Santo Gold

Hoping for confirmation if the below is correct: solo 401k plan. Owner doing the mega backdoor Roth. Contributes $30,000 after-tax in 2023, converts $30,100 to a Roth IRA in 2023. The 1099-R would be as follows: box 1: $30,100.00 box 2a taxable: $100.00 box 5: $30,000.00 Box 7: G Does this look correct? Thank you

An individual is receiving some large NQ plan distributions for the next several years and is looking for a way to avoid some of the taxes. He could not use those payouts as a basis to establish a solo 401k plan for himself and defer into the plan on a tax deferred basis could he? I'm pretty sure the answer is no, but just checking around for him. Thanks

That would seem to make sense. Treat the h/w as one individual. Thank you

Looking at how attribution affects my common and identical ownership tests. This shouldn't be difficult, but...... Husband owns 40% of company A, spouse separately owners 40% of company A. Two other unrelated individuals own 10% each. No exceptions apply, so husband/spouse are considered to own 80% of Company A. Husband and wife each own 20% of Company B, same thing, attribution applies and they owned a combined 40%. The two unrelated individuals from Company A also own 20% each. Third unrelated individual owns the other 20%. When I am adding up my common ownership do I use 40% plus 40% for husband and wife for Company A, or is it 80% and 80%? Is Company B 20% and 20% or 40% and 40%? Same with identical ownership then, are they each 40% or 20%? It has to be the lower percentages, correct, otherwise we exceed 100% for common ownership, which can't be correct, can it? Thank you

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