An employee was re-hired after incurring five 1-year breaks in service.  He never took a termination distribution from the plan.  Since he is now an active employee but not yet eligible to re-enroll in the plan, is he able to borrow against his account in the plan?

I believe that you should be able to set up a solo 401k just as you would any other 401k but wanted to make sure that the automatic enrollment feature was available and that then you could also receive the government tax credit for this?

Law firm that is a partnership.  Bill and Mary and married and both work for the firm. Bill owns 5% profits interest and Mary owns 5% profits interest.

When they reach RMD age, must they start the RMDs while they are still working?  Neither one  has more than 5% profits interest.

I am reading several articles that state that the reference in 416 to the constructive ownership rules of 318 will require Bill to be deemed to own Mary's interest, and vice versa.  Therefore they will each be deemed to have 10% profits interest and therefore must start the RMDs.

My question is, "what is the significance of 416(i)(1)(B)(iii)(I) which says  that “constructive ownership” only applies if a person owns more than 50% of the stock of a corporation, or (II) in the case of an employer that is not a corporation, principals similar to the principals of (I) apply.

To me, this seems to be saying that Bill would not be deemed to own Mary's profits interest unless Bill owned 50%, and vice versa.

 So while 318 requires constructive ownership, it seems like 416 is saying that for purposes of determining a 5% owner, the constructive ownership rules will only apply if a person owns at least 50%. 

Thanks!! 

As BenefitsLink yesterday informed us, this morning’s Federal Register publishes the Treasury department’s proposed rule that would permanently allow remote witnessing of a spouse’s consent, whether to a distribution not a survivor annuity or naming a beneficiary not the spouse.

Some plans’ sponsor/administrators and those who advise them might use this as an occasion to reconsider what a plan allows for a spouse’s consent.

ERISA § 205(c)(2)(A)(iii) permits recognizing a spouse’s consent “witnessed by a plan representative or a notary public[.]”

But does anything require allowing both those means?

May a plan provide that only a consent witnessed by a notary public allows something that requires the spouse’s consent?

And further, may a plan provide that only a consent witnessed by a notary public who is neither an employee nor a nonemployee contractor of the plan’s sponsor/administrator is recognized?

Hi

I am pretty sure the answer is no but wanted to see if I missed something here.

A QRP with excess assets from a terminated DB plan which is allocated every year to the plan participants as PS allocation.

The plan sponsor wants to make a contribution/donation to a charitable contribution using some of these assets that are in a suspense account.

As far as I know, these kinds of contributions can only be made from IRAs.

Just wanted to check and see if anyone has a comment on this.

Thank you

Apparently, the withholding tax on a distribution made in 2021 was paid in July 2022.

How would Form 945 be filed, on a 2021 Form 945 showing amount due?

How would IRS know the tax was paid and when paid, or is it up to the client when IRS sends a notice.

I don't know if there is a penalty for late filing.

Accountant paid the withholding for a participant in 2022, but payment was for a 2021 distribution.

How to handle?  Client knows there will be penalties

Looking to confirm what date for plan termination can be for a qualified plan. 

For DC plans and non-PBGC-covered DB plans is it at least 15 days prior to the date of termination when notices need to be provided to participants?

For PBGC-covered DB plans is it 60 - 90 days before date of termination when notice have to be provided?

Company is sold to another larger company which brings all employees onto their set of benefit plans.

Employees are covered by selling company for 2 months after the purchase date so as to finish the year off at 12/31 with the same benefits.

At 1/1 they are under the new company's benefits.

1 employee stays on the old plan for two more months (ie the plan exists until 2/28).

No need to file an additional 5500 since beginning of final year < 100.

So seems logical to file the 12/31 5500 with Code 4R and then mark as Final?

Facts: 

Suppose you have a husband and wife with no kids living in a community property state. Also, suppose he owns 82% of his corporation with no employees and is eligible for his companies' retirement plan. She also owns 82% of her corporation has 3 employees except she is not eligible for her corporation's plan. 

Question: 

A controlled group seems to exist here but would both plans need to be aggregated for testing when she is not eligible for either plan?

Thanks.

Transmeroca sent out a piece indicating tha the IRS now requires W4R every time someone wants to increase their withholding.

Can that be right??  Those forms are notoriously nonsensical.

An accountant posed this scenario to me:

His client established a traditional IRA and made a $7,000 contribution in 2022 and then converted it to a Roth IRA.  In doing year-end projections, the accountant determines that the client does not have any earned income for 2022 and therefore the IRA contribution is an excess contribution.  The current account value is $6,700.

Ordinarily, excess contributions must be withdrawn from the IRA to which made but in this case the original IRA no longer exists.  Seems the only logical thing to do is withdraw the $6,700 from the Roth IRA.  The client is going to get a 1099 for the conversion to Roth.  Since he can't claim the $7,000 as a deductible contribution (which, if it wasn't an excess contribution, would result in a wash for tax purposes) is he now facing taxable income of $7,000?  The 1099 issued for the refund of the excess contribution from the Roth is a non-taxable transaction.  Any thoughts on how this individual avoids picking up $7,000 of taxable income?

Thanks for any input.

The SECURE 2.0 Act of 2022’s provisions for a “pension-linked emergency savings account” include not only Internal Revenue Code provisions but also a new part 8 of subtitle B of title I of the Employee Retirement Income Security Act of 1974.

Am I right in thinking an emergency savings account is a part of an ERISA-governed retirement plan (if it’s not a governmental plan or church plan), and so is governed by ERISA § 206(d)(3), with its QDRO exception from a retirement plan’s anti-alienation provision?

How does a need to pay an alternate payee as a qualified domestic relations order requires affect one’s administration of a retirement plan and its emergency savings account?

Is it the same as, or different from, administering QDROs regarding a plan’s other subaccounts?

If a participant has immediate access to an emergency savings account, would a spouse or other alternate payee get no less access?

Pretty sure I know the answer to this one but just in case ... 401k/PS plan- owner gives his 2 kids (they do not work there ever - they have other full-time jobs) the max 401k and accompanying SHMatch every year.  They are on the payroll so get W2s.   They do not contribute any 401k monies where they actually work, but can they get a profit sharing contribution from both this plan and their actual plan?  No need to comment on the legality of this - been down that road with them.  TYIA! 

I have read that the President intends to sign the Consolidated Appropriations Act, 2023 (which includes SECURE 2.0) into law. Has anyone read when he intends to do so?

Thanks and Happy holidays to all!

I am working on a cross tested 401(k) Plan.  This Plan has a few allocation groups that are defined as ineligible for Plan Purposes in the Plan Document.  In 2022 one of the participants moved from a non-Partner group that was eligible to participate in Profit Sharing to a Partner Group that is ineligible for participating.  This individual is less than a 5% Partner so he is considered non-key.  In addition, he is not an HCE.  He made employee deferrals prior to becoming a Partner.  

Since he is considered ineligible as of 12/31/2022 would this require the return of his deferrals made when he was eligible to Participate?

He is still employed as of 12/31/2022 so does this  require a 3% top heavy minimum and the gateway minimum of 5%?  If yes, would this be on his W-2 wages only or would we also need to include his K-1 wages. 

Thanks for any insight.

Hi

Looking at a possible takeover and have a dilemma I did not deal with before.

Plan's AE assumptions are not great and need to be redone.

Currently, post AE is 5.5% with 2022 Applicable mortality table (yes, hard coded in the document as 2022).

I would like to amend it to a more favorable assumption that would reduce the AB for owner.

I checked the math and based on current assumption, AB is $1,888/month. If I change to more favorable assumption, AB drops to $1,503/month which is huge difference especially for testing purposes. In either case, the 415 limit stays the same.

If I change it now and the pay credit does not change, is this 411d6 violation because the AB drops but not the pay credit?

Thank you

Accountant mistakenly gave 5% owner of LLP us date of birth which turns out to be incorrect, 11/11/49, but accountant gave 11/11/50.

No previous distributions based on his being age 72 in 2022, this would have been the 1st RMD. With the corrected date of birth, don't we need to go back to the old 70 1/2 and recalculate 2019, 20 and 21?

in 2020 I started then terminated a solo 401k, then somehow now I ended up with another plan in 2022 and I'm completely overwhelmed
I try to read the instructions but my head just starts spinning and I'm panicked over the possibility of making any mistakes. at least I filed 5500ez 7 months after the first plan was empties.

I just want to give everything to a pro to check everything over (from both 2020 and 2022), correct any mistakes, and reassure me both plans are terminated properly, I want nothing to do with them anymore before I start crying.

Where can I hire a pro to take this on? I don't think my usual tax accountant can really do this.