So I have this plan with 4 terminated employees who each have a small residual balance due to interest/dividends.  

1¢
$20.03
$8.92
$208.82

For the $208, we will send her the money.... issue a 1099-R.  For the rest, send them the money... is a 1099 needed?  I'd like to just expense it out.  What does everyone do in this case?

Fiscal year 6/30 organization wants to contribute funds in June, 2024 to a 457(f) plan being adopted on June 1, 2024.  I am told the employer has been "setting aside" funds to contribute on behalf of the executive for past services for the organization.

This sounds to me like a 409A, if not a 457(f) violation, as I don't believe contributions can be made for services performed before the executive has become a participant.  Nor do I believe it permissible to make the plan retroactive to a date before its adoption such that the executive could become a participant as of an earlier date, July 1, 2023, for example.

Am I right?  If so, can a contribution be characterized as something other than for past services to enable the contribution in the current fiscal year even though the plan didn't exist for the first 11 months of the fiscal year?

Hi,

Thank you all, as always, for all the insights.

Now that the Secure Act allows for a DB Plan to provide for in-service distributions starting at 59.5, is a DB Plan now allowed to adopt an NRA of 60? Or is 62 still the lowest safe harbor NRA for a DB Plan?

Thank you.

Hello, I had a consult with an actuary/administrator about starting a cash balance plan this year. However, I maxed out my solo 401k contributions 69,000 this year by myself with fidelity. He states that he can create a new solo 401k plan (?) and reclassify the excess as after-tax contributions for this year so I can start my cash balance plan this year.

Hi

Did not have to deal with one of these in many years so a bit rusty on the process.

Everything is on a calendar basis.

Joe and Mary are 50/50 partners of a law firm - no other employees. They both get K-1s. Let's call this LawLLP. All they have is a SEP.

July 1, 2024 they will go their own separate ways.

Joe sets up a PLLC (filing as a sole-prop). He will bring in some of the clients from LawLLP. Is this an ASG issue?

Joe wants to set up a DB plan for 2024.

Can he:

1. Use prior service and income (limited to 5 past years) to start the DB effective 7/1/2024 (ending 12/31/2024 for a short plan year) so that he can have an AB as of 7/1/2024 for pre-funding?
2. Assuming that he can, plan year must start on 7/1/2024 to avoid Mary to be involved in the DB, correct?
3. What needs to be pro-rated, if anything? His net c will be 200k and he wants to put away as much as possible. Of course it will depend on what can be used from prior firm.

What else am I not asking or thinking about?

Thank you all.

We have a small plan whereby each participant has a separate broker account.  We directed the financial advisor to deposit into each person's account their 2022 employer contribution in Sept 2023 and actually again in Feb 2024.  It did not get done until May 2024.  The contribution was made to the plan on time for tax purposes - deposited into a general fund plan .account.  The financial advisor has agreed to deposit lost earnings.

The FA is now getting into areas that in my opinion they should not -asking us if Form 5330 is needed and if the 2023 5500 needs to be amended to reflect the earnings receivable.  I do not see anyway to report this on Form 5330.  The employer did not benefit so it is not a prohibited transaction.   As for the 5500, I lean toward just showing the earnings on the 2024 5500 since that is when they will be deposited.  I suppose we could split our calculation between Oct 1 and Dec 31, 2023 and show that as a receivable and amend the 5500 but that seems unnecessary.  It is filed on an accrual basis since we add in the employer 2023 contribution receivable even though not paid until 2024.

Thoughts?

I know that SECURE 2.0 allows you to terminate a SIMPLE IRA and start a 401k/SH plan in the same year after 1/1/24 (got to love those pro ration calculations!), but what about the other way around?  The fact that I'm not finding that you CAN do it makes me think it's not allowed.  Thanks.

Can someone explain to me why fees associated with Insurance Services would fall under the new line 2(i)5 "Investment Advisory and Management Fees"? No where in the 2023 5500 Form Instructions does it say this nor in the 5500 Regulations site. Shouldn't insurance service type fees just fall under "Other" for expenses on the Schedule H P2?

Thanks!

Sort of an Angels dancing on the head of a pin item here.

The 401(k) regulations are very clear that the sole prop (or unincorporated partner, for that matter) must complete a deferral election no later than the last day of their taxable year. Very common for such a deferral election, if it doesn't specify a specific dollar amount or percentage, to  say "maximum" or something similar.

Now, suppose a sole prop has an election where s/he specified "maximum." But once Schedule C income is known, s/he does not want to contribute the maximum, for whatever reason. Is this a problem? If instead, the deferral election said something more along the lines of, "an amount from zero up to the maximum allowed" or something along those lines, is this an acceptable election? Curious as to whether anyone has EVER seen or heard of the IRS opining on the issue - I have not...

And please don't beat me up with arguments about how stupid the regulations are on this - I absolutely agree that it is foolishness, but I don't make the rules - just try to play by them!

Thanks in advance for any thoughts.

Can a partner who receives a k-1 from a partnership participate in an HRA? Partnership is setting up a fertility HRA and would like all employees and partners to be eligible. 

Has anyone come across guidance regarding whether Code section 72(t)(2)(A)(v) applies to distributions made to rehired employees.  Any guidance is greatly appreciated. TIA.

Safe Harbor 3% plan for controlled group.  We have a location that we have been excluding and now cannot pass coverage or average benefits (unless a significant profit sharing is made to the staff of the eligible location).

My question is, can we bring in the staff needed to pass the 70% coverage test at the excluded location? Would we have to allow them to defer since they would now be considered a plan participant?

If someone wanted to freeze a Cash Balance Plan, what is the deadline to do it?  Like if they wanted to freeze the Plan for 2025, when do they have to make that decision by?

Thanks in advance!

I received an email from a client over the weekend.  An employee thought they were participating in the plan, thought deferrals were being taken and thought they were getting the 5% match.  This employee did notice that nothing was being taken from  their check... didn't see the deferral on the W2.. and is still crying foul.  Paperwork was provided to her be she never completed and returned it.  The employer is willing to make her whole in some way.  What is the best way to handle this?  

edit:  I read that a QNEC can be made on behalf of the employee.  If that is the answer, do I need to go back and issue one each year, amend each year's 5500?  OR, can it be done all in one year and only amend the last 5500?

Damn, another edit:  The IRS link I am looking at states that the correction QNEC would be 50% of the ADP.  So I need to determine what the ADP/2 is and that would be the corrective QNEC.  It is a SH Match plan we need to make that contribution as well I would think.. right?

Thanks

My soon to be ex has a 401K which he has almost nothing left in it due to him empting the account. The state where he filed doesn't seem to care. He has about 200,000 in his pension (which seems odd for working there since 2007.) I am worried about my future since I wasn't allowed to work for 30 years, so nothing in retirement myself. I have asked my lawyer several times about his pension and if I can roll it over to something I can have in my name. She doesn't seem to understand the question. She did send me a copy of paperwork from a subpoena to Fidelity stating different scenarios one being if he was terminated in July if he was terminated in the year he turns retirement age. I didn't understand the termination part of it. Anyway, it didn't state anything about being able to take (I am assuming 50% out) So I am in the dark about what should I make sure the QDRO states. I know its up to the plan administrator along with the court. I just want to make sure I have all the info I can. I have reserched about being able to cash out (meaning after the QDRO is filed I get a cash out and not having to pay the 10% tax fee) but I am not sure if this is just a 401K or if that includes the Pension as well? TYA 

An individual met the 1 YOS/1000 hours requirement in the past and was employed for 15 years.  He did not contribute to the plan and has never had a balance.  He leaves for 2 years (has 2 BIS) and then returns.  The 401k plan does not use the rule of parity and does not use the one year hold out rule.  He would be eligible to re-enter immediately, is that correct?

Can we ever disregard YOS for eligibility in a situation like this?  What if he left after 3 years, was not 100% vested (he did not have a balance regardless), has 3 BIS and then returned?

I've checked the document and it is confusing.  This has to be addressed in it but without having anything specific to point to that says "disregard the following service..." I do not think we can ever disregard any eligibility service.

Any comments are appreciated.

I am a Law Student, and I am working a case assisting an elderly women who was due Alimony from her ex-husband as part of a Judgement of Absolute Divorce. I am not working with the woman to obtain Alimony through a QDRO for the ex-husband's 401k benefits. This Case is in MD and I am aware that unless a party waives their rights in a Judgement to receive the accrued interest in a Defined Contribution Plan, both parties will share in the interest generated over the years. My question is does relate to Alimony that is being awarded pursuant to a QDRO; should I write up that she is entitled to interest accured over the years on her share?

This impacts things like number of employees, revenue (as represented by TOT INCOME on the 990 and Revenue on 5500), liabilities, cash on hand, etc. Can anyone help me understand why I'm seeing those differences?

 I had a question regarding an amicable divorce for medical reasons, in which my husband is already receiving his disability benefit as a 75% Joint spouse option. If I state on the divorce decree that his Annuity remains his now, to avoid the split, is a Qdro still needed for my benefit upon his death or the pop up upon my death. The lady at the plan says no, but will want the divorce decree which will state the pension remains my husbands. Why else do the need the decree now. I do not trust them.

Preface by saying the company is a small S Corp.  In recent years the evaluation of our company ESOP shares versus what the board sets as a price for all other shareholders has grown substantially different, with ESOP market value being now 20% less than what other shareholders value is.  Is this common within privately traded company’s with an ESOP.