I just heard from the partners of a plan sponsor that they could barely fund the 3% for 2022 and want to eliminate the 3% safe harbor for 2022.  It is not a "maybe" safe harbor.  Most of our SH plans have the 3% hard-coded in because it is easier to deal with as opposed to an amendment each year.  they are probably stuck for 2022 which is fine.  they then will ask me if they have to fund for themselves - 2 partners in a partnership.  My answer has always been for this situation yes so as to follow the plan document but if they want to take that chance and simply have insufficient funds, they must at least fund for the non-HCEs.  

Any way to get out of the safe harbor for 2022 at this late date?

Tom

An IRR is a rollover within a retirement plan to a designated Roth account in the same plan. 

Question is do we code the 1099 code "G" and then use the taxable box to create the tax liability to the participant converting OR do we use code "2" (I have read this is IRA to Roth coding only).

Thank you for any input.

An employee stopped working for a company for a certain period of time, kept on payroll, but did not officially terminate from the company. Would you consider his termination date the day he/she stopped working for them or the date they are no longer on payroll? I'm thinking the latter, but would like to know your thoughts on this.

Plan sponsor has an employee who wants to be excluded from the plan due to religious reasons.  Eligible employees receive the 3% SH and a small PS.  It is not workable to exclude him by job definition or class, location, etc.  Very strange and I will tell the sponsor he must participate.  Maybe use the beneficiary designation to assuage his objection to the plan whatever that might be.

https://www.sidley.com/en/insights/newsupdates/2022/11/us-dol-proposes-self-correction-of-delinquent-contributions-and-loan-payments

Can someone pleas call the DOL and explain to them what "self-correction" means?

1. The sponsor would submit an electronic notice form on the EBSA website, after which the self-corrector would automatically receive an emailed acknowledgment. The sponsor must complete a retention record checklist, including signing a penalty of perjury statement, preparing or collecting certain documents, and providing the checklist and required documentation to the plan administrator.

In reliance on advice of prior counsel, a client engaged in what has turned out to be multiple prohibited transactions, with a 4975(a) tax due of around $200,000.  Client has corrected the prohibited transactions, so no second-tier tax is involved.

          First Question: Does the IRS have any discretion to not assess the full 4975(a) tax? 

I know the IRS has discretion not to assess a second-tier tax, and discretion not to assess penalties for failing to file 5330s under IRC 6651(a). I know the client can apply for an individual exemption with the DOL, and that the DOL has the discretion to reduce penalties under ERISA Section 502(l)(3) for reasonable cause.

          Second question: Is there any IRS discretion or other statutory or regulatory basis to reduce the 4975(a) tax?  What are the client's options if the $200,000 tax would be an extreme hardship on the taxpayer by using up essentially all of their savings and other assets?

Thanks for any help. Feel free to email separately if you prefer: jkirtner@hershnerhunter.com

A fiscal year filer's report was due 10/31.  Our office submits on the client's behalf and the client signed and returned the form timely, the actual submission took place after 10/31.  No penalty notices have been received.  Is it possible to submit it again using DFVCP?

The following is a link to the SEC Clawback Regulations as published in tomorrow's (11/28/22) Federal Register (which take up a mere 67 pages in the typical Federal Register three-column print).

https://www.govinfo.gov/content/pkg/FR-2022-11-28/pdf/2022-23757.pdf

just wondering - do Plan Sponsor's generally sign the Safe Harbor Notice, or do they just get sent out as applicable?

Plan Sponsor/Administrator files 2018 5500-SF one year late (not under DFVC).

Ignores IRS penalty letters and IRS has now assessed a $70K penalty.

No DOL penalty assessment yet.

Can we file an amended 2018 5500 under DFVC and get IRS penalty abated or is it too late?

Many thanks.

one of our clients asked what it would look like if they stopped doing 3%NE SH-if there would be refunds/ how much. Is the simplest solution setting up a new plan and uploading the census and running the tests? I know what I'd do in Datair, but that's not an option right now. 

I have a company that has 2 divisons, but they are operated as seperate companies. it is 100% a controlled group, Each of the companies has a 401(k) set up, but one company is an all-union shop, so no participants can be in the plan. recently, a new, non-union member joined the company, so he would be the only participant. is the best course of action to set up a division at the custodian to keep them seperate? does the new employee need to be kept separate from the original 401(k) plan?

We have a plan that missed providing deferral opportunities for quite a few employees over the years.  They are going to go back and make good on calculating and depositing what is required for these individuals.  However, several individuals have left the company years ago and they may not be able to locate them on their own.  Any recommendations on a public or private services that can be used to search for lost participants?  

Thank you

Hope you all have a wonderful Holiday break. Watch out for crazy drivers! There were already a lot of people in a heckuva hurry this morning...

Never encountered this - one person plan and the owner died.  Spouse survives him, though she was never in the plan.  Does she sign the plan termination paperwork?

Getting word that a plan I've been chasing is going to come with us.  Sounds like they haven't yet gotten their safe harbor or EACA or QDIA notices from their current TPA or RK yet for 1/1/23.  It's a SHNEC, so we can pass on that if we have to, fine.  I'm getting information rapidly, but what if we just can't get enough to produce the EACA or QDIA notices by 12/1/22?  I don't see any kind of remedy, like "hand it out as soon as possible" anywhere.  What kind of pickle are they in?  Thanks.

Client has pension in TIAA, rolling $50,000 to Roth IRA and paying tax on that.

He is also required to take an RMD, which is about $15,000.

Can the $50,000 coming out of TIAA and going into the Roth cover his RMD requirement?  

It seems like that would be a 'no' but I am not an expert on this.

Thanks.

When I was doing some random browsing, I saw something on this that made be do some additional browsing. There are MANY websites out there that say you are a HCE if you had more than $150,000 compensation in 2022. 

Now, while true, it seems to me that this is very misleading, as some of the charts, etc. would lead someone to believe that the THRESHOLD is $150,000, rather than $135,000, so that if you had, say, $145,000 in compensation in 2022, you would not be a HCE in 2023.

Are others seeing this, or getting questions due to this type of information out there?

Hi

My very first age 72 RMD.

Turned 72 in September 2022, when is my first RMD due from the DB plan?

Is the AB based on 12/31/2021 AB if starting 4/1/2023?

If participant wants 2022 RMD and withdraws in December 2022, can he receive annual lump sum by 12/31/2022?

Thank you

We have been attempting to terminate a Plan for about a year that is with Ascensus. We have a handful of terminated employees and a deceased participant. The deceased participant's spouse does not want the funds and refuses to sign paperwork (they were estranged for many years). We would like to force them out to an IRA and finally close this Plan. However Ascensus refuses to let this happen. They say that Plan cannot terminate until beneficiary signs forms. No one else can be forced out as they want checks to be cut at same time. I have countered that they are excercising  control over Plan Assets and acting as a fiduciary but they claim that in the termination paperwork they require you to sign, the Plan Sponsor requests no one gets paid out unless they sign a form. I don't know how many years Ascensus expects them to continue the Plan for this beneficiary. Does anyone have this experience or ideas?