Good afternoon!  We took over a Cash Balance Plan and for '21 it appears they were using these interest rate s (they used the corridors under BBA):

However, I see that this table hasn't been updated for Plan Years Beginning in 2022.  Does anyone know when these will be updated, or what can be used instead?

Thanks in advance!

Hi, 

There was a balance of $300 in the forfeiture account and the sponsor was unable to terminate the plan because of the balance in the plan level l account.  The sponsor decided to re-allocate the balance in the forfeiture to one participant as a match contribution.  There was no employee for 2022, they funded a match in 2022 but there is no deferrals which has lead to a operational defect  since they can not fund it match. 

Since the plan is completely terminated what options the client has to have this corrected/fixed. 

 Thanks

Has anyone recently filed Form 5310 for a frozen defined benefit plan after formal action has been taken to terminate the plan but prior to the termination date?  We have previously done so, but didn't know if there had been any recent concerns or questions raised by the IRS with this approach.

ERISA § 502(c)(2)’s civil penalty for a failure to file an annual report is $2,586 per day.

88 Fed. Reg. 2210, 2219 (Jan. 13, 2023).

If a plan’s administrator is off by one year and three weeks, that’s about $1 million.

To keep this simple, I will use  two HCEs and two NHCEs that are being tested for nondiscrimination. All 4 employees are non-excludable. 

Can one HCE & one NHCE receive an allocation, and the other HCE and NHCE receive $0.00?

410(b) test would be 100%

Each employee is in their own group, and the plan does not have the SHNEC to trigger the minimum gateway.

Thank you!

I have a client who owns 40% of 3 car dealerships, the other 60% is owned by his father-in-law (30%) and uncle-in-law (30%). He then owns 100% of 4 other dealerships. He has two 401(k) plans that we administer, one plan covers the entities he owns 40% and the other plan covers the entities he owns 100%. With respect to this situation I have the following questions:

1. I have done controlled group analysis and have determined that the 3 dealerships he owns 40% are not part of the same controlled group as the entities he owns 100%; does this appear to be right? Am I missing anything? I don't think affiliated service groups applies since a car dealership isn't a service entity and I don't think a management group applies because he gets paid a W2 from each dealership, he doesn't have the dealerships pay a management company that he owns (also, I am not sure if it is a requirement for the business to be a service company to be part of a management group). 

2. We have been allocating a profit sharing contribution for each plan and since I think both plans are unrelated he has a separate 415 limit in each one. One plan he does his max deferral and gets a match and maxes out to the 415 limit via profit sharing and then the other we just allocate a profit sharing contribution and max out to the 415 limit. However, he just turned 50 in 2022 so he is eligible for catch-up. My question is, if we had him fund the normal 402(g) limit (22,500 for 2023) to one plan without catch-up and then fund the catch-up (7,500) to the other plan, could he fund $73,500 to each plan? It seems wrong because he is basically using the catch-up limit twice (each plan would be using 7,500 of catch-up) but he isn't going over the 402(g) limit (he would only be funding 30,000 total in deferrals between both plans). 

Hopefully my questions make sense, let me know if I need to clarify anything. 

Thanks, 

I have a client who has not been able to process his payment since Friday, and has a tried a few times.  Anyone know if the site is down?  He finishes entering all of his info on the DOL side, he goes to the IRS pay.gov site and enters all of his credit card information and then it tells him there was an error processing.

I feel like I am the kid going to the first day of school in looking at setting up this non qualified plan.  But I am also quite aware of the many pitfalls and trying hard not to step in them and cause problems down the road.

We are looking at setting up plan that has a discretionary employer contribution and also allows the employee to defer a portion of their pay. 

I am confused a bit by the IRS W2 directions because they do not seem to indicate any reporting in Box 12 Y for employee deferrals.  

From the NQDC Reporting Example chart in the IRS Publication

"Example 1—Deferral, immediately vested (no risk of forfeiture). Regular wages: $200 Defer, vested: $20 Employer match, vested: $10 Box 1 = $180 ($200 – $20) Boxes 3 and 5 = $210 ($200 + $10) Box 11 = $0"

There is no mention of Box 12 Y, yet the directions for Box 12 Y clearly indicate  "Deferrals under a section 409A nonqualified deferred compensation plan"

Hi

Participant turned 72 in 2022.

The AB 1/1/2022 is $1,000 and 12/31/2022 is $2,000

Must start RMD 4/1/2023.

Does not want to take it monthly, wants a lump sum withdrawal.

As 9 months in 2023, is it correct to provide $18,000 on 4/1/2023 (9 * $2,000)? If taken later, would you adjust each monthly payment from 4/1/2023 to date of withdrawal by 5% (plan pre/post %).

If wants to take in February 2023, would you adjust the distribution to 11*$2,000 i.e. $22,000

Any other corrections to my math/thoughts, I know I am not thinking correctly here ?

Thank you

Under SECURE 2.0 section 317, a Sole-Prop can RETROACTIVELY elect to defer for a new startup 401k for PYs beginning after 12/29/22. Normally I would think that means “for 2023 PYs”, but could the following work:

1. Initial SHORT PY = 12/30/22 – 12/31/22
2. Limitation Year = calendar year ending within PY
3. Compensation Computation Period = calendar year ending within PY
4. Therefore elect to defer full 20.5K/27K for 2022 PY fully deductible for 2022 Tax return.
5. (+ PS alloc up to 415 limit, which is NOT prorated since Limitation Year is full 12 months, as well as Comp year; this part was already available for retroactively adopted plans I believe)

I’m a pension actuary obviously trying to think outside the box and there may be other boundaries that can’t be crossed that I am not thinking of. 401ks are not my forte.

Hypothetical situation:  Trustee terminates plan and takes all money, including monies due to employees.  Takes this money and transfers into a personal IRA for this trustee.  Believes he/she can get away with it since no reporting of benefits was ever done to participants.  What is the TPA or actuary's obligation in this situation?

Help! 

Post SECURE Act/IRS Proposed Regs re: successor beneficiaries is making my head spin - 

Scenario

• Traditional IRA owner, dies pre-SECURE Act & before their RBD
• Original designated beneficiary was "stretching" payouts & died in 2022

Questions

Its my understanding the successor beneficiary is subject to the 10 year payout (which in this case - year 1 is 2023)

I am struggling to get an answer re: whether RMDs are required in the 10 years and if so - whose life expectancy is used?  Pre-Secure the successor bene "Stepped into the shoes" of the original beneficiary and continued the "stretch" using the remaining life expectancy of the original beneficiary - easy enough

The IRS proposed regs (at least my interpretation) say the RMDs (during the 10 years) are dependent on when the account owner died - before/after their RBD - 

Does this mean (in this situation) the Successor Bene does not take RMDs?   In other RMDs stop.  Which doesn't seem to make sense?  Or doe the successor beneficiary continue taking RMDs based on the original (designated) beneficiaries life expectancy for years 1-9 & drain the inherited account in year 10

Thank you in advance

A participant in an ERISA 403b plan passes away.  She named her spouse as beneficiary and son as contingent beneficiary.  Years before her passing, she divorced then remarried, but never changed the beneficiary form.  

Is the beneficiary form with the ex-spouse still applicable under ERISA?

This is taking place in New York, which has a divorce revocation statute, which would seem to no longer permit the ex-spouse to be a beneficiary.  But would NY state law take precedent over ERISA if ERISA would call for the ex-spouse to be the beneficiary, since the form was never changed?  And if the ex-spouse is not the beneficiary, would the contigent beneficiary (the son) now be the beneficiary would the current spouse be the beneficiary?

I am not sure if a QDRO was ever produced after the divorce.

We are having an attorney look into this but I was hoping for any comments on this as we go along.

Thank you

Profit Sharing plan took the balance of an unlocatable participant and transferred it to a Default IRA. Question is does the plan have to prepare a 2022 Form 1099-R for this participant, knowing that the form will never been received by the person? Thanks for any replies.

First of all, I want to thank all of the great resources on this board for answers as we are trying to set up our NQDC plan.    It appears that we are moving toward an account balance type plan with either a limited menu of investments or something that mirrors our 401k plan.  We are either going to use an outside broker to hold the accounts or possibly our 401k plan administrator.

I am looking down the the road at the eventual distributions.  I know that they are supposed to be reported on a W2 to the employee.  I am really trying to understand the mechanics of the distribution if we use the 401k company. 

Do the custodian send the funds to the company and then we send to the former employee?  I have heard some nightmare issues regarding participants getting both 1099s and W2s and then it looks like the income gets double reported.

As I understand it, the proper procedure is that we would report Box 1 wages, nothing in Box 3,5 as the FICA should have already been paid under special timing and the report a Deferred comp amount in Box 11.

Am I basically on the right track?

Very confusing, as you all know, to follow "insert comma after x, add the following text after y, delete the words z and b" etc., etc.

Do you know of a source where all this has been done, and there is final updated text of all the updated provisions?

The HIPAA Notice of Privacy Practices must be tailored to include state laws that are more restrictive than HIPAA (see https://www.hhs.gov/hipaa/for-professionals/faq/464/must-a-covered-entity-with-a-notice-revise-the-notice-every-time-it-changes/index.html). Is there a resource that puts out a good survey of those state laws? Practical Law does not appear to have have anything like that. 

ok - this one is new for me.  31% owner of company, retired in 2017.  After 2017 the ownership is now in the name of a "dynasty trust/owner's name" and that trust has 37.04% ownership in the company.   Owner's daughter (age 54) comes to work for the company in 2023 as CEO.  Is she considered to be highly compensated and/or key due to attribution?   (Her compensation is under the HCE comp limits.)

Thanks in advance for any insights!

Are there any other systems out there other than Pension Pro that TPA's use to track their clients, etc.?

Hello, we have a plan where 3 NHCEs were brought into the plan early.  They met the age and service requirement, but were allowed to defer prior to their entry date.  I have done a corrective amendment in the past by naming the individual being brought in early.  I thought there may be a better way to write the amendment to bring in multiple employees.  Does anyone have a sample amendment I could use or any ideas?  Also, do you specify the Rev. Proc. or Regulation # in your corrective amendments?