Bob was born 3/1/1953
He turns 72 after December 31, 2022 therefore his RMD age is now 73
He turns 73 on 3/1/2026... he needs to take a 2026 RMD
He can put off his 1st RMD payment as long as it is paid by April 1 of the following year, 4/1/2027.

Q/ This payment he makes on or before 4/1/2027 represents the 2026 RMD based on his 12/31/2025 year end balance... correct?
OR; is the deal he can put off his 1st RMD payment until 2027, the amount of the RMD is based on the 2026 YE Balance,  but the catch is he must take it by 4/1

What I struggle with is if he puts off his 1st RMD (the 2026 RMD based on 2025 YE Bal) until  4/1/27 (the following year) and then he needs to take another one for 2027 based on the 2026 YE Bal, he is going to have 2 RMD payments hitting his personal account in 2027...  a lot of taxes to come up with.  Am I overthinking this?

I have a non-gonvernmental Plan, but they do educational services and do get some grant money for pre-school programs.  Would they be considered exempt from ACP Testing?  I just want to make sure, as the issue is coming up with the auditors if it is required or not.

Thanks in advance!

It has been determined that 2 years ago, a plan failed the ADP test.  The HCE (not an owner) terminated and already took a rollover distribution the following year, so it has been over a year since that distribution has been taken.

Earnings have been calculated through date of distribution and an amended 1099-R will be issued.  When they (hopefully) withdraw this non-taxable amount from their IRA, are their additional earnings that need to be calculated, or is this amount simply frozen in time at the date of the actual distribution?

I am reviewing a health plan SPD. Has there been any official model NSA/TiC summary published by the Departments of Health and Human Services, Labor and Treasury of an approved summary notice that is suggested for this purpose? Alternatively, is there any summary language that anyone would be willing to share?

I submitted this question to Relius a well but curious if you are all in agreement:

My reading of the Relius 403(b) document and the Corbel formatted 401k prototype document is that the 60-63 catch-ups will automatically be added because those documents merely reference "up to the catch-up limits". And now that limit is just higher for ages 60-63.

Have others come to the same conclusion? I believe I saw an FT William email taking the position that this was their reading of their own document, which was what got me thinking.

For a retirement plan that provides participant-directed investment, an administrator provides information to meet ERISA’s disclosure requirements. This includes comparing a fund’s or other investment alternative’s past performance to “an appropriate broad-based securities market index[.]” For example, many fiduciaries compare a fund one finds to have the investment goals and strategies of a US small-capitalization value fund to the Russell 2000 Value Index or the CRSP US Small Cap Value Index.

In SECURE 2022 § 318, Congress directs the Labor department to publish a rule to let a plan’s administrator use for “a designated investment alternative that contains a mix of asset classes” a benchmark that is a blend of broad-based securities market indices, proportioned to follow the target-date, asset-allocation, or balanced fund’s investments in asset classes.

Considering the Office of Information and Regulatory Affairs’ most recent Unified Agenda of Regulatory and Deregulatory Actions, it seems unlikely the Labor department will complete, or even propose, a rulemaking by Congress’s December 2024 due date.

For plan administrators that rely on a recordkeeper or third-party administrator to assemble rule 404a-5 disclosures comparing an investment alternative’s past performance to an index’s past performance, what have the service providers been doing?

Have some followed what Congress permits, setting up a custom benchmark built from applying each underlying asset class’s index in the portions the target-date fund declares as its target allocations?

If not, what benchmark does a 404a-5 disclosure use for a target-date fund?

(I’m aware some investment funds use custom benchmarks for securities law disclosures; I’m seeking what retirement plans do in ERISA 404a-5 disclosures to participants.)

I’ve had been granted divorce in 2019 where per judgement, we are to split the IRA 50/50 as well as all assets. She (during the divorce process) sells all assets leading to 60k ordered to be returned to me. Yet she does not report this information to child support upon seeking help. She as well was (while married) involved in a class action that she didn’t report, which was recently found.

So arrears have been accumulated, while I’m in and out of the hospital and therapy for an accident I was in back in 2023. The child support agency put a freeze on my possible winnings, took my license, claimed to release it if a payment was made, and closing by depletion of 12k from my IRA.

No QDRO used, no judgement orders, just an order to withhold letter directly from the agency. No levy only the request to withhold. This was not made known at last hearing, caught us by surprise, and the bank doesn’t have any answer to how they deviated from my best interest to forfeit my money. They say CSS is identical to state, but if that’s true, we’re all screwed. What can I do now that they’ve taken all I have and violated the divorce decree?

I do have some very generous plans that allow deferrals immediately.  Most concernedly, I have a MEP that allows it - and now we're bringing on our first 10+ employee employer post-12/28/22, so welcome to automatic enrollment.

Amongst all the other issues is timing for the automatic enrollment notices.  Obviously, it's going to be difficult to give the notice before they are eligible.  What is the best solution for implementing it?  It seems counter to the intent to say "Welcome to Company X.  Since we are part of Y's MEP with immediate eligibility, you can elect to defer starting today, your date of hire.  But if you don't make an election, then in 30 days you will be subject to the plans' automatic enrollment provisions as outlined on this notice I'm giving you today."  Is that really the way to go?

Thanks in advance...

Employer has history of reimbursing some COBRA for terminated employees being provided severance.  Company is concerned about number of individuals on COBRA for general health insurance renewal purposes as well as with possible switch to a PEO with benefits.  Former employees generally have no contractual right to COBRA reimbursement and there is no severance plan or program--the Company has just offered to reimburse some limited COBRA on a discretionary basis with past terminations.  Company would prefer to avoid more COBRA beneficiaries if possible.

Any concern in stopping the old COBRA reimbursement practice (maybe forever, maybe just temporarily) and implementing a new severance arrangement where the amounts provided for COBRA reimbursement are instead provided as special "transition health insurance benefits" (or whatever you want to call them) for use in covering the cost of transition health coverage either through an exchange or COBRA and requiring proof of coverage?  If that is a problem, any issue in simply providing that amount generally earmarked for transition health coverage but paid no matter what--i.e., they get the cash and can spend however they want without being limited to reimbursement.  Employer would not limit ability to elect COBRA and would provide all required COBRA election packages but may highlight the potential benefits of exchange coverage as part of the exit process.  Thanks.

401(k) plan participant dies.  Spouse is sole primary beneficiary.  Based on advisor's recommendation, spouse -- pursuant to SECURE 2.0 -- elects to treat 401(k) account balance as if she was the employee.

Participant also had a SIMPLE IRA.  Spouse is sole primary beneficiary of the SIMPLE IRA.

With spouses having full rollover rights (402(c)(9)), is there any issue with spouse rolling over the SIMPLE IRA death benefits to the 401(k) plan and having the recipient 401(k) plan treat such rollover as if she was the employee for purposes of paying RMDs to the spouse?  Any help would be appreciated.  Thanks.

For a single-employer individual-account (defined-contribution) retirement plan, typically the employer, or some committee or officer of it, is the plan’s administrator.

Of those, for some a bank or trust company is the plan’s trustee, but for others only people associated with the employer are trustees.

(For the question I ask here, let’s leave aside an investment adviser, even if it is a fiduciary.)

So, how often does it happen that both the administrator and trustee roles are filled by the employer?

My query is only to support a lesson I teach my law school students. Any information you share I’ll use only with nothing identifying, and only in a very wide generalization.

I'm using the client's 9/15/24 extension for Form 5500-EZ, which I have not done previously for any client.

Do I check 5558 at the top?

I was thinking of checkin 5558 at the top and including the Corporate extension as an attachment.

As the title states, the original IRA depositor (a Florida resident) passed away leaving the assets to his spouse. Hours after, the spouse passes away prior to the assets moving to her IRA. JP Morgan is saying the only option is a distribution to the estate resulting in some hefty tax implications given the size of the IRAs. 

Has anyone dealt with a situation like this? I am sure there are some PLRs out there that help with the tax side of things, but ultimately this is a contractural matter between the estate and the custodian.

I have a cash balance plan that is terminating.

We sent the distribution packages to the participants the beginning of August. 

Several the of participants have a lump sum balance less than $3,000

The owners are anxious to get there money. 

I know we need to do a diligent search but I can not find anything that give a time frame we need to wait before we can send to the PBGC.  

Is there a time frame?

Thanks!

I have a new plan, everyone is part time.  It's a SH Match.  To be eligible to defer you only need to work for the company for 6 months, no  hour requirement. CAN the SH eligibility have a hour requirement?  will that screw everything up?  My ADP test?

Employer withheld premiums for welfare benefits from employees' pay, but only deposited a portion of such premiums into the VEBA/trust. (Reasoning is unclear, but may have been to avoid UBI/UBTI, as VEBA is overfunded.)

Employer held in its general assets the remainder of those employee "premiums" apparently for its own use.

If the "surplus" premiums never went to the VEBA is it a reversion? Does it matter that the contributions were not dictated by the VEBA but rather simply by open enrollment materials? How does one correct an issue like this? Is there a correction program for VEBAs?

Appreciate any thoughts!

I’m 99% retired, but have a couple people I help take care of their EZ filing on their solo k plans.  I understand the feds want the EZ to be filed electronically, and that this is apparently mandatory for many filers for the 2024 returns to be filed in 2025.  But I’ve seen conflicting guidance where some say it’s mandatory if the plan sponsor files at least 10 returns of any type (e.g. payroll, tax, 1099s, etc) in a year, and other sources say this threshold is 250 returns in a year.  Obviously this makes a big difference in who must file the EZ electronically.  Can anyone help clarify this for me?  Thanks.  

Quick question on the 70% coverage testing.  If a client fails, is there any alternative correction method than a QNEC?  I didn't believe so, I just wanted to be 100% sure.

Thanks!

Deleted post - information originally provided to me is incorrect.

P and K divorced 7/29/15. Decree says P is to split 401k from marriage 1997 to divorce w k.  QDRO finally started in 11/23, signed by courts 3/24. 401k plan transferred to IRA by P’s previous Employer. Unknown to both P and K.
 

QDRO relates to 401k not IRA and does not correspond with decree, (K manipulated documents and P signed thinking the had to match decree or courts wouldn’t have signed, not the case) So it’s a blessing that it got transferred to an IRA. When P contacted 401k company-Fidelity to see if QDRO was being processed in March, that is when he found out about it being transferred to Insperia Financial as an IRA. That company does not process QDRO and Ca Labor Retirement Service stated that QDRO is not Valid as it relates to a 401k not and IRA. Insperia Financial says that P and K have to agree on either a percentage or an amount. Funds are locked down until then.

k won’t sign unless the split of the 401k includes Child Support and Alimony as well. K has now levied P bank acct for child support and on Sept 9 a withholding order will take the total child support from his IRA, K is willing to sign for a lump sum agreed amount.
 

Question: Can a settlement agreement be made, staying the they agree on this amount, and that it covers the split, child support, and alimony. Have them both sign with notary. Is that legal to be done? If so do you know someone who could it?