If the disclosure method is only for ACTIVE EMPLOYEES (paper copy to all others) who all have a company e-mail address and accessing it is an integral part of their duties, etc., etc., is the initial notice of electronic delivery required to be in paper format, or can that initial notice also be sent electronically via e-mail? Some confusion on this - it appears that it could be via e-mail rather than paper?

I have a solo 401K plan for my LLC (of which I’m the sole member and no employees) and I have an associated roth option. In my first restatement completed earlier this year, I marked them as plan sequence numbers 001 and 002 and I called them ABC LLC Individual 401k and ABC LLC Roth 401k. Since they are in different account and I always had to complete two sets of paperwork I thought of them as separate plans. Was that incorrect? Should they be the same 001 plan sequence and only be called by one name.

I'm having to move my accounts since TD Ameritrade, where I have been, is discontinuing the business. As I do the paperwork with a new custodian, it got me thinking. Appreciate any comment. Thanks!

What are the benefits and drawbacks of using paycheck to paycheck for company match vs statutory compensation? We are taking a rollover plan that is paycheck to paycheck but are not sure if it would be best to keep it this way or change to statutory compensation. We believe statutory compensation would be easier for true up purposes but paycheck to paycheck could be easier for record-keeping. 

If the administrator inputted the incorrect % match for a participant how can they correct this error? The plan is matched on a paycheck by paycheck basis so is there a way to correct it in the following paycheck or would that not be allowed? If that does not work would we be able to have a forfeiture of that amount or is the money now the participants due to the error? 

Hi Folks!

I know that in some cases attribution through a retirement plan trust is blocked for purposes of determining HCE and Key status. 

Is the same true for determining 5% owner status for purposes of an RMD?

If that's not the right question please let me know. 

ROBS plan - the participant turned 72 in the second half of 2022. Their account of course holds the employer stock. they are very much an active employee. 

I'm thinking the constructive ownership of §318 applies and an RMD is required. But I'm wondering if I'm missing something. 

Can anyone confirm or deny?

Employer received a participant request to increase 401k deferrals from 3% to 5% in 2020. The request was received but never implemented, but the participant just noticed that the change never occurred. Is the participant entitled to any corrective contributions/earnings on the missed deferrals and safe harbor matching contributions?

Thank you.

Can a new nongovernmental 457(b) plan becoming effective 11/15/2022 allow employees to make initial deferral elections after 10/31/2022, but before the plan effective date, that will be effective to defer pay beginning 11/15/2022?  These are not new employees.

Under 1563 and 414, brother-sister common control for corporations can be based on value or voting power. So five people owning all the voting stock of two corporations would create a brother-sister group regardless of the value of their shares relative to the overall value of either corporation. 

Under 1.414(c)-2(c)(2)(iii), effective control for a brother-sister group of partnerships is based solely on ownership of capital or profits interests. There is no separate reference to value or voting power, just ownership. 

Does this mean one individual could own the sole voting interests in two partnerships (but not sufficient economic ownership) yet not form a brother-sister group? This seems inconsistent. Or is there some implication that the ownership of capital/profits interests would be determined in part by reference to voting power?

Or am I missing something altogether?

Appreciate any insights.

Just curious, if a partner(s) accidentally forgot to make a 401(k) contribution to the plan for 2021 via their Schedule C or K-1 income, can they still make it for 2021 even though it's no longer deductible on the business tax return for the 2021 year?

If a plan is Safe Harbor are you able to do discretionary profit sharing (like a new comparability model)? Where the owner wants a different end of year profit sharing contribution from the other employee. 

Co. A sponsors SHNEC plan with a profit sharing contribution as well.  Plan is TH.  Owner of Co. A also owns Co B and Co. B is NOT a participating sponsor of the plan.  Pass RPT without issue.  Are these employees required to receive a Top Heavy contribution?  I love it when they tell me about new businesses the week before their PYE and they want their contribution before the PYE on Monday.

The SECURE Act (Section 104) increased the tax-credit for a small business establishing a retirement plan to $5,000.

Does a small business qualify (for the credit) if they already sponsor a retirement Plan (in this case a SEP-IRA)? They would you like to start a 401k in 2023 but only if they are eligible to  receive the tax credit for a establishing a new retirement plan 

All help is appreciated

Thank you in advance

Timing is everything

A CPA has asked me a question.  His client has a Simple plan and I guess they want a 401(k) plan.  I know that you can not fund both plans at the same time (and dare I go further, you can't even have both plans in existence at the same time?).  They want to terminate the Simple and establish a 401(k).

• If they funded the simple during 2022 they can not adopt a 401(k) until 2023 (correct?)
• He is concerned about the Secure Act, a mandate on funding a 401(k) into next year.  Did I miss something? I'm going to ask him what he means.

This in my mind shouldn't be difficult.  Maybe he is reading into something too much? 

Looking for guidance on the following scenario.

If a participating employer in a MEP completes a stock sale of one of their entities which is covered by the MEP 401k and the new owner is not eligible to participate in the MEP (and participants are not eligible for distribution due to the same-desk rule) is it correct that the new owner would still be responsible for plan documentation and participant communications? 

A defined contribution plan has an age 72+ Active Participant who is not a 5% owner, who would like to receive an in-service distribution which the plan permits.

Required Minimum Distributions are generally required for non-5% owners in this plan upon the later of the year that he or she reaches 72 (70 ½ if you reach 70 ½ before January 1, 2020), or, the year in which he or she retires.

Q: The question is whether or not a Required Minimum Distribution is necessary since the Active Participant is beyond Age 70.5/72 but has not retired and does not intend to retire this year?

Fidelity provided a client with a discretionary matching contribution notice and this was surprising to me as I had never seen or heard of such a thing. After looking around, it appears the IRS never formally announced that this new notice is required. Instead, they may have forced document providers to incorporate this notice into the actual plan document. Has anyone else come across this? Is there a formal regulation that I'm missing or was this a way for the IRS to backdoor regulate plans? Thanks! 

I know one or more people have asked about DC plan litigation statistics within the last year. I came  across Part II in another newsletter and found Part I so linking these for anyone interested.

https://www.callan.com/blog-archive/dc-plan-lawsuits/

https://www.callan.com/blog-archive/dc-plan-litigation/?utm_campaign=Headlines_102722_US&utm_medium=email&utm_source=Eloqua

Participant terms with a loan balance.  He takes his money, taxes taken and loan offset at the record keeper.

A month later he's rehired and wants to start repaying his loan.

is that an option?  

The R/K said they could "convert" a loan using the prior balance (plus any interest, etc) and go from there.  But is that w/in the rules?

My question is, what if he terms again in 6 months and the loan gets defaulted/offset again?  He'll be paying taxes on it again.

I have a plan that is a MEP and the assets are all in one big account at the recordkeeper.

 From time to time there are forfeitures from participant accounts due to distributions.  Those forfs go to the forfeiture account.  But it is also just one account for the plan, not broken out by company.

 How can/must those forfeitures be used?  That is, can the forfs from one company be used to cover the contribution or fees of another?

 From my limited research on the issue, people suggest the forfeitures from each of the companies be used only for the respective entities.  However, the regs are silent on the issue.  It seems the IRS did not contemplate this situation.

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.