Newbie here but nonetheless, determined there were a handful of missed profit sharing contributions from our annual profit-sharing calculations for the past two years. 

Do we calculate any missed earnings on these contributions and how is that done? Do we handle the earnings similar to missed salary deferrals through QNECs or is there another formula that would need to be calculated? 

Thank you.

Is there a way to avoid plan asset status for revenue sharing?  Client, a large 401k plan, has a large amount of revenue sharing that will continue to be forfeited. I am aware of DOL Advisory Opinion 2013-03A in relation to plan recordkeeper accounts.  But can client take the money from that account for their own use?  I feel like this was more for providers to have relief when transitioning the money. Any insight is appreciated it.  

Client rolled over accounts due to plan termination.  Rollovers processed 1/9/23 but client is saying that Schwab says they can designate which year the rollover is attributed to, 2022 or 2023.  Would that affect what year we do the 1099R?  My thought is the 1099R will reflect the actual year of distribution.  Agree?

Have a physician that sponsors a defined benefit plan. His wife is also a physician who owns 50% of a separate medical practice. Since we are in a community property state I believe we have a controlled group.

I know we need to test for 401(a)4 and 410(b) as though the two entities were one. I don't see where the defined benefit plan needs to consider all employees of both entities for 401(a)26. Does anyone believe this is correct / not correct?

Thanks.

A husband and wife each own their own business with 50% ownership in the spouse's business.

There is (1) W-2 employee in the wife's business.  However, they are looking to hire in the future.

There are several contractors.

They had a solo 401(k) - but terminated the plan in 2022.

What plan options are available to allow husband and wife to be part of a plan, along with the W-2 employee - they do not want to include contractors.  Note - they do not want the administrative burden/testing requirements of a 401(k) at this time.

Another question - after researching, self-employed individuals appear to be considered sch. c.  However, in order to defer into a solo(k) for Roth deferrals, would they have been treated as W-2?  If so, would this allow them to start up a Simple IRA for themselves and the employee?

Thanks!

Existing U.S. company sponsors a 401(k) plan and is to be acquired by a Canadian corporation, which has an existing U.S. subsidiary with U.S.-based employees and U.S.-based employees of its own.  Upon acquiring the U.S. company that sponsors the plan, the Canadian corporation intends to become the plan sponsor, having its own U.S.-based employees participate, as well as the employees of its existing U.S. subsidiary and the employees of its newly acquired U.S. company.  Any problems with this concept?

The Canadian corporation owns other entities in various countries outside the U.S., but no other U.S.-based organizations.

Considering a tornado’s harms to people and places in Alabama, do we need to know now whether a plan allows a qualified disaster recovery distribution?

For a provision tax law permits but does not require, remedial-amendment periods make it impractical to look to what many people call the plan document as a reliable source to discern whether the plan allows or omits the provision.

To deal with those situations, recordkeepers, third-party administrators, and other service providers use less formal writings to ask a plan’s sponsor which provisions it wants. Some of these might state an implied instruction: absent a written response, the plan’s administrator is deemed to have instructed its service provider to provide its services assuming the plan provision (or omission) the service provider’s request for an instruction specified as a presumed choice.

Some service providers might have hoped much of 2023 would elapse before it became necessary to ask for instructions about optional provisions under the SECURE 2.0 Act of 2022.

But if a service provider knows or suspects a plan’s participants could include some with one’s principal place of abode in Alabama’s Autauga and Dallas counties, should we ask the plan’s sponsor whether the plan allows a qualified disaster recovery distribution?

A plan may, following Internal Revenue Code of 1986 § 72(t)(2)(M) and 72(t)(11), provide such an early-out distribution.

The incident period began January 12.

https://www.whitehouse.gov/briefing-room/statements-releases/2023/01/15/president-joseph-r-biden-jr-approves-alabama-disaster-declaration-3/

https://www.fema.gov/disaster/4684

Hi

Looking over a possible takeover DB plan. It is 2 years old.

It is for a law firm. 2 partners are in their late 40s and early 50s

The NRA is written as (I have not seen this before):

Later of age 55 and 5 YOP and 17 YOS. Maximum NRA is 65 and 5th anniversary of plan participation.

As this is not one of those special category of employers (like football players etc), how kosher is the way the definition is written?

If kosher, how would you calculate the funding requirements?

I would never use less than 62 but might be missing some allowance here.

Thank you

Hello, I'm a Datair user, former Accudraft user, seriously considering ftwilliam for admin, forms as well as docs.  Familiar with forms and docs.

How easy to use, has all one needs to do DC an DB valuations and testing?

Pros and cons (if any)?

Concerned with privacy, you can email me at steve@thepensionmaven.com

Can a Simple IRA for a business with less than 25 employees be established only for W-2 employees and exclude contractors paid through 1099?  If it can, anything they need to be careful about?

Company has existing 'Solo 401(k)' Plan.

Contributions were made once, in year started up, > 5 yrs ago.

Now there are employees and they would like to offer them opportunity to participate.

Actually, they would like a brand new plan.

Is there an issue to terminate existing 'solo' plan and start a brand new plan, or rather do a complete restatement?

Eligibility in 'solo' is immediate but they would like 21/1.

We have a situation where we may have failed to promptly notify a participant of receipt of a QDRO.  He claims he first became aware after the QDRO was qualified (but it hasn't yet been processed, though we're about to).  

If true, is there a penalty associated with the failure?

I assume that the AP isn't penalized and we can still process the QDRO, even if there is a penalty on the Administrator.  Is this correct?

I swore I wasn't going to think about 2.0 today, but when I let my guard down, things pop into my head.

Curious as to thoughts of others. Many plans revert to calendar year for service counting after the initial eligibility period. If you handle the LTPT employees the same way, then they could come in even faster than strictly required? Suppose DOH is 11/1/2023. From 11/1/23 - 12/31/2023, works 100 hours. From 1/1/24 - 10/31/24, works 600 hours. So if service counting reverts to plan year, then employee would have two years of service crediting, and enter on 1/1/25. Alternatively, if plan uses anniversary years, this employee likely wouldn't end up being eligible until 1/1/26.

I'm not clear as to whether the plan can "carve out" these employees via the SECURE 2.0 Amendment, and use anniversary years just for LTPT? I'm assuming the answer is no, but I haven't done any analysis on that question.

Assuming it is not possible (or even if it is possible) would you change your plan (or LTPT portion of the plan, if permissible) to anniversary date service crediting? I wouldn't... too complicated, and these people generally aren't going to defer regardless, so if they end up entering earlier than strictly required under the law, big deal.

Of course, I'm on a seriously overloaded 2.0 circuit at this point. I shouldn't think about this garbage on a Friday....

Hi Everyone,

How does the following provision in a DB Plan document sound to you?   " For Employees paid both on  a commission and base pay basis, compensation shall be limited to $60,000."    Thank you as always.

A Balance Forward Profit Sharing Plan had an age 72+ non-owner Participant retire in late November 2022. The Participant Elected a Rollover to an IRA for the rollover eligible portion, and waived all tax withholding from the Minimum Required Distribution portion. Total Vested Account approximately $25,000, Minimum Required Distribution portion is approx $1,200, leaving approx $23,800 rollover eligible.

The Employer requested a single check from the Plan Account made payable to the IRA FBO the Participant for the entire Vested Account Balance. This check was issued in December 2022 and mailed to the IRA custodian. The 2022 Form 1099-R is not yet issued.

Question 1 A and B: Since the tax filing deadline has not come to pass and the 1099-Rs have not yet been issued, A. can the Plan issue two (2) 1099-Rs, one reporting a taxable distribution in the amount of $1,200 with zero taxes withheld (because they were waived by election) and distribution code 7, and, a second reporting the Rollover Eligible portion (approx $23,800) as a non-taxable amount, with rollover code G, while the Participant requests the $1,200 be removed from the IRA account? B. If completed before the tax filing deadline it may be removed with out penalty - correct?

To note, the Plan is a balance forward plan with a 1/31 plan year end. From the plan's perspective there is no interest adjustment necessary since all was paid prior to the last day of the Plan Year 1/31.

Question 2: Is a VCP filing required? If yes, is there a defense not to do so given the amount involved that would stand up to review, e.g. the User Fee exceeds the amount involved?

Question 3: if by chance the IRA custodian has yet to settle the check, could the Plan put a "stop payment" on it and have the checks reissued as elected by the Participant?

Thank you.

I have a small business 401k and PSP which has language which allows a one-time irrevocable election not to participate. An older ex owner executed this election after disclosure of the plan, but before it became effective. I assume they did this because the money would be subject to RMDs soon, and they didn’t want to have to manage another account. They received no compensation or other consideration for electing not to participate?

Is this valid? I am worried that they may claim they should have been covered, especially on the profit sharing side after some time has gone by. 
 

Is the proper way to confirm this by requesting a private letter ruling?

Hi. A physical therapy practice offers all employees (doesn't matter full-time, part-time, HCE, NCHE) and their families a workplace perk. They have a policy where employees and families receive a discount on any physical therapy services they need. The employee provide insurance information and insurance is then billed. The employee is responsible for paying all cost share amounts. After that, the employee pays no more than $75 per visit. 

My questions are:

1. Is this structure permissible?

2. Does this policy create an ERISA-covered plan that would require a plan document, 5500, etc.?

Thanks.

A CPA came to us with this situation.

A woman suffered a stroke a year or so ago.  She needed cash to buy some type of long term care or medical policy. Not sure exactly what it was, but it doesn't matter for this question.

In late December 2022 she took a $450,000 cash distribution - $90,000 was W/H.

A couple of days later, but still in 2022, she unexpectedly died.

The money is no longer needed and the husband would rather it not be taxed.

Normally she would have 60 days to roll it over if she came up with the withholding.  Husband said he could afford the $90k, but the wife is deceased, so I don't think there is a way to do that.

If it was in the plan, he could roll it to a spousal IRA, but I don't think that can happen without having the distribution reversed first.

The check for the $360,000 has not been cashed.  Husband has it in his possession.

I doubt the plan can reverse it.

Can the plan limit the damage by voiding the $360k check and making the distribution $90k - 100% withheld?

Any other options, or are they stuck?

We use Fidelity as our 401(K) Administrator that allows those age 50 or older to elect pre-tax/Roth and catch-up. The problem is that many of our employees are electing catch up when they will not be maxing out on their pre-tax/Roth IRS limit. We only match on pre-tax and Roth.

This leaves us with the issue that what should be regular pre-tax or Roth is being captured as catch up in the payroll contribution side of things. We do not true up at year end or termination to ensure the match is correct so this is one issue.

However, I believe this can be corrected with some rule built in to only deduct regular pre-tax and/or Roth until capped out and then catch up deductions would begin. But I am not having much luck selling this.

Could anyone share how this is done in your system to avoid this type of issue? We use Workday payroll.

Thank you!

I have a client that utilizes individual brokerage accounts for their participants' investments. The Plan requests beneficiary elections from all participants, as does the Custodian. The participant files a beneficiary election with the Custodian, but NOT the Plan. If the participant dies, does the beneficiary election on file with the Custodian stand or would you default to the plan document provisions?