Santo Gold

For funding purposes then, after-tax contributions have the same deposit deadlines as 401k/Roth contributions, is that correct? Sole props and partnerships (no W-2 involved) the deposit deadline is the date of the owners tax return, including extensions But for S-Corps and C-Corps (W-2 is involved), isn't the deadline the usual "as soon as possible" or 15th business day requirement? Thank you

If the plan sponsor is a C corp or S corp, would the after-tax deposit deadline then be 12/31/23 to be considered a 2023 plan year contribution?

At this point, there is no resolution stating the contribution.

In late 2023 we calculated the 2023 profit sharing contribution allocation for a 401k plan. Only 4 participants shared in it (1 HCE). The profit sharing is optional and is allocated on a cross-tested basis, each participant as its own allocation group. The PS amount for each participant was communicated to each participant. The NHCE's allocation was more than the minimum needed to pass testing. Early 2024, one of the NHCEs is leaving the company. Can the employer change only his allocation to a lower amount (enough to still pass testing)? Since the employer previously informed the participants of their 2023 PS allocation, is it a problem to go back and change that allocation to a lower amount just for this specific NHCE? Thank you

Thank you for those replies

I do not work enough with after-tax contributions and came across a question for an owner-only sole prop where the owner wants to contribution profit sharing and after-tax. (1) The owner has gross income for the year is $100,000. Minus expenses (not counting plan contributions), this his net compensation down to $80,000. (2) He is looking to contribute 20% profit sharing and, as much after-tax as he can (under age 50 FWIW) Do we determine the PS amount first and then subtract the after-tax or after-tax first and then PS? Thank you Mike

Under 20 hours/week is roughly equal to 1000 hours/year. Our 403(b) plan would by definition possibly exclude individuals who work 500-999 hours, which would fit the LTPT classification. Based on the guidance that was recently released, I would conclude that LTPT applies to any 403(b) employees who have been kept out of the plan but who have worked 500-999 hours each year since 2021. They would have to be provided with the opportunity to contribute to the plan. Would you agree? Thank you

Thank you very much.

A sole prop established a solo 401k plan in 2023, wants to include after-tax employee contributions and do the mega-backdoor Roth with it. (1) do the after-tax contributions have to be deposited by 12/31/2023? (2) Does the Roth conversion have to be done by 12/31/2023 as well in order to be applied towards the 2023 tax year? Thank you

Thank you everyone.

A key employee began RMDs in 2021. We have the calculated RMD due 12/31/23. Before it was taken, the employee passed away. His spouse is his beneficiary. Is the spouse required to take the RMD by 12/31/23? Reading the document below, I interpret this to mean that an RMD is now not due by 12/31/23, but will be due in the year following, or in 2024 (12/31/24). Does this sound correct? Plus we would need to calculate a new RMD amount based on the spouse DOB compared to that of the deceased's DOB. Hoping to get a comment on whether others come to the same conclusion. Thank you Death On or After Date Distributions Begin. (i) Participant Survived by Designated Beneficiary. If the Participant dies on or after the date distributions begin and there is a designated Beneficiary, the minimum amount that will be distributed for each distribution calendar year after the year of the Participant's death is the quotient obtained by dividing the Participant's Account balance by the longer of the remaining life expectancy of the Participant or the remaining life expectancy of the Participant's designated Beneficiary...

Great. Thanks everyone

I was asked a basic question but not working with Davis Bacon contributions I was not sure: Are Davis Bacon contributions considered employer contributions to a plan and if so, would they count towards the 25% deductible employer contribution limit? I assume they count towards an employee's 415 limit. Thank you

That is great information Zeller and Peter. Thank you. I will use your links to reference further.

Church or government agencies are exempt from being required to have auto-enroll starting in 2025. Maybe I'm just reading too much into this, but is the exemption applicable to a plain old non-denominational church that wants a 401k plan? They do outreach programs and such, but it all centers on their church. They would prefer not to have auto-enroll and I think this would fit the exception to the rule. Any comments are appreciated

Thank you for the replies

I'm not sure if this is the correct message board but here goes: Company A buys Company B and each have their own 401k plan. All Company B employees now participate in Company A;s 401k plan. No new entrants or contributions to Company B's plan. They will terminate company B's 401k plan, but have not done so yet. Can Company B employees, now working for Company A, take distributions from B's 401k Plan? Have they had a distributable event? Thank you

If an individual was in 2 different retirement plans, both of which permitted after-tax employee contribution, could the individual contribute say $50,000 after-tax into each (assuming compensation is high enough, passes testing, etc)?

Medical professional #1 runs a stand alone business. No employees, only the owner. She has a solo 401k for herself. Medical professional #2 also runs a stand alone business. No employees, only the owner. She also has a solo 401k for herself. #1 and #2 form a separate company to handle administrative work for both companies. Assume 50/50 ownership. They plan to hire 1 individual to handle the admin duties that pertain to the other 2 companies. With 50/50 ownership I don't see a controlled group here. But this would appear to be an Affiliated Service Groups ("ASG"). If an ASG, what are the 401k plan implications: (1) Assuming full time employment, will the employee of the new company eventually be eligible to participate in one or both of the solo 401k plans? (2) Can #1 and #2 still maintain separate plans, different benefit structures, etc if they start the new company? is there any required aggregation? Thank you

Great replies. Thank you very much

Wife and husband own 100% each of 2 different businesses, unrelated to each other. The one has about 10 employees and has a 401k plan. The other is spouse only and started a solo 401k for herself, well under $250K. Neither performs any work for the other's business. I do not see in the instructions that this would cause the solo plan to file a 5500EZ. Would you agree? Thank you

Currently prime rate is 8.50%. Moodys Bond rate is 6.17%. We have a new plan that wants to allow for loans and was questioning whether they could base the plan loan interest rate off of Moodys. Any thoughts whether that would be acceptable, given the disparity between Moodys and Prime? Thanks

The plan did not have a TPA and handled everything in house. And the person who was responsible for everything, most notably the bi-weekly employee/match contribution deposits, was the individual who passed away. Ongoing deposits after her death continued for everyone just fine. But unfortunately, that included contributions on her behalf, which were just coming from the employer account and not being reconciled with the bi-weekly payroll withholding and match. By the time someone was permanently assigned to this role, it took some time for them to realize the mistake. The mistake is somewhat easy to understand. And now I was told that the money never left the deceased participant's account. It is still held in the plan. Which should make things easier to resolve. I think the easiest solution is to have the excess money moved to the forfeiture account and use to offset future employer contributions. Do you see any problem with that? The plan sponsor would also like to consider whether this could be returned to the plan sponsor as a Mistake of Fact ("MOF") contribution. That seems...a little more involved. I have not been involved with any MOF $$$ returning to the contribution. Would anyone recommend pursuing this course of action? The threshold to meet a MOF return to the employer is a pretty high bar and from what I've researched, even though was a literal mistake having the $$$ deposited, I do not think it meets the MOF requirements. Thank you

I think I should have added to the initial post, for at least the SHMatch, would the plan sponsor be able to tap into the forfeiture account (there are non-vested assets from other money sources) to use as an offset to the ~$8000 extra match that was deposited/paid out to the deceased participant? Since the excess 401k contributions were also coming from plan sponsor account, could the forfeiture $$$ be used to also offset future SHM contributions?

Participant (NHCE) passed away in mid 2022 but the company payroll dept continued to send her regular 401k amount for deposit into the mutual fund account. It wasn't withheld from any pay; it just kept coming out of the company bank account, along with the match. This went on for over a year, spread across 2 plan years. Roughly $10,000 in 401k and $8,000 in SHMatch was deposited that should not have been. The deceased participant's account (100% vested) was paid out to the beneficiary, including these excess 401k and match amounts. Is the only course of action to go back to the beneficiary to reclaim these amounts? The plan sponsor is reluctant to push too hard from the beneficiary but there is no other way, correct? If the beneficiary does not pay it back and the plan sponsor does not pursue it further, is there an amount the plan sponsor owes to the plan to make up for these excess amounts? Thank you