austin3515

LOL... 99.99% bad, .01% good 🤣

That was just a crazy example where absent this rule the testing would be catastrophic, LOL. This is really kind of neat and may be a great reason to adopt the LTPT rules in certain cases.

Owners child works part-time and has not met 1,000 hours in 12 months, but they are now an LTPT. I can exclude LTPTs from ADP testing. So the kid can contribute 50% of pay, right? Is this too good to be true?? Maybe there is something that says otherwise but it's something that never even crossed my mind until I saw it happen this morning..

In my view the RMD rules for these palns are practically moot (not entirely). A Participant is not subject to RMDs while still employed. I've seen people defer payments until the year after they retire but no later. So someone could theoretically retire when they are 75, under your provision they get their first payment on the Required Beginning Date, and then presumably they elect either a lump-sum or perhaps some annual installments - the latter should really never be more than 10 on the high side. So it is true that in my example the participant could not defer their distribution until they turned 80 but the reality is people tend to want to get their money (and employers would prefer to part ways). Your same provision applies to someone who leaves when they are 45 by the way, I presume?

This is all wonderful news. I think probably 80% of my clients (i.e., the smaller ones) will not adopt this provision. Wonderful sentiment, but execution is so incredibly infeasible. And if you have less than 50 employees, you might have one person every 3 or 4 years eligible for this, and how many of them can actually contribute more than $30,000??? I just don't get it. This is wonderful for IBM and Microsoft and Amazon, but down here in the weeds it's the last thing anyone wants to deal with.

I've seen conflicting things on this. Is it 100% known yet whether or not this administrative horror show is mandatory or optional?

Having spoken to the client, I can assure the clients goal is to not owe any match during the period of time that elapses between their eligibility date and the date they first elected to make a contribution. That's the full scope of their goal.

Understood but the executive who maxes out in March 2023 gets a true-up of $8,00 (per my calculations for a client this morning). So you'll have tough time convincing my clients that the true-up was not for the CEO but rather the other employees who got true-ups of around $50 to $300 max.

Honestly I do not see this as being an administrative nightmare at all. Participant becomes eligible 4/1/2023, does not contrbiute. They sign up at 12% 7/1/2023, and the match is 50% of 6%. The client doesn;t want to match their comp for the 3 months before they signed up. This is not an irrational idea. The client wants a true-up calculation primarily for people who max out too early. This is all very insightful information but the one thing I have not yet seen addressed is whether or not it is permissible. I can't think of a reason it would not be. The amendment would need to be clear it impacts ONLY compensation paid prior to their initial enrollment, and not a start/stop scenario in later years. This not challenging to administer either as the client clearly knows what pay-date they first contributed from. Again this is not a safe harbor plan.

1) it is for a non-safe harbor match 2) the client wants an annual true-up but doesn;t feel like they should be obligated true-up for the portion of the year that participant was "too lazy" to fill out the forms. I'm paraphrasing but that is the logic. I am reminded of something I learned a long time ago which is clients want they want even if we don;t think they should want it 🤣 The question at hand is, is it legal. And of course I cannot run ADP/ACP testing based on that definition of comp. I would need comp as a participant based on the plan provisions to comply with 414s.

Participant's entry date is April 1 2023. They start contributing June 1st 2023. Client wants to have a plan provision that excludes comp prior to the first date they made any contributions. In the words of Kramer, my reaction was "You just blew my mind." I think this should be allowable (aside from the fact that my pre-approved document does not include this option, which I guess is a different matter on reliance, etc). Thoughts?

Not surprisingly (because I think FTWillilam is so awesome) they can do them all year long. The fees are very modest. I'm actually a little embarrassed I misinterpreted all of their caveats about processing deadlines at the end of January. In hindsight those deadlines obviously only related to hitting the 1/31 deadline. Thanks everyone!!

@Paul I that was the missing link for me, thank you. The red copy goes to the IRS not the participant. I get it. If FT can't do it we might work with another vendor for the one-offs, that's probably not a bad idea.

100% thats the problem. Our admin person will spend 45 minutes trying to get it to line up! I will ask FT but I thought they would not do the fulfillment piece post 1/31.

We do most of our 1099s through FT "fulfillment" service where the print/mail/ and send everything to the IRS. But after 1/31 we need to do them manually (for example when a client only tells us about it now). For years we have been ordering the IRS's red ink 1099s and trying to print the 1099s on those before mailing hard-copy to participants. Can someone explain to me why I am making my life so much more difficult even though I know from doing my own takes that taxpayers don't even send those to the IRS?? Are people sending this out just on regular whit paper?? If there was a compelling reason I would be all over it but if there is one I just can't see it...

Does anyone know how to request that the IRS abate the now 10% penalty tax on a missed RMD for 2023? I know no one knows if they will abate now that they have reduced it but I still think that the same logic of "don't stick it to an octogenarian living off of social security for a silly mistake" should still rule the day... Regardless I'm going to give it a shot but curious if anyone knows how it is done!

Thanks!! Very much so!

http://actuarialtools.com/cctable.html I've been using this site to pull the covered comp tables for years but the 2024 tables are not yet available. Anyone know where to pull them from?

From EOB, you are correct. I wasnt 100% sure if the ADP and ACP Safe Harbors had to be satisfied and the answer is yes. Now you could have a match that is 400% of the first 6% and I believe that would work. 2. Certain safe harbor 401(k) plans are deemed not to be top heavy. A safe harbor plan is deemed not to be a top heavy plan (even if the top heavy ratio, if calculated, would exceed 60%) if: (1) the plan consists solely of a safe harbor 401(k) arrangement, either under the 401(k)(12) safe harbor or, in post-2007 plan years, the QACA safe harbor, and, (2) to the extent there are matching contributions made to the plan, all of the matching contributions satisfy the ACP safe harbor prescribed by IRC §401(m)(11) or, in the case of a QACA safe harbor plan, the ACP safe harbor prescribed by IRC §401(m)(12) (which cross-references the requirements of IRC §401(m)(11)(B)). See IRC §416(g)(4)(H), as added by EGTRRA §613.

"The Employer retains the right to reduce or suspend the safe harbor nonelective contribution under the Plan. If the Employer chooses to do so, you will receive a supplemental notice explaining the reduction or suspension of the safe harbor nonelective contribution at least 30 days before the change is effective. The Employer will contribute any safe harbor nonelective contribution you have earned up to that point. At this time, the Employer has no such intention to suspend or reduce the safe harbor nonelective contribution." That's what our Corbel/Relius notice says. So it seems clear to me you can do it.

There is this thing from the IRS. IT' a good place to look and see if your fringe in question is even mentioned. The word "jury" is not found anywhere in this publication. https://www.irs.gov/publications/p15b

I've always thought of fringe as not in any way related to service (how much of it there was or how good/valuable it was). Examples of where this holds true for taxable fringes are: GTL, Opting out of benefits, Personal Use Company Car, taxable Car allowances, etc. Those items are not at all related to the value of the employee or how much they work. That's what puts them on the "fringe" I guess. Jury duty, vacation pay, sick pay, are are all paid in lieu of service so they are related to service. Now third-party-sick pay is a weirder interpretation. The benefit itself is in the form of insurance protection, via monthly premiums paid by the employer. Receiving the benefit of that insurance has nothing to do with amount or value of the service. When a benefit becomes due, the IRS requires it be reported on W-2, but that doesn't change the fact that it was a fringe at the outset (note that the benefit is paid by a 3rd party, the insurer--not the plan sponsor (edited, originally said "Client")). Anyway that's been my reliable north star.

That;s impressive. The notice we have been using is 4 pages combined, and the font looks like 8pt!

Also there is SO MUCH duplication. IT's as though they wanted to make it as impractical as possible.

I agree but we do still order thousands of copies a year and that's a lot more paper than one combined notice...