What are the ramifications, if efiled without the SB and then amend a couple of days later to include the SB? Thank you!

Hi.

The situation is that an 85+ year old client has a terminal disease and has a life expectancy of several weeks to maybe a few months.

This person has no spouse and has named his four adult children as beneficiaries of about $300k each. 

I've read everything I can find on the new Secure Act rules, and it seems the best planning the beneficiaries can do is inherited IRAs and withdraw the money over a 10-year period.

But I'm not even sure that's correct.

Can the beneficiaries implement inherited IRAs to receive their distribution from the deceased's pension plan 

If so, is the period during which they must withdraw the money 10 years? And if so, must withdrawals be level or can they wait 9 and 1/2 years and take all the money at once? Or decide each year how much they want as long as they take it all out in 10 years?

Is there a tax deferral strategy that's better, if deferring taxes is their goal? 

Thank you. 

Hi, hope all of you are going great.

I’ve a question regarding required minimum distribution (RMD) and the scenario as follows:

Plan Year: 12/31/2022

Participant’s age as of 12/31/2023 turned to 72

Does he/she need to take RMD in 2022 Plan Year? Or he/she will be eligible to take RMD in 2023 Plan Year (turns on his 73th)

Appreciate your insights.

A husband and wife are both self-employed and 50% owner of each other's companies.  Wife's company has (1) W-2 employee.  Husband's company is hiring (1) W-2 employee.  They want to start a Simple IRA under wife's company, they will both participant including the employee under wife's company.  Can employee (2) under husband's company also join the Simple?  Or would each company need to set up their own Simple IRA?

Thanks!

Client currently owns an LLC that sponsors a SIMPLE IRA for herself and one other W-2 employee.  Same client wants to start a C-Corp and new 401k Plan.  I understand that this creates a Controlled Group.  But is this even allowed?  What needs to happen with the SIMPLE IRA if so?

Our office orders free tax forms from the IRS every year. For 2022, half of the forms 1096 we received from the IRS in our forms order have 2021 in the upper right corner instead of 2022. Is it okay to use the 2021 forms 1096 for the transmittal of the forms 1099-R?

A client over age 50 is self-employed. He has net Sch C income of $20,000 for 2022. No other earnings. No partners. No employees. He wants to contribute $18,587 of either pre-tax deferrals or Roth into his 401(k) plan "and" $6,500 into his Roth IRA. I think it is okay. Any issues with this?

Situation - Company has a safe harbor match 401k plan.  The owner is self-employed, Schedule C.  He has several employees who will defer on a payroll by payroll basis, and he would like to fund safe harbor match is contributed each pay period, and not provide a true up, as that's how his other employer, where he is just a W2 employee, operates.  We won't be "paid" via payroll on the business in question, his income would be determined via his schedule C after the year in over.  Once he knows his income figure (after year-end), he would like to contribute to the plan based on his Schedule C, self employed income, and deposit his deferrals and the appropriate match after year-end.  Is there a way to structure this?  If the determination period is "End of Plan Year", then he'd certainly be able to participate as he wants, but would also be required to provide everyone with a true-up.  If the doc's determination period is "Each Pay Period" that does not allow for true ups, but would that negate his ability to participate since he's technically not participating on a payroll by payroll basis?  Would he technically be providing himself a true-up but not everyone else?  Thoughts?

An individual-account (defined-contribution) plan has no nonelective contribution and no matching contribution, only a participant’s elective deferrals. The plan allows participants a choice between non-Roth and Roth deferrals.

After qualified military service, a reemployed participant invokes her right to make her contribution regarding the time she was away on military service.

The participant’s wages are not enough to support her current-year deferrals and extra reductions for prior years’ deferrals. Fortunately, the reemployed person has savings. For the prior years’ deferrals, she sends her personal check to the plan’s recordkeeper/trustee.

The participant asks that her make-up contribution be credited to her plan account’s Roth subaccount.

Is there any reason the plan would not do this?

Hi

Here is another new one for me.

Back in 2020, CPA asked me to run a proposal for a DB plan. Did projections for 2020 and 2021, big numbers, provided consulting and also all the mandatory deadlines. Never heard again from the CPA and the prospective client.

Last week I got a note from the CPA saying the client did not make any money in 2022, is $0 contribution ok? 

I went "huh???"

Apparently, plan sponsor (one lifer) made deposits into an account (do not even know what kind as there is no plan document) for 2020 and 2021. So

• No document
• No valuation
• No signed SB
• No 5500 for 2020 and 2021 (EZ - easy fix)

Other than getting an ERISA attorney involved, has anyone dealt with a situation like this and if yes, what steps were taken?

Yucks

Plan sponsor opened a 401(k) plan effective March 1, 2022 but has been in operation for some years.  It is top heavy as of 12/31/2022 and so the first/short 2022 plan year is top heavy.  I assume the 3% top heavy minimum is required only on pay from March 1 through December 31?  

For 401(a) testing purposes would Company A which is owned 50/50 by husband and wife, and Company B owned 50/50 by their children be considered a brother sister company part of a controlled group? It's clear that if these individuals were unrelated the answer would be no because 5 or fewer individuals do not have more than 50% common ownership. So for example the children have 0% ownership in Company A and the parents have 0% ownership in Company B. However the Section 318 family attribution rules state that husband and wife are deemed to own each others shares and parent and adult children similarly are deemed to own each others shares. Further Reg Section 1.414(c)-2(c)(2) states that if an individual is in effective control of a company, (greater than 50%) then he or she is deemed to own their parents or children's interest in that company. However, I interpret Section 318 and the 414 regs to only apply to family attribution within a single company, not among 2 companies. So even though the husband and wife are deemed to each have 100% effective control of Company A, this shouldn't mean that the parents are deemed to effectively own their children's 50/50 ownership interest in Company B and vice versa? If this were correct then Company A and B would be deemed to be a brother sister controlled group of companies which I don't agree with especially since each owner does not have a greater than 50% interest.. Any thoughts or experience with this issue?

Update - the information I was given that led to this post was mostly all incorrect, so I'm deleting it so people don't waste there time. My apologies.

On 1/1/2023 Company B merged into Company A's 401(k) Plan ( controlled group).

Prior to the merger Company B had a match tied to a vesting schedule.

Company A maintains a Safe Harbor 401(k). 

At the time of the merger there were  funds in  Company B's forfeiture account.  Company A needs to fund a  QNEC and Match for participants. Any issue with using the forfeitures that came from Company B to fund this contribution.

Once the plans merged, there is no distinction as to where which company generated the forfeiture, correct?   A forfeiture is a forfeiture and can be used to offset, SH match, pay admin expenses, or used to fund QNEC and missed match

We use ASC for our DC/CB testing (including 401a26). We have some plans where in the CB plan, the "staff" get  the minimum amount possible. Just enough to satisfy the meaningful benefit (401a26 test).  There has been some discussion within our actuaries that the meaningful benefit in ASC (typically calculated at .5%) isn't really enough. Granted the .5% meaningful benefit isn't set in stone law and instead people point to the infamous Schultz memo. I am curious if others use ASC's calculation of the meaningful benefit or are uncomfortable with the value being presented out of ASC? Hope that makes sense.

I have a client who sponsors two plans, a calendar year 401(k) plan, and a profit-sharing plan with a November 30 plan year end (the latter is paired with a cash balance plan).

Do I determine highly compensated employees for both plans with respect to the look back year that corresponds to their plan year? It just seems odd to have, perhaps, two different groups of highly compensated employees.

Assume a 401k plan currently allows pretax, Roth and catch up deferrals.

In theory, can a 401k plan allow pre tax deferrals, Roth deferrals, and only Roth catch up deferrals for all employees regardless of pay and SECURE 2.0? (Ignore document restraints for this question and ignore that catch ups were accidently deleted)

My answer is 'no' based on the following:

414v allows for catch ups, that section defines “deferrals” under 402g(3), which defines deferrals under section 401k, which says a plan cannot only allow Roth deferrals (1.401(k)-1(f)(1)(i)). Since a catch up is a deferral, I am not sure how a plan could only allow catch ups as Roth.

Thoughts? 

Thank you

I have a plan where the plan sponsor mistakenly submitted census' for the plan that included some leased employees despite being excluded plan document. That caused safe harbor non-elective and profit sharing contributions to be made on their behalf for several years.  Now that the plan sponsor has realized the mistake they want to move these employees out of the plan.  I assume that we cannot forfeit the balances like the plan sponsor wants.  Any idea on the correct way to handle this?

For the CCYLE 3 Restatements, we went from FIS/Relius Volume Submitter to ASC (non-standardized Adoption Agreement). While the Relius document had default language that a "discretionary" Safe Harbor Non-Elective could be contributed to HCE's, the ASC Adoption Agreement required a special check off that was missed for the 12/31/2022 Plan Year.

Is a retroactive Amendment permitted to add HCE's as eligible for the 2022 Safe Harbor contribution?

Working on a plan where the owners and their spouses in a corporation had no compensation for 2022. Do I still include them in my testing? This is the first time working on this plan but I see that they haven't taken any compensation for a few years now. One year the prior TPA included them and the next year they were excluded. Not sure why hence my asking this question.