Sometimes we have instances where, due to delayed reporting by an employer, additional contributions are reported after a member has refunded their account. In a case where a member refunds prior to reaching RMD age but the second, supplemental refund is paid at or after they reach RMD age, would regular RMD calculations apply to that second distribution?

I am working on a Calendar Year CB plan that has an accrual requirement of either 500 hours OR Employment on the last day of the Plan Year.

The plan Froze and terminated mid-year, and only one HCE met the 500 hours requirement.

I know the Termination date creates a short Plan Year for the purposes of funding, but does it also create a short plan year for the accrual period?

Did the participants employed as of the termination/freeze date with less than 500 hours meet the requirements for accrual or do I have to amend the plan and lower the hours requirement? I don't see any guidance for this in the freeze amendment.

Thank you

Ok, so always something new, at least for me....

In the last month of the plan year, the payroll company correctly withheld 401k from paychecks, but deposited a multiple of 2 payroll withholdings into the participant accounts.

This was discovered during the next plan year and pulled out of participant accounts. 

No 1099-R was issued since it was not a distribution.  However, some participants took distributions before this was corrected. Due to the relatively small amounts, the Employer will not be asking for the money to be returned.

This leads to 2 initial questions:

1. How to show this on the 5500, I'm thinking: Year 1: instead of Employee contributions, show as 'Other Income'? Year 2: Show as 'Admin Expenses - Other'?
2. For those who took distributions - show their extra deposited amounts instead in Year 1 as an 'Employer Contribution' instead of 'Other Income'?  (treating this as Non Elective Contributions may lead to other issues, but still contemplating that).

A participant in a 457 f arrangement passes away and the employer needs to pay the benefit to the surviving spouse. How is that handled from a tax and reporting standpoint? Does the W2 get reported under the participant's SSN or the beneficiary?

Any insight would be appreciated.

This will be a very easy question for this group.  Dentist along with 2 eligible employees will receive 3% non-elective safe harbor for 2024.  Dentist will also fund 10% PS. One employee terminated in 2024 with <501 hours.   Coverage test rules seem to say if term <501 hours they are excluded from the coverage testing.  Ok, but I'd bet our admin soft ware will say discrim testing fails since Dentist and 1 employee are getting 13% total and terminated employee with <501 hours is only getting 3%.  I'm just doing a fast calculation to advise the client.  I'm thinking this would fail 401(a)(4) perhaps?

BTW the PS is provided on allocation basis not accrual cross-tested basis so no gateway minimum.

Thank you, Tom

When determining if a disaster qualifies for the SECURE 2.0 disaster relief distributions and loans, is there a "level" of declared relief that determines if a participant can request a SECURE 2.0 disaster related distribution or loan?

For example, I am on the FEMA site looking at the Hurrican Milton disaster page for Florida.  They provide a map showing the designated areas (attached).  On this particular map there are 4 levels of designated areas.  The categories listed are Public Assistance (Category B), Public Assistance (Categories A-G), Individual Assistance and Public Assistance (Categories A and B), and Individual Assistance and Public Assistance (Categories A-G).

Do all of these categories qualify as a designated area for purposes of requesting a SECURE 2.0 disaster relief distribution or loan?

Thank you very much.

dec_4834.pdf

Are the Federal Disaster distributions under SECURE 2.0 subject to the 10% withholding that normally applies to retirement plan distributions that are not eligible for rollover?

Thank you.

Participant has $100,000 total, $50,000 Roth and $50,000 pre-tax.  Their RMD is $5,000 based solely on their Non-Roth Account (made up number, don't try and recalculate!).

Can they take the $5,000 distribution from their ROTH account to avoid the taxation?

Someone had setup accounts at the recordkeeper and allowed an inbound rollover to hit in mid-December before the plan went live January 1.  There is no guidance on this issue because it should never happen, but here it is.

My thoughts tell me this would call for a 5500 in the year the plan first received any monies.  The part I'm not sure about would be the trust and plan effective date being after that first rollover hit.  There was technically no plan in place at that point.  An amendment wouldn't really make sense here either... Has anyone ever heard of this situation before?

Good morning everyone.  We have a client who inadvertently failed to start auto-enrollment contributions for several employees.  I just want to make sure what the correction is for this type of mistake?  Do they catchup the missed contributions via the next payroll and pay them interest for the missed contributions? 

For the interest, what's the best way to calculate?

Thank you in advance

It doesn't seem to me that the guidance specifically addressed whether the 2025 auto enrollment requirements must apply to LTPT employees? In the absence of a regulatory dispensation, it seems like the safest procedure would be to have auto-enrollment apply to them, as ridiculous as that seems. Thoughts on this issue?

Hi Everyone, 

Self referrals are welcome - a small ESOP company is looking for an attorney who can advise the plan/company about a real estate transaction they are considering in the very near future. For privacy purposes I won't post the details here, but if anyone could suggest an attorney they could contact, it would be welcome. 

If you send me your contact information - I'm happy to give more details privately to see if the scenario is something you are interested in working on - before I pass along your contact information to the ESOP. 

Thank you all. 

I'm curious if the CPA firms that prepare the financial statements for large plans have a standard determination of when a deposit of 401(k) contributions is late.  ie 7 business days after payroll or the 15th business day of the following month?

Also, ever seen a company get away with the excuse, I mean reason, that the new recordkeeper didn't get set up so there was no way to submit the first few months of payroll until much later?

Can you please help me understand. I had a QDRO drafted before and didn't even went to court at first. Then I had another QDRO drafted again d second time but these people didn't even give me any updates. I'm just a little worry if my money wasn't wasted the second time. My ex was a retired Army and been having a hard locating him. So these QDRO  has been telling me that they will have a hard time proceeding the process because they need his current address or email for them to send the draft for approval. I have been reading some comments that my ex signature is not really needed if he refuses to cooperate. What do you think I need to do with these QDRO people to send me any update.. since everytime I call the in charge in the office is annoyed with me and telling me to put in a nuisance. Can she put my case on hold? For just asking an update? I am currently in Philippines right now . And already paid them in full. And all I have is a receipt that they received the payment. I am planning to go back in States in couple of months to work on these. Anybody can give me any good advice on what to do.. 

thank you

For employees who fail to affirmatively elect a deferral rate, and are automatically enrolled at the plan's default percentage, how does the employer apply the default percent to tips received as cash to the employee? 

I understand excluding cash tips from plan compensation has its own complications, especially since most HCE do not receive tips. 

I am not asking about how to employees defer from tips when they affirmatively make an election - those employees can turn in their tips each shift if their expected net pay is not large enough to cover the elected deferral amount. 

I am wondering specifically what guidance or advice folks have been given sponsors who have to implement an EACA or better (most of ours go with QACA), in light of the auto enroll mandate in SECURE 2.0. 

If there is another thread on this somewhere, please feel free to share, I wasn't able to find anything recent, but perhaps did not use the right search terms. 

Thanks!

We have such a mess.  For multiple years I had an FSA that I contributed to and my husband had a HDHP with an HSA that his employer contributed to (500/yr) but he did not (he did not even realize he had it).  The wording during open enrollments for both employers was not clear (really confusing).  Last year realized we may have had both and couldn't but thought if he had a HDHP and was not on my insurance he could have HSA and contribute and I could have my insurance and FSA for me (even tried to explain to one of our HR depts to make sure we were doing correctly) and now realize we were still WRONG.  Open enrollment for both now so want to make sure we are correct.  Am I right that we can have our individual insurances without the other on our plans and he can contribute to his HSA and I don't opt for FSA and his HSA would be available for both of us?  OR: He ask his employer not to contribute to HSA and I can have FSA that can be used for both of us?  If second option: what do we do about the money still in his HSA?  Also: how do we correct for the years we did this incorrectly?  What a mess we are in.  Thanks for any advice on where to go from here.  We would like to make this right.  I don't think we ever hit the yearly contribution limits or if so not by much.  Thanks

Has anyone had issues getting their login updated for the IRS' secure messaging portal?

Looks like they did an update and even when I try to follow the instructions it is not letting me in. 

Any tips or tricks? 

https://www.irs.gov/help/tege-secure-messaging

I have a QDRO that was just signed by a Judge with a Seal on it. I am sending it to my ex-husband's 401k Plan at Lincoln Financial. Is there anyway that I can request that the company not notify my husband that funds are being transferred out of his retirement account for safety reasons. I have a lot of safety issues with his new wife 

While working at a major medical center in NYC for 35 years, I had been contributing to a 457b plan for a number of my later years… Long story short, when I retired 5 years ago, there was no mention of the election requirement, regarding this account… and, I only just recently learned about this from the account’s administrator… So, I was never given the option of deferring the payout or receiving it in increments or as an annuity… Rather, they just sent me a letter this week, saying that they are sending me the check for the lump sum in 7-10 days… (again, I reiterate, this is the 1st mention of this account with me, 5 years post-separation)…

Since this unanticipated delayed payout will require a hefty tax payment this year, can anyone recommend any sort of recourse that I might have, as far as “encouraging” my former employee to provide me with the options that they should have offered to me 5 years ago?

Thank you all for any feedback, insight or assistance…

Trying to payout this account.  The participant (80) died in 2023.  Has been taking RMDs.  We need to take an RMD for the spouse now so we can roll the balance to her IRA.  Do all pension RMDs use the uniform life table?  CPA wonders if it should be a single life table.

Thanks