of service, so that the 3 employees will not be in the plan for the first year.

Hi. While an employee is out on leave and not receiving a paycheck, the employer direct bills the employee for their health insurance premium. The employee pays the premium with after-tax dollars. When the employee returns to work, does the employer have any reporting or other obligation regarding the fact that if the employee had been actively working, the premiums would have been paid with pre-tax dollars?

Making sure to get this right.

New plan, effective date 1/1/22, adoption date 12/1/22; 2 HCE's & 2 NHCE's.

• Startup costs - Because adopted prior to 12/29/22, they only get 50% of startup cost credit, or $500 in this case/yr, for taxable years 2022-2024. Say startup cost in 2022 was $2,000, then $500 credit in first two years only to equal $1,000, or 50%.
• Contribution credits - plan is still eligible for credits on NHCE PS contributions (< 50 ee's); up to $1,000 at 100% for 2023 (2nd year of plan); 75% for 2024 and so on.

I am looking for credible sourcing of the percentage of 401(k) plans which claim 404(c) status.  

Any ideas?  

I thought an eFast search would get me there but no luck.

Hi Folks,

Wondering if we can simplify the management of a small plan, owner is subject to RMD under § 1.401(a)(9)-2(b)(3) 5% rule and currently contributing to the plan. Is it allowed to reduce the transfers of cash in such a situation, for example:

1. RMD is $10,000.
2. Contribution is $15,000.
3. Contribute $5,000 and do not remove assets from plan.

It seems economically the same to the plan, and the owner still receives their 1099-R for $10,000 so they are paying appropriate taxes, just not sure if there is any rule that I might be overlooking here?

Thanks for any insight!

I'm hoping for help and clarification on this section of SECURE 2.0. With the automatic enrollment exceptions for small businesses with 10 employees or less, I am curious on how the employee count is defined. Is this looking at the total number of employees who received wages, tips, or other compensation from the employer (what would be reported on Form 941) regardless of whether all employees are still actively employed? Or is there another definition?

As an example,

- If Employer A has 8 employees at the start of the year.

- 4 employees terminate mid-year.

- Employer A then hires on 3 more employees before the end of the year. At the end of the year, they have 7 active employees.

Would this employer be considered to have a total of 11 employees for that tax year and then be subject to the automatic enrollment requirements under SECURE 2.0?

Account Owner of IRA failed to take RMD for 2022 (account owner was incapacitated and under conservatorship).  Account owner subsequently passes away in 2023.  The question is, how does 2022 RMD get addressed?  Are the beneficiaries liable for the 2022 RMD?

Any recommendations for an IRA custodian that will accept Real Estate from a 401(k) Plan?

A summary plan description's ERISA-rights notice includes this:

If you request materials from the Plan and don’t receive them within 30 days, you may file suit in a Federal court. In such a case, the court may require the Plan administrator to provide the materials, and pay you up to $nnn a day until you receive the materials, unless the materials were not sent because of reasons beyond our control.

What is the current amount?