What is the most efficent way to withhold Federal taxes and remit the withholding to the gov't?

I have never had to do this before because my plans are typically with John Hancock or Charles Schwab who take care of the withholding on distributions. The plan I need to start withholding and remitting taxes on is a 1 (80 yr. old) participant profit sharing plan with all investments in a Charles Schwab account which I have access to as the Advisor. But Schwab is not the TPA, I am.

I just want to do this the easiest way possible.

Thanks all.

I have never heard of this situation.  A full time employee old enough to need an RMD but not required to take one because she isn't an owner (just an employee) died in December 2021.  Technically she wasn't employed as of her date of death.  That wouldn't kick in that she needed to take an RMD for 2021 based on her 2020 balance, would it?

Maybe the short question to ask is, do deceased plan participants (who have not been paid out yet) need to take RMDs?  I guess technically they still aren't owners so no?

I just read that "once a participant starts taking an RMD they must continue taking one, even after death".  The twist is that this participant was never required to take one due to the fact that they were an employee and not an owner.  Would that mean that her account is not required to distribute an RMD for 2021 because she was just an employee? Am I answering my own question?

I have a calendar year ESOP that normally pays over 5 years of installments except for participants with large balances that may be stretched to up to 10 installment payments.

For a participant with a large balance, if the first installment is paid in 2022 based on the 12/31/2021 share valuation; do you use the 2021 or 2022 409(o) limit to calculate how many years in excess of 5 are used?

2 letters were sent from plan administrator stating the funds could be dispersed per ERISA 18 month rule in full to the participate if the QDRO that was approved by the plan and sent back for signature from the court is not returned to the plan. Not in exact words but meaning was they needed the signature of the court and sent back to them. These letters were a year apart of them being sent. Wife takes the full amount of the account and rolls it over out of the plan since the last letter stated the same and has been waiting over 6 years and this is first time the 18 month rule was mentioned. Now the attorney who did not file the QDRO until 5 days after funds were rolled over leaving a account balance of $0 with the plan files a contempt charge on wife stating that Wife did not pay spouse what was owed per the divorce decree and QDRO. Should the wife return the funds to the plan that has been discharged per the letters?

How are others interpreting a plan sponsor's obligations related to the delayed deadline for payment of COBRA premiums during the PHE?  

i.e., If an individual is currently receiving COBRA and not paying monthly premiums, does the plan sponsor have to keep the coverage active until the delayed payment deadline is passed?  Or can the plan sponsor cancel COBRA and reinstate it retroactively if payment is received by the delayed deadline? 

My interpretation has been that COBRA should not be cancelled for nonpayment of premiums until the delayed deadline has passed, but I am hearing chatter that others are interpreting it differently. 

Let's say there are two plans in a Controlled Group:

1) Plan A - 3 months of service required for eligibility

2) Plan B - 6 months of service required for eligibility

Question 1) How would the coverage testing be done to determine if the plans can be tested separately? Would you use the appropriate eligibility for each plan (3 months for Plan A and 6 months for Plan B) for coverage testing purposes, or would you use the more lenient eligibility (3 months) to determine who is eligible and benefiting for coverage purposes? This question only relates to coverage testing done to determine if the plans can be tested separately.

Question 2) Let's say the plans pass coverage testing on their own and can be tested separately for non-discrimination purposes. In this case, it's my understanding that the eligibility requirements can stay as is and don't have to be the same for both plans. So, Plan A can still have the 3 month eligibility requirement and Plan B can still have the 6 month eligibility requirement. Since they pass coverage testing separately, the eligibility requirements don't have to be consistent. Is that correct?

Question 3) Let's say the plans fail coverage testing on their own and must be aggregated. Would Plan B be required to change its eligibility to 3 months (the more lenient eligibility requirement between the 2 plans)?

Thank you.

We have a 401k participant who was accidently paid out twice, in separate calendar years (the assets were pooled).  These were cash distributions, taxes were withheld and remitted to the IRS for both distributions.  1099Rs were prepared for both distributions (2 different years).  The participant has agreed to pay the excess back to the plan.  

How would the plan administrator go about getting the money paid in taxes back from the IRS?  Does the participant pay the entire amount (including taxes) back to the plan and recoups the taxes when he files his amended tax return?

How would we go about reporting this for the participant's records?  For the second distribution he would need to file an amended tax return and a corrected 1099R for that year would be needed as well.  Is that correct?

Thanks for any comments.

Hi

I have not dealt with insurance in DC plans for many years and need a refresher.

Plan had 401k, 3% NESH and PS provisions.

Assume whole life thus up 49.99 percent cumulative limit of the contributions. They want to use all 3 provisions to maximize insurance.

Which provisions have seasoned money for future? PS definitely.

Thank you

There are 5 Participants in Plan - Owner, her husband, their 3 over 21 and not disabled children.

Both Owner and husband began taking RMD's.

Owner dies in 2018, after RBD. Her husband is taking RMD's of her account.

Husband dies in 2022, also after RBD.

The 3 children are the beneficiaries for both accounts.

Looking to confirm what I think the new rules are:

Owner:

• 2022 - Paid as intended based on subtracting 1 from 2021 RMD factor used
• 2023 on - Must be paid by 12/31/32 to 3 children, using life expectancy of oldest son, then subtract 1 each year, w/bulk being the RMD for 2023

Husband:

• 2022 - Paid based on his age in 2022 using new table
• 2023 on - actually the same as for the Owner above

To determine the amounts for 3-year 457 special catch-up that can be used at City B

A government employee goes to work for City B in 2022 and wants to start making catch-up contributions at 457(b).

Assume that  he meets the NRA rules as defined in the at City B, Assume he can provide all the documentation from City A to City B

He has underutilized amounts from City A prior to 2022 - let's just 2002-2022. He never really used the three-year catch up at City A anyway so it is true underutilized - no double dipping.

Question:  Can he use his underutilized amounts from City A 457(b) be used at City B

Question: confirm this is a code specific interpretation and not something specific to plan provisions

Citing the 457 code would be helpful.  It appears that underutilized amounts are individual to the participant and a personal limit that can be carried from employer to employer.  the catch-up can only be used once per employer  but the underutilized amounts is not specific to the City B contribution history but to the City A contribution history as well 

I have a situation where client wants to terminate its 401(k) before a stock sale. Client uses a Fidelity preapproved document and has already adopted its restatement but is being told by its Fidelity rep that it needs to come up with its own good faith amendment for SECURE Act and CARES Act because Fidelity does not have yet and will roll those out only later this year. I have a form of good faith amendment that I can use for this client, but I am a little incredulous that Fidelity does not have its own by now. Can anyone confirm or deny what the client’s Fidelity rep is saying? This must have affected a lot of terminating plans over the last couple of years.

I know part of the rule for SARs is that there not be a feature to further defer the compensation beyond exercise.  So a couple scenarios:

1) assuming the SARs have an exercise feature, would it still be considered a feature to further defer if we allow participants to elect to defer payments of SARs under a NQDC Plan IF we require the participant to make the deferral election in the year before the SARs are granted?

2) assuming the SARs have no exercise feature (i.e. the SARs are paid out automatically as soon as vested) THEN would it be okay to defer the SARs under a NQDC Plan so long as we require the participant to make the deferral election in the year before the SARs are granted?

Both 403(b) plans are subject to ERISA.  The 2 401(k) Plans will be merged.  The 401(k) Plans are Safe Harbor plans.  It is my understanding that the 403(b) Plans could be terminated and the employees would have a distributable event and that the distributions must be made within 12 months and they could rollover the assets to the 401(k) plan but are not required to do so.

Is there anything that would prevent the plan termination of the 403(b) Plans on 6/30/2022 with the covered employees becoming immediately eligible for the existing 401(k) plan on 7/1/2022?

I know if this were 401(k) Plans, the only option would be to merge the plans but because this is a 403(b) Plan, it cannot be merged into the 401(k).  Thanks!

We received a QDRO (just a draft at this point) under which the court is ording the Plan to pay the fees of the Guardian Ad Litem of the Participant's minor child.  I don't see any way this is possible, as QDROs are only supposed to award benefits to an Alternate Payee who is a spouse, former spouse, child, or other dependent.  Has anyone ever seen this before?  Is it legal?

DC plan provisions for hardship withdrawal - "Safe Harbor" hardship.

Ms. Jones wants a hardship withdrawal for the purchase of her primary residence.  The catch is the home will be in her husband's name.  Is this allowable?  

Hello, 

Money purchase pension plan with an anticipated termination date in the coming months. Sole participant is taking installment payments in the amount of annual RMDs. Duration of installments is likely to blow the ability for the participant to make an eligible rollover. As a result, participant looking to take remaining installment payments in a lump sum upon plan termination. QJSA rules do not apply to the distribution. This shouldn't be a cutback issue because the plan is not removing an optional form of benefit; instead, the participant in pay status is merely wanting to change the form of distribution. The plan does not prohibit this, and the participant election to take installment distributions did not say the election was irrevocable.

I know this issue has been dealt with in some fashion on the defined benefit side, but what about on the money purchase/defined contribution side? Can someone point me in the direction of authority for whether changing installment payments to a lump sum upon termination is prohibited or allowed? I am at a loss. 

Thanks in advance.

I know the missed deferral opportunity amount is a % of the ADP of the group to which the participant belongs.

But what if it crosses plan years?

I have someone who was missed on 7/1/21 and we just found out about it this month.  The ADP of his group was 3.25% for 2021.  But do I have to calculate the 2022 ADP (next year!), or do I just use 3.25% for the entire period?

Haven't seen this before. Fidelity bond coverage is lower than 10% needed, set at $20,000, but according to the agent, has a built in 'inflation guard' up to $500,000.

Assuming that is fine, what would we report on the 5500?  In this case $500,000 is greater than plan assets even.

Assume you have a Solo 401(k) that allows after-tax employee contributions and in-plan Roth rollovers and you have pre-tax money and after-tax employee money. Can you do an in-plan Roth rollover/conversion and convert only the after-tax amounts and exclude the pre-tax amounts from the conversion?

I don't do a lot of 403(b) work, and I have had another question proposed to me.

A Non-ERISA 403(b) for a private high school provides a "Profit Sharing" contribution based on the following:

0-9 years of service - 6% of gross salary

10-14 years of service - 7% of gross salary

15+ years of service - 8% of gross salary

However, the principal of the school, no matter how many years of service that they have, receives an 8% of gross salary contribution; this is written into the contract of the principal. The principal by definition is an HCE, and at this point, the principal has less than 9 years of service, and, per the document, should be receiving a 6% allocation, save for the provision in the contract.

Our firm, who is the auditor of this plan, is concerned that the higher percentage given to the HCE principal is a discriminatory allocation, and the 2% over the document prescribed allocation should be forfeited. As I have no clue as to the answer, I thought I'd throw this out here and see what opinions you have have. Thanks for any replies!