Bird

You can't have both plans existing in the same calendar year. You are correct about not starting the 401(k) until 2023 (unless the company is on a fiscal year; that can make a hash of things). Yes, ask him what he is talking about.

We've been doing it this way from the beginning. It gives clients max flexibility. We do* issue a notice that says "no we're not" if that is the case, but I agree that it is probably not necessary. *Did. Under the new law, we have all of our SHNE plans as NOT SH and simply amend them in November; no maybe notice needed.

"Confusing" in the sense that you would expect anyone to read 925 words on this subject.

Thanks. Ilene's article, just out, says it's up in the air. "We don’t know yet whether the final regulations will require a “make-up” distribution of the 2021 and 2022 specified RMDs as part of the 2023 RMD."

I don't think I've seen any discussion on this...the notice says that the excise tax will not apply for distributions not taken in 2021 or 2022 under the 10 year rule. But I don't think they said when those distributions must be taken - that is, do they get pushed to 2023, or do you do the RMDs over the remaining 10 years, or what? Or did I miss something? The notice makes reference to the intent to publish final regs and I guess that's where the answers will lie. Seems weirdly incomplete though.

Also the 3% SHNE generally provides a better base if the sponsor is making additional profit sharing contributions. We are just scratching the surface here.

The only issue with not making substantial and recurring contributions to a PS plan is vesting, IMO. You do not have to amend/freeze.

Understood. I think I made my statement with the intent of adding some snark and got distracted.

I think any reasonable person would interpret "in any 12-month period" as referring to the period, not the actual date of the statement. If not, they'll have to get over it. It's not on my worry list.

That's what I don't understand.

They are part of the total plan assets. There is no distinction between employee and other on the 5500.

I don't believe it is a big deal to change. I'm not sure I follow how you don't have to file in year 1 but do in year 2 in this scenario, unless the $500 happens to put you over the $250K threshold.

Actually I was in a time warp - we write all of our SH plans as "not" SH and amend them into SH in November, so the advance notice is not an issue at all.

Just to put a wrapper on this...my problem was not understanding the FTW checklist. The question reads something like "Will the plan charge participants for plan expenses?" and I did not want to say "No." But saying "No" actually gives language that says something like "The plan may charge participants for plan expenses - see the Administrator" (as you note above, thank you!). And that's just what we need.

There was a thread on this recently. My opinion is that the 30 days is a safe harbor but it doesn't mean you can't do it with a shorter time frame - facts and circumstances would dictate that if a plan is just set up on 9/30 you can't give 30 days notice.

Exactly. When you start putting the same thing in multiple places, but it's not actually the same, then you have a problem. Trying to do too much can be harmful.

That's a good point. Otherwise you are essentially shifting assets from one group of participants to another. Might that be ok? I don't think so.

How do others handle disclosure of fees for distributions and such in the SPD? In great detail, not at all, or with an addendum? FTW gives us an option to use an addendum but then we still have to go into detail. Can we just say "refer to the fee disclosure document?" (Of course) I am referring to plans that are on a recordkeeping platform where distribution fees are typically deducted from a participant's account, per participant fees for ongoing services, etc., and they prepare a fee disclosure document. It's such a pain to keep track of the different fees with different recordkeepers, and then our fees might be different by plan, and god forbid anything should change and you have to do an SMM or new SPD. I know it's been discussed before; thanks for any refresher info.

Right, we just had a couple of these and my research turned up a BL post from last year saying exactly that. Interesting - I guess the first return has beginning assets.

I don't know. I'm going from memory and from the IRS website that was cited.

The employEE contribution limit in a SARSEP is indeed 25%. Total allocations, with employER contributions, could (theoretically) be 100% of pay, although I can't think of an example where that could happen since the SEP part has to be allocated pro-rata, or with permitted disparity which isn't going to get anyone near 100%. (Y'know, you're right, there are some built-in apparent contradictions in those Q and As. All statements are correct - the annual additions limit is in fact 100%, but the other limiting factors won't let anyone get there.)

Keep reading that IRS page, a couple of Qs down: How much of the contributions made to employee's SEP-IRAs may be deducted on the business's tax return? The most that may be deducted on a business’s tax return for contributions to the employees' SEP-IRAs is the lesser of the contributions or 25% of the compensation (compensation for each employee is limited to $305,000 in 2022, $290,000 in 2021, $285,000 in 2020 and $280,000 in 2019, and subject to annual cost-of-living adjustments) paid to all the participants during the year. Elective deferrals made for the employees are not subject to the 25% of compensation limit. Self-employed individuals must make a special computation to figure out their maximum deduction for these contributions. When figuring the deduction for contributions made to the SEP-IRA, compensation is net earnings from self-employment which takes into account the following deductions; (a) the deduction for one-half of self-employment tax and (b) the deduction for contributions to the SEP-IRA. See the Instructions to Form 5305A-SEPPDF and Publication 560 for details on determining this deduction. As Bri says, they are just telling you the individual limit.

There is a list of assets "required" under PPA (very few do it, in part because the DOL never came out with regs that they were required to issue within 6 months...this was the PPA of 2006). Not the list of companies holding investments on the SAR. Yes.

yes

And when will that be? 😉 I live and work in NJ and many of our clients are in NJ. I'd say that generally speaking, company contributions are deductible. However, for self-employed individuals, their own employer contributions are not deductible, only their own 401(k) contributions. But as suggested, an accountant is the one to ask.