Have an owner who just reached Age 72 on 6/14/22. Plan Year is 4/1/21- 3/31/22. Under Secure 2.0 he has to take his RMD by either 12/31/22 or 3/31/23 (if he takes 2 RMD's in 2023). Two questions:

1- Do I use the value of his Account Balance in the Plan at 12/31/21? Or use the valuationAccount Balance at 3/31/21 or 3/31/22? If I have to use 12/31/21, an interim valuation would be required.

2- I have read that the senate and house are working on a bill extending the RMD to 73 in 2023.  Would that help him in any way?

Thank you for your help.

Richie

An IRS-preapproved plan’s adoption agreement has a fill-in for the effective date of the cycle 3 restatement.

(But that date does not apply to a provision for which the basic plan document, the adoption agreement, an “addendum”, or something else in the IRS-preapproved documents specifies a special effective date.)

Imagine the user’s plan has for decades used the calendar year for the plan year, limitation year, and other provisions.

If in July 2022 a user specifies a date on the fill-in for the general restatement date, what would you choose:

July 31, 2022?

July 1, 2022?

January 1, 2022?

Something else?

What is your reasoning for the restatement date you choose?

DB plan terminated in 2018. The two participants received max lump sum, and the excess went into a QRP. The two original DB employees are no longer on payroll, so no 95% issue. There are now new employees including a new owner. Remaining unallocated assets are over 1 million. Can we set up a new DB qualified replacement plan using the remaining unallocated assets.   

Our client has an interesting situation:  A participant whose divorce became final ON her annuity starting date.  The plan administrator was aware of the pending divorce, but could not suspend payments (as it normally would under QDRO procedures) because the participant had also reached her required beginning date under the RMD rules.  The administrator did not receive the final decree until a few months after the ASD/RBD, and brought the participant into pay status with a QJSA because they believed her to still be married on her ASD.  

Under state law, the participant was not married on her annuity starting date.  My thought is that the participant should be permitted to retroactively elect a life annuity.  However, I'm curious if anyone has ever seen a similar situation and how you handled it?

A participant executes a beneficiary designation naming her son as beneficiary.  She was not married at the time of the designation.  Within a year, she gets married.  She does not change the beneficiary designation and does not have her new spouse sign the consent.  She passes away.  Under the plan, the new spouse is the beneficiary because he did not consent to the beneficiary designation.  The new spouse wants to disclaim.  Does his disclaimer, where he is treated as predeceasing the participant, revive the previous beneficiary designation such that the son becomes the beneficiary?   

Single-employer defined benefit plan is terminating this year.  The plan is distributing the assets through the purchase of annuities from an insurance company for those participants who don't take a lump sum at termination. Participants can elect an immediate annuity that will commence benefit payments right away, or they can elect a deferred annuity and can commence benefit payments any time after plan termination - even if they are still employed by the company at the time they elect to begin benefit payments.

The plan currently has an RMD provision that does not require distributions until the later of age 72 and termination of employment.  Does that rule continue to apply after the plan is terminated to the participants who receive a deferred annuity?

In other words, does the insurance company have to verify employment status witht the plan sponsor for those annuitants who are 72 or older to begin RMDs, or does the participant's employment status not matter for purposes of RMDs under Section 401(a)(9) once the plan is terminated (or RMDs don't apply at all)?

I’ve been working more and more with combination cash balance / 401k plans, and have been looking to gain additional knowledge of 401k plans in general.  Are the QPA, QPC, QPK designations worth obtaining for a retirement FSA or would just familiarizing myself with the various rules and regulations be good enough ?

While restating a plan document prepared by another service provider, I see a limit on the rate of 401k for HCE's of the current dollar limit divided by the Comp limit.

Considering that the ADP test takes into account discrimination issues, what would be the purpose of this limit?

Husband owns 100% of a real estate agency (single-member LLC) with one employee who is eligible for benefits.  Wife owns 100% of a law firm (single-member LLC) with no employees.  Husband and wife have two minor children so this is a control group.  Husband received a 401(k)/Cash Balance illustration just for him and his employee - these will be start-up plans - that assumed no PBGC coverage (the illustration was from some "online" 401(k) company).  Husband wants this plan design but has wisely chosen to use a local TPA and financial advisor.

This guy definitely does not want to deal with PBGC insurance premiums because the illustration and quote he received from that "online" company assumed there would be no PBGC.  Can the wife's law firm sponsor the Cash Balance Plan, give her a 0% benefit in the Cash Balance plan, and have the plan exempt from PBGC?  Testing is fine and I haven't found anything that would prevent this but I don't know that I'm 100% comfortable with it either.  I would really like to hear other opinions and hopefully someone has come across a similar situation in the past.

Somehow a participant started his pension on a QJSA without actually being married - he was divorced prior to initiating his benefits and apparently just lied on the application? That participant has now died and the lack of marriage discovered. No payments have been made to the would-be surviving spouse. Any thoughts about how the plan should correct for this, if at all?  The plan has not been made aware of any QDRO. It seems to me that the plan is just done now, and doesn't have any obligation to pay out the difference between what his SLA would have been and what the QJSA was. 

I have a company who has never funded their ESOP with cash (non leveraged, S Corporation, all company shares are held in the ESOP, 9 active employees, 8 terminated employees).  When employees are entitled to distributions, they fund the trust account with the distribution amount(s) and payout the employee.  I allocate the amount(s) contributed during the year as contributions to eligible employees who then repurchase the terminated shares.

The employer now has a problem as the distributions are becoming much greater than 25% of compensation of the eligible employees.  Their accountant told me that the company is not deducting any of the "distribution contributions" on their corporate return.  I have to allocate the contributions based on compensation and I believe that they have nondeductable contributions and need to pay an excise tax of 10% on the amount greater than 25% of eligible wages. CPA disagrees.

Has anyone ever come across this situation?

Thank you.

I have a client that has stopped depositing the employee deferrals.  There have not been any deposits since January of 2022.  We had to beg and do manual entries to get some of the payrolls in that did go in.  It's a very small doctors office and the plan is safe harbor and new in 2020, the year she started the practice.  The plan has automatic enrollment and there were employees that have become eligible in 2022.  We have emailed, texted and called and we aren't getting any response.  We have sent a certified letter letting the doctor know that we are resigning.  The question is should we report our client to the DOL for not depositing the payrolls?  We are signed on as a Fiduciary on the Investment Advisory side, we are also the TPA, but not a 3(16) so we aren't a fiduciary in that capacity.  Part of me wants to report it, but then I guess I can't say with 100% certainty that there were deferrals withheld that haven't been deposited, I guess only someone in the office would know that for sure.  I'm curious to hear what others think they would do in this situation.  Thanks in advance.

I have a client who is bundled with a daily vendor and the company is being sold as part of a stock purchase.  The daily vendor is saying it will take 6-8 weeks before they can even look at preparing an amendment to terminate the 401k plan.  We need to get the plan terminated ASAP because the buyer is requiring the plan to be terminated prior to the transaction.

I have read the BPD for the vendor and there is no specificity on how the termination must be accomplished (board resolution or amendment), just typical language about all accounts being 100% vested, no future contributions, etc.

If the client's attorney types up a Board Resolution to terminate the plan with an effective date prior to the acquisition, will this be sufficient to legally terminate the plan?  Then if the vendor wants to prepare some sort of amendment they can follow up with that later?

Thank you!!

Hi

Does SB still needs to be physically signed or docusign or another method is ok?

Thank you

Husband and Wife own 50% each of Company A, B, and C, all of which are S-Corporations.  Company A has 6 employees, Company B has 37 employees, and Company C has only the Husband & Wife.  All of these are a no-brainer Control Group.  Wife is just an Owner of each and is not on payroll and has a separate job.

Company A & B has two separate SIMPLE IRA's, but they're operating them the same. Not really that big of an issue, since they're treating them the same.

A bank trust company talked the husband and wife into setting up a Solo(k) for Company C.  In 2021, the Husband put in a $10k deferral into that.

In 2023, they'd like to set up a Safe Harbor 401(k) for Company A, B, and C.

Is there an easy way to unwind this and get rid of the Solo(k).  The "Mistake of Fact" won't work.  Could they just remove the $10k plus earnings as an excess deferral?

An employee eligible 1/1/2022 was discovered to have not been given opportunity to defer until 6/1/2022.  If they elect to not defer at all, Is the only correction for the Missed Deferral Opportunity the greater of 3% of comp or the maximum deferral percentage for the safe harbor match that is 100% or more?  

For example, if SH match is 100% of 1st 3%, and 50%, would they just contribute a 3% of comp QNEC?

We had a good discussion going on whether the addition of abortion-related travel coverage to the health plan would qualify as a Section 125 cafeteria plan permitted election change event.  Now it seems to have dropped from the forum.  Any idea why?

don't try this at home....

so, while I'm not collecting Soc Sec yet, June 1 I was within 3 months of my 65th calendar year birthday. And as such, that is the earliest date to start the application for Medicare. Supposedly, if you have set up an account on the soc sec website, you can apply there. tried that, the only thing that shows up asked for my medicare number which I don't have so that was no good.

So I called Medicare and they set up an appointment, but that call would be late July. I then went to the Medicare site to try to apply on line, and...it gives a link to go through soc sec. When I clicked on that I was back to my soc sec acct, but this time there were a bunch of questions about filling out on line for Medicare. go and figure.

A few days letter I received indicating the phone appointment was cancelled.

then I received another letter indicating the medicare card would be sent in  2 weeks.

And another letter checking to see if I was eligible for supplemental drug coverage.

and today, my card arrived at my brothers address...My brother called them and they have no idea why the card was sent there. Seeing how I already received 3 pieces of mail from them, this is a great puzzle.

well, at least I do have a number. Now I can get signed up with a health insurance company for supplemental coverage. At the rate I am going, I might just have everything in place by my 65th birthday.

I guess word to the wise, start your application at the earliest possible date. good grief.

I have a client that wants to introduce significant design changes effective August 1, 2022.  This is one day after the deadline to "adopt" Cycle 3 (Post PPA) restatements.  If the document is signed prior to 8/1/22, but effective one day after the adoption deadline, would you have any concern that the restatement is not timely?  I think not, but I will appreciate your thoughts, and hopefully, citations.

The question of Restatement effective dates comes up all the time.  For example, most of us are drafting Cycle 3 restatements with effective dates that are later than the earliest effective date of changes made in the document. For example, a lot of documents are being drafted with 1/1/22 effective dates for laws that took effect in 2018 and earlier.  

Clearly, there is a deadline to sign the document on or before 7/31/22, but does anyone know of a requirement that documents specify earlier effective dates?  It seems the only requirement is to sign  before the end of the Remedial Amendment Period, on 7/31/22.

Thank you very much.

I have a client I have been working with for many years.  He started with a Keogh opened at Paine Webber.  In 2007 I restated the plan into my independent doc (ftWilliam).  Back when he adopted the plan typically the account was opened using the sponsor's EIN.  I have advocated forever that a plan needs it's own EIN.  I obtained one (sadly I can not find the paperwork that assigned an EIN for the plan).

Now, the client is switching financial advisors.  The funds are going to be transferred "trustee-to-trustee" to the new financial institution.  I provided the EIN I had in my records only to find out that the existing financial institution has a different EIN and so the funds would not transfer because the EINs are different.  I understand that.  

Here's my question... the existing financial institution produced an EIN assignment (a copy of the SS-4). It goes  back to 2006.  The client has never taken a distribution and as you know the EIN on the 5500 is the sponsor's EIN.  
- Is this original EIN defunct at this point ? I mean, after so long with no activity don't they die?
- or, should we use it for the transfer because his existing accounts are registered with it?

I think that's enough info.