I was automatically enrolled in a 401k by my employer without my consent, and after I filed a form to opt-out of their automatic enrollment program. What can I do to get the money they deducted from paychecks returned?

A former employee had been receiving annual payments from her NQDC plan, and we were issuing her W-2s. We just learned the former employee died a couple years ago. The spouse has continued to cash her checks. How do we correct the tax reporting from W-2 to the deceased former employee to 1099-MISC to her spouse? 

Self-employed person/1099 contractor has a DB plan. The person contracted with one employer which no longer needed the services. The person provided no services and received no income for the year.

The plan document defines credited service as elapsed time. Does this person get credited service or not? Compensation was zero so we aren't concerned for benefit accruals but need to know if service can be credited for 415 service and participation.

My thought is that because the person did not provide any services that no service should be credited. I think this is different than if services were performed but expenses exceeded revenue resulted in zero net income/compensation, in which case I think you could/should credit service. 

I looked in the regulations but could not discern an answer, nor could I locate guidance elsewhere. Is my thinking correct/reasonable or flawed. Also, this is more than a one-year situation.

Thanks

An Employer is in the process of establishing a new single employer plan (401(k)) effective in 2023.  They will spin off (not terminate) from a PEP that they are currently in and transfer the assets from the PEP into the new plan.  They do not have a safe harbor provision in place in the PEP, but they would like to add a safe harbor provision to the new plan for 2023.  Is this permissible?  How would the ADP testing work for 2023, would they need to test separately in the PEP for the short period and correct via refunds / QNEC (assuming the test fails for the short period), or are we permitted to test the entire year under the new plan (and the safe harbor provisions, assuming this can be added to the new plan in 2023)?

Any input would be greatly appreciated.

Thank you very much.

I started a 401K plan in 2000, stopped contribution in 2011 because of job change; was married in 2005.  I just received copy of QDRO and they are asking for 50% and it is not a correct calculation.  What can I file to correct the order?

Can anyone tell me what impact (if any) changing from a C corp to and S corp might have on the company's profit sharing plan.  The owner is the only employee.  

If there are no HCE's who are left participating in a DB/DC combo plan (an odd situation, I know, and it may just be a 1 year aberration), how would that impact the Gateway?  Is it still the 7.5% or can that be reduced dramatically?  The employer is going through some turmoil and change over so just want to make sure what we can/can't do.

Thanks in advance

My apologies if this has been answered before.  I saw one post from 2018 that was not very conclusive.  

Is it possible for a 403(b) plan to allow for prevailing wage contributions in the 403(b) plan, as is possible in a 401(k)?  So the fringe benefit portion of the prevailing wage, if not used for any other purpose, would be deposited in the 403(b) rather than given out as cash.

I'm assuming if it is allowed it would be subject to the availability in the plan document and the service providers limitations.

Thanks very much.

Hello,

We've got a plan with 0 hours required for eligibility and 1,000 hour required for benefit.  1 owner that works 1,000 hours and 2 employees that don't work 1,000 hours.  Are we going to have testing issues?  Are one of these employees going to need to benefit?

Thanks!

Hi! I'm hoping that I can get some experts to weigh in here. I'm excited about the new process for determining if a plan is subject to an audit starting with the 2023 plan year - it's now looking at participants with a balance - yay! However, it leads me to wonder if the definition for large vs small plans will be extended to the DOL safe harbor regarding timing of employee contributions for small plans. I looked at the federal register and it doesn't specifically link to 5500 status, it only states "100 or more participants". 

What are your thoughts on this? I'm thinking that unfortunately, we are going to have a larger difference of small vs large now between the SH rule and the 5500 filing than in the past [since 100 ppt filers did not have to file a large 5500 until they hit 120]. Thank you!

Can a participant who inherited an IRA from her late spouse roll over the IRA into the 401(k) plan in which she participates? The plan allows rollovers from all permissible sources.  Can she then take a loan from these rolled over assets, given the plan allows loans from all sources?

Can the 3-year pre-normal retirement age catch-up apply to allow employer nonelective contributions in excess of the applicable dollar amount ($22,500 in 2023)?

Thanks in advance if anyone can help me with this.

My company farms out the payroll to a very large payroll company. Our last pay period of 2022 went from 12/19/2022 to 1/1/2023. 1/1/23 was a holiday and since it fell on a Sunday, was celebrated the following Monday and went on the next paycheck (no one worked that day at all). Which means all earnings on that final 2022 paycheck issued on 1/6/23 were earned in 2022. 

For some reason, this payroll company used the new year (2023) HSA deduction amounts that each employee selected in November to begin with the new year for 2023 earnings instead of the 2022 HSA deduction amounts for each employee. (This is the amount each employee contributed to their HSA account each paycheck)

I cannot get them to correct this or show me any proof that they are allowed to withhold 2023 HSA deduction amounts on 2022 earnings

So I guess my question is- Is it legal to use the following years HSA deduction amount on the previous years earnings if that previous years check is distributed in the following year, but contains no following year earnings?

I hope that makes sense and thanks again.

An employee had withholdings done as pre-tax instead of Roth and didn't notice until they saw their W-2.    I'm sure Ascensus will just say have the plan sponsor give us instructions and we will move the contributions and earnings (loss actually) from pretax to Roth.

Is there a prescribed fix for this?  Seems fixing payroll is the only reasonable correction.  Not sure what else would be equitable.  

Thank you.

Buyer is purchasing Seller in a stock transaction.  Seller has agreed to terminate Seller's 401(k) Plan immediately before the closing.

After closing, Seller will perform final testing and make any necessary refunds.  Is it possible to refund through payroll so the participant's W-2 is accurate, or must it be handled by 1099?

For example:  Before closing, Employee defers $22,500 in Seller Plan.  After testing, Employee receives a $6,000 refund.  After closing, Employee defers $6,000 to Buyer Plan.  Would Employee's W-2 show $28,500 in the 401(k) Box (since payroll provider is the same), and also receive a 1099 to show the $6,000 refund?  Or can we just adjust the W-2 to show $22,500 in deferrals for the year?

Can a MEP plan use Top Paid Group for testing?

Are ATM corrections subject to the 3/15 deadline? (for 1/1 plans)

A client want's to take a second loan.  I looked at the IRS' explanation and it is not how I have been calculating 2nd loans.  In the end I have been more strict (it appears).  Am I wrong?

Here is the link to the IRS' example

IRS Example / My comments in blue

Jim’s vested account balance is $80,000. He borrowed $27,000 eight months ago and still owes $18,000 on that loan. Jim wants to take a 2nd loan.  What can he borrow?

Maximum second loan if amount still owed on first loan
Jim’s current loan balance is $18,000. This amount plus the new loan cannot exceed the lesser of:

1. $50,000 – ($27,000 - $18,000) = $41,000, or
2. $80,000 x 1/2 = $40,000

Jim’s total permissible balance is $40,000, of which $18,000 is an existing loan balance. This leaves a new maximum permissible loan amount of $22,000 ($40,000 - $18,000).

I always said that you take the vested balance to find the maximum loan amount for the 1st loan.  
If a 2nd loan is requested regardless of whether the 1st is paid off or not, this is how you calculate the maximum allowed:

  First, determine what the maximum loan amount can be right now
  Next, If the participant has an existing loan (or had a loan in the past 12 months), look to see what the highest balance of that loan was and subtract it from what the participant's could borrow now had s/he never had a loan
  THAT is what they can borrow.

Using the IRS' example I would say that Jim could only borrow $13,000  ($40,000 maximum allowable less highest outstanding balance in the past 12 months or $27,000..... 40,000 - 27,000 = 13,000), not $22,000

It's a big difference.  The IRS' example is more beneficial.  Have I been wrong all these years? 

Bank executives have employment agreements that allow 2 times pay as severance for voluntary separation from service within one year after a Change in Control defined by reference to 409A definition of Change in Control Event.

Bank wants to incorporate a Holding Company and do a statutory share exchange where all of the Bank shareholders exchange their Bank common stock shares for Holding Company shares, leaving Holding Company as owner of all shares of Bank common stock, and Holding Company will then have same shareholders that Bank had before the transaction.

No Bank shareholder is related by attribution rules of 318(a) to any other Bank shareholder. No Bank shareholder owns more than 30% of the outstanding shares of Bank.

Bank has asked if this is a Change in Control Event under 409A, for purposes of the employment agreements of the Bank executives. After this transaction, if one of the Bank Executives leaves voluntarily, would he or she be entitled to the severance pay under his or her employment agreement?

I know this shouldn't be a 409A Change in Control Event, as nothing has "really" changed, but I'm having trouble pinning down why in the regs under 1.409A-3(i)(5)(v), (vi) and (vii). Even if the shareholders of Bank are treated as acting as a group, (because they are involved in an acquisition of shares involving the corporation they all own) the Holding Company is a separate "person" and as an entity it does acquire more than 50% of the voting stock of the Bank in the transaction.

After the transaction, the 318(a) attribution rules don't help with respect to the original shareholders, with respect to Bank stock or Holding Company stock, as none of them own more than 50% of the Bank stock or the Holding Company Stock before or after the transaction, and the attribution rules of 318(a) measure stock ownership of each shareholder even if they are "persons acting as a group" for other purposes.

Also, since the Bank stock will remain outstanding after the transaction, the exclusion from the definition of Change in Control of 'transfers to a related party'  of 1.409A-3(i)(5)(vii) respecting Change in Ownership of a Substantial Portion of Assets does not apply the way it might in a merger where the stock of the target does not remain outstanding after the transaction. 

Can anyone point to the regulation under 1.409A-3(i)5(v), (vi) and/or (viii) that excludes this transaction from the definition of Change in Control Event under 409A?

A company with 30 employees has a non elective safe harbor contribution of 3%.  They would like to change to a safe harbor match with a 4% match (or using the match formula).  Can this change be made anytime with participant notice or must it be done at the beginning of the next plan year with participant notice?  If it can be done during the year:  what kind and how much of a notice do the participants need to be given.  Thanks for any help!