austin3515

Oh believe me, I'm all over adopting this. No way it makes sense for the client to incur the extra time and expense (and embarrassment) of validating these things.

Effective immediately (Well at least for calendar year plans) are we no longer required to obtain any support at all for hardships? The conversation will be "How much do you need?" "$5,000" "Are you able to certify it is for one of these pre-approved hardships things?" If they say yes, they are eligible and that is that, right? Literally anyone can take a distribution for any reason at any time as long as they are comfortable lying through their teeth to get the money they desperately need (at least as they would define that), right? Does something bad happen to them if they lie? Is it subject to any audit at all? Hardship Distributions. Current law allows distributions on account of immediate and heavy financial need or an unforeseeable emergency, and the amount must be limited to the amount necessary to satisfy the financial need. Certain listed events are deemed to be on account of hardship, and employees are required to submit records documenting the safe harbor event. Effective for plan years beginning after December 29, 2022, plan administrators can rely on employee self-certification that they experienced a safe harbor event and that the requested amount does not exceed the amount required to satisfy the financial need.

It's going to take more than a year to sort all of this out won't it? Maybe it's just me but I predict a ton of people making catch-ups on a pre-tax basis who were only eligible to make Roth catch-ups. I just don't think payroll software is programmed with a "lookback" feature to determine who is pre-tax catch-up eligible or not. I can't think of a single other payroll item where a "lookback" is required. It may sound simple but the mere act of a payroll software program going into a prior year to look at year-to-date pay (415 pay in particular no less) to check for this catch-up eligibility seems incredible. OK fine maybe ADP and PayChex will pull this off, but I just can't see Quickbooks doing it. This is really going to be an operational disaster.

Let's say a 457f plan says participants balance becomes vested at age 55. The participant is currently 50. Can the plan be amended (At the employers election) to become vested at age 54 instead? What about 53? Is this strictly forbidden no matter what, or can these kinds of changes be made within certain parameters?

I thought the point of the recently law change was to faciliate people being able to contribute earlier. You want that to happen, you can't penalize employers for doing it. And I rather think the consequence (perhaps not the intention) is to disadvantage employers who are smaller and who happen to employ lower paid people. The assumption baked in to this rule is that CPA firms are "good" employers because they pay their average employee $85K (making up numbers) while the average Fast Food Joint pays $15 an hour (the former of course is rarely top-heavy because the contribution levels among the non-owners is generally substantial). The owner of Fast Food Joint that sponsors a top-heavy SH Match plan requires punishment for being "Bad". The real irony of course is that if they try to good a thing by allowing their own contributions from date of hire, they get punished. That is just bazaar to me. Really bazaar.

Are we on the same page that a top-heavy Safe Harbor Match Plan would not amend their eligiblity to make it more generous because even though there is no top-heavy minimum due for people with less than a year, there is for people with more than a year? Smaller Safe Harbor Match plans are generally top-heavy. Why? The reason they are safe harbor match in the first place is because the owners participate and the employees do not. So top-heavy comes at these plans pretty PDQ. This would be a ridiculous oversight making this relief probably 1/3 as impactful as it otherwise might have been. Maybe less.

https://www.irs.gov/pub/irs-prior/fw4r--2022.pdf OK it's not horrible but it's an extra piece of paper. I suppose maybe they want people to know what their marginal rate is when they make the election? OR will the Empower's and John Hancocks just modify their forms to avoid this?

Transmeroca sent out a piece indicating tha the IRS now requires W4R every time someone wants to increase their withholding. Can that be right?? Those forms are notoriously nonsensical.

Looking forward to confirmation that this will be a real thing and not a teaser!!

Congress intended to allow plan sponsors of small top-heavy plans to allow their hardworking employees to contribute from their date of hire. If the IRS does not bear this in mind when analyzing this language it would be most unfortunate working Americans. To me if you are exempt from (A) and (B) you have met the requirements. If there is any doubt about this the IRS needs to tell us ASAP since these LTP rules are effective 1/1/2024. Just so everyone understands the implication of CB Zeller's conclusion, this new rule is practically worthless for safe harbor MATCH plans trying to avail themselves of the exemption: That's because if you have immediate eligibility for 401k and a 1 year wait for the match, now anyone with more than a year has to get the 3% top-heavy minimum. No one in their right mind would do this. IF they would they would just have the 3% nonelective. Not a single solitary top-heavy safe harbor match plan will amend to liberalize 401k eligibility if relief does not apply. Not sure what the point was.

Excellent, very excellent. That sounds good enough to me! The sole impediment to immediate eligibility will be the audit now!

Well maybe this new rule will cover it. Honestly if it doesn't cover the Safe Harbor match top-heavy plans that is just too bad.

Awersome article from Groom Law. But in a sea of bad news, this almost makes it worthwhile... I haven;t seen yet if they fixed the issue where a top-heavy safe harbor match plan can avail themselves of immediate eligiblity and a 1 year wait to avoid blowing their top-heavy exemption. That would for sure be a disappointing exclusion but regardless this is pretty awesome for a lot of plans. https://www.groom.com/resources/secure-2-0-hitches-a-ride-just-in-the-st-nick-of-time/

Amen Peter. Sometimes the disconnection with the world is unbelievable. Such a good example of that. Another is when they think it's feasible to have additional catch-up contributions at age 60, 61, 62 and 63. And login.gov were the links that I deleted (at least that is the text I didn't exam the link).

Client got this email and wanted to know if it was legit. Have others seen this? You get an email from some account with hyperlinks and obvioulsy people are concerned it is a phishing campaign (ALL links were deleted before I pasted this in). Curious to know if anyone else has heard of these going out. This will ruin 2023 for us unfortunately. IT was awful the first time. The 2nd time should be no different. The email is as follows: EBSA is modernizing the EFAST2 website authentication process. The existing EFAST2-issued User ID and password log-in process is being phased out and will be replaced by the unified single sign-on solution for U.S. government websites. enables users to securely log in to many government agencies’ services with a single username and password. Beginning Jan. 1, 2023, all new EFAST2 website accounts will be created using the process. Existing filers may use their EFAST2-issued User ID and password to log in to the EFAST2 website until Sept. 1, 2023. This eight-month grace period provides a gradual transition for filers. However, existing filers may change to a account as early as Jan. 1, 2023. Logging into the EFAST2 website is required to obtain new electronic signature credentials for the Form 5500 Series. It is also required to file the Form PR or to use IFILE, the government’s Form 5500 Series filing application. Logging into the EFAST2 website is generally not necessary for existing Form 5500 Series filers using Thank you, The U.S. Department of Labor

we're going to try to route of sending the letter wioth the documentation as RBG suggested. We have always done that in the past where needed and its been fine.

Wow, our tax dollars hard at work. And they don't know what we have to go through to resolve these things. Thank you very much for the tip on the power of attorney.

We sent in extensions for both 2/28 and 3/31 and so far at least one in each batch was rejected even though we are 100% certain we mailed them in at least a few days before the due date. Anyone having the same issue?

Here is what my document says in case anyone is googling this post: The reference to 401a4 to means the orphan match issue...

The more I think about it, the email seems like a courtesy. I wonder how many of those emails that are sent relate to the sponsr at Bundled Provider, Inc. who just submitted without realizing the pdf needed to be attached. I'll bet it;s a fair amount. And then there are those that were legitimately late, but now that the audit is finished, the amended was never done. That's also common. We have definitely followed up with the auditors and gotten the response "oh we finished that 6 weeks ago!"

FYI, we received our first correspondence from the DOL on a missing audit report. It was just a nice email from your very friendly DOL Chief Accountant that the filing excluded the audit report. So no $18,000 penalty from the IRS, so that was nice to see. An auditor friend of mine received a similar correspondence so it seems as though they have replaced their draconian whack you over the head approach with a more practical position.

Correct but not use the VFCP. 99% of these are deposits that are 3 days late with $30 of interest.

If all deposits that are funded within 180 days of being due are covered, regardless of when we do the lost interest calc/funding it certainly goes a long way to alleviating my concerns. This whole notion of reporting it to the DOL is still a deal-breaker because I just don;t trust them not to use it for additional communications, etc. What's the point of requiring the reporting if they are not going to use it somehow?

Oh well that's something! Good thing I haven't sent in any comments yet!

I'd have to put my name on it and I don't if I can bury the contempt 🤣🤣🤣