Have not had this situation.

Client, through payroll error contributed more than $26,000 for 2021; but took the deduction for only $26,000 and that is what the W-2 shows.

Error most probably made with the last payroll in December, but all deposits for 2021 were made in 2021.

Just because it does not make sense to take the excess out of the plan then put it back in one week later I don't think negates the fact that there was an excess, but it was cured in less than a week.

Still need a 5330 and payment of the excise tax?  

Of course the accountant told the client not to worry about it, leave it alone because it was not an over-deduction, count the contriubtion for 2022, and hope they don't get audited.

I have a plan that is asking if they can not to a Safe Harbor (3% NE) contribuiton for 2022. Their document states that there will be a SH contribution But only if the plan sponsor provides a follow-up notice. I have not seen that language before on an adoption agreement. 

I'm not sure if that qualifier gets them out of having to make one,Edited: they did not distribute the notice last year

Also, if they are supposed to make the contribution and do not, The plan is out of compliance, but I'm not sure what would happen after that. 

Can a plan sponsor with a 403b have an automatic enrollment feature where the match is 50% up to 10% of pay, all 100% vested?  What limitation would there need to be as far as the initial defaulted employee contribution?

Thank you

A recordkeeper is basing their fee to service a PEP based on the merits of each individual adopting employer. In other words, the fees for each adopting employer within a given PEP will be different and determined based on their respective total assets (the greater the assets, the lesser the fee). This will inevitably create a situation where the PEP participants will be paying different fees from one another. Could this create a prohibited transaction or otherwise violate ERISA?

Client allocated a match contribution to a participant is excess of the match formula.  The excess match amount is less than $250 and does not cause the participant to exceed a statutory limit.  If the plan chooses not to forfeit the excess match contribution, does the excess match have to be included in the ACP test?   EPCRS makes it clear that if the excess contribution is forfeited it is not included in ACP testing.  However, does the free pass not to forfeit de minimis amount, give a free pass not to test de minimis amounts?

I feel this is a very basic question, but still want a more professional explanation: To become catch up eligible, does the participants need to max out the 402g limit?

My understand is: to be eligible for catch up contribution, the participants need to meet the age requirement and max out the 402g limit. However, SPD indicated if you reach age 50 during the year, you can contribute catch up contribution anytime(people interpret this as no requirement for max out 402g because if the contribution is by paycheck, most employee won't max out at the 1st paycheck). This caused a lot of employees able to select a % for both contribution at 1st day of the calendar year they become age 50, and they may not max out the 402g limit at the year end.

Plan is a calendar plan and catch up is not matched.

Good afternoon.

We have a safe harbor 401(k) plan that uses the top-heavy exemption due to the fact that the only employer contributions to the plan are safe harbor contribution.  They are merging with a non-safe harbor plan January 1, 2023, that is going to be deemed (more than likely) top heavy on December 31, 2022.  The question is if the top-heavy contribution is going to be made to the surviving safe harbor plan sometime in 2023, does the safe harbor plan loose it's top-heavy testing exemption?  Both plans are calendar year.  I am understanding because the non-safe harbor plan is considered terminated, they should make the final top-heavy contribution. Any comments are greatly appreciated.

So memory is that you couldn't have both the carryover(rollover) AND a grace period with regard to a health FSA. Then Covid/CAA/etc. came along, and I'm not sure now whether the temporary allowance of rollover if you also had carryover expired, or is it permanent?

Or maybe I'm completely off-base anyway...

Thanks.

Plan year end is 09/30/2022.  Funds at Nationwide.  Are RMDs done based on 12/31/2021 balance or the 09/30/2021 balance? Thanks in advance! 

Hello.

I have a terminated participant that we sent distribution instructions.  Back in June he called with questions.  During the phone call he indicated that he was divorced and his former spouse was entitled to part of his 401(k) account.  He stated the former spouse was supposedly having her attorney prepare the QDRO.

As of today we have not received a QDRO.  However the terminated participant has requested his distribution (on-line).  The plan does not require spousal consent.

Do we hold off on processing the distribution since the participant did indicate his former spouse was entitled to a benefit?  or do we process the distribution?

Appreicate any advise.  Thanks!

If the employee about to max out at 402g, let's say he contributed $20k, and still have$500 left. and his original contribution % is 10% pretax and 5% Roth. Either 10% pretax and 5%Roth will over $500. How should payroll to set up split this $500? Weight average? or evenly?

The plan set up by payroll match, but the employee max out earlier of the year, is that wrong to keep allocation match to employee even though there are no employee contributions in later payrolls? Match is immediately vested and the plan is not a safe harbor plan.

IRS Notice 2022-55, published at noon today (Friday, October 20)

https://www.irs.gov/pub/irs-drop/n-22-55.pdf

• Effective January 1, 2023, the limitation on the annual benefit under a defined benefit plan under section 415(b)(1)(A) of the Code is increased from $245,000 to $265,000....
• The limitation for defined contribution plans under section 415(c)(1)(A) is increased in 2023 from $61,000 to $66,000....
• The limitation under section 402(g)(1) on the exclusion for elective deferrals described in section 402(g)(3) is increased from $20,500 to $22,500.
• The annual compensation limit under sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $305,000 to $330,000.
• The dollar limitation under section 416(i)(1)(A)(i) concerning the definition of “key employee” in a top-heavy plan is increased from $200,000 to $215,000....
• The limitation used in the definition of “highly compensated employee” under section 414(q)(1)(B) is increased from $135,000 to $150,000.
• The dollar limitation under section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in section 401(k)(11) or section 408(p) for individuals aged 50 or over is increased from $6,500 to $7,500."

Good morning

Sponsor just signed the resolution to terminate the plan by 12/31/2022 (PBGC termination). Form 500 will be filed in 2023.

They just told me about a recently terminated employee.

Can they pay out this employee now with 60% vesting or have to wait thru the whole termination process and pay in 2023 with 100% vesting?

Thanks

I believe I know the answer, but I wanted to confirm:

For a Profit Sharing Plan for the RMD to be taken in 2022, we obviously use the 12/31/21 Balance.  If a receivable is made in '22 for the 2021 Plan Year is that included in the balance used for the calculation?

Thanks in advance!

Hi,

At 250 a day for late 5500, isn't that quite steep...is there a grace period? Yes, there Is the DFVCP, however tax returns allow to file a few days late with barely any penalty (relatively). Thank you for any insights etc.

Hello:

Does anyone have any feedback or concerns implementing the 2022 W4P in their DB systems?  I am being told that the IRS didn't rule on implementing, but from what I can find, the W4P is required to be in place for 2023, where as the W4 was required in 2022.

I found IRS publication 15-T that specifically addresses this so I am unsure why some don't think this is law.

Any thoughts or insight is appreciated.

Patty

profit sharing plan states that in the absence of a designated beneficiary, the spouse becomes the beneficiary and if no surviving spouse, then the children. Plan also states that an ex-spouse can take the spouse's place on death if so provided under a domestic relations order per.  In this case, the marital settlement agreement stated that the participant was to name the former spouse as beneficiary under the plan. The participant has died; but there is no executed beneficiary designation form effecting what the marital settlement agreement called for. There is no spouse at death, only the ex-spouse and children.  Does it matter that the deceased did not physically name the ex-spouse as beneficiary while alive or was the intent of the marital settlement agreement sufficient?  Any insights are appreciated.

I am seeking guidance on whether the Plan Sponsor can submit an application to VFCP for funds that were moved back and forth from the plan to the corporation over the course of 3 years.  Turns out one of the owner/trustee was mishandling funds unbeknownst to the other owner/trustees.  This is a family business and they trusted him.  All funds have been restored and lost interest deposited and excise taxes paid with 5330 forms.  The company recently sold and the buyers attorney is requiring they apply for relief through VFCP.  She claims it qualifies for this program under one of the 19 categories that states "the use of plan assets for corporate purposes is a prohibited loan to a party in interest."  I don't see where she sees this category on the application form.  I explained the situation to a DOL agent in Washington D.C. and Los Angeles and both of them told me the application would be rejected if there is any indication that there was fraudulent activity.  Is the attorney confused or am I?  I would appreciate any comments and/or guidance in this matter.