BG5150

Does the act of not furnishing statements (and probably SARs) disqualify a plan? (I'm guessing this is a PSP) And isn't part of having a plan communicating it to the EEs? If the owner didn't give out SPDs, was there a plan to begin with? And, Lou, I would add "theft" to your "fraud" diagnosis.

In Secure 2.0 there is a section on LTPT that references 2 years of 500 hour of serivce and it is set to take effect in 2025. Does that override the current rules? Or do we use 3 years of 500 hours UNTIL 2025 then scale back to 2 years?

This is hypothetical: Owner wants to add a facts & circumstances hardship provision to plan in order to take a large distribution. As plan administrator, he will be the arbiter of "heavy and immediate" need. What if the plan gets audited by the IRS and they determine the need really was neither heavy nor immediate? Like, maybe he used it to purchase a stake in a thoroughbred race horse or a down payment on an office building. What is the redress? pay it back? Disqualification?

Will there be a snap-on amendment? (I know it's way too early)

But what if a plan does not allow Roth deferrals at all?

Peter's .pdf above says it's for plan years beginning after 12/31/2023 The OP says after 12/29/2022 Which is it?

Thanks, Peter. There was similar language on the W-4P BUT: does an election on a W-4P continue over to the new W-4R? To go further, do they HAVE to get a new 4-4R because of the tax tables?

thanks!

Do you have a cite for that?

Do you also advise them that withholding is optional? The W-4R may be optional, but I don't think you can just go ahead and do RMDs without informing the participant her rights at some time. The W-4P/R are good elections in perpetuity until they are changed, so once is good enough. So, once someone fills out a form they should be good to go withholding-wise. Unless the form doesn't say the election stands for any future RMDs. However, I find way too many RMDs just go out with the 10% penalty tax defaulted without any input from the participant. I for one am not comfortable making personal tax decisions for participants.

Notice was given timely until this year.

Plan has been around for four or 5 years and have been SH match all the long. What happens if they give their SH notice on Dec 20 this year? Or January 12, 2023? what are the consequences?

Ah. makes sense.

No partial plan term, as the terminations have to be employer-initiated.

Yes. The W2 shows $20,500. Usually we would issue a 1099 for the excess and earnings with code 8. and let the prior year take care of itself. The IRS site looks like it says we should be issuing 2 1099's.

Participant had 2021 402(g) excess of 1,000. At time of distribution there was $20 in earnings. The IRS says it's taxable in both years. (I knew that). But it also says BOTH amounts are reportable on a 1099-R. I thought just the 2022 amount is reported on a 1099-R (basis and the earnings), but the 2021 overage would be taken care of on the 1040 using the W2. Here's what the IRS site says: Under Revenue Procedure 2021-30, Appendix A, section .04, the permitted correction method is to distribute the excess deferral to the employee and to report the amount as taxable both in the year of deferral and in the year distributed. These amounts are reported on Forms 1099-R. In the case of amounts designated as Roth contributions, the excess deferral will already have been reported in income in the year of deferral. However, the amount will be reported as taxable in the year distributed.

Situation: Plan is Top Heavy 2 HCE, one owner, one not )and non-Key) 2 NCHE owner defers max 2 NHCE defer enough to get 3% match Non-owner (N/O) HCE does not defer at all so no match N/O HCE is due 3% TH contrib. That gets contributed to the discretionary source. Is there a problem here? No NHCE getting a 401(a) allocation.

What's the remedy? Is there any harm in keeping it that way? At the brokerage house, they would have to create all new accounts with a trust id and transfer them from the old accounts. Evidently there's lots of paperwork involved.

Can you do it in a spreadsheet?

"SoloK" is a marketing term. A SoloK plan is just a regular 401(k) plan that happens to only cover owners (and their spouses). Sure, some institutions offer an abbreviated plan document making things a little easier, but once an employee is hired then you have to put the plan on a full-blown document, increasing time and effort on all fronts. If it is a child of an owner (more than 5%), then the child is an HCE by attribution automatically.

if money is there and the owner/employee demographics are there.

Yep thanks. And Box E on the Form 5500.

Does anyone know where on the 5500 you indicate the plan was retroactively amended?

I think I may have found something: Form 5500 Filing Requirement In August of 2021, the IRS issued an Employee Plan News bulletin that states that retirement plans that are retroactively adopted can skip the first year’s Form 5500 filing. Plans that are retroactively adopted become effective as of the last day of the first plan year, creating a one-day plan year that would normally require a Form 5500 filing. However, the IRS is allowing plan sponsors to file their first Form 5500 for the 2022 plan year, indicating on the filing by checking a box, that the plan was retroactively adopted.

Plan was created in August 2022 with a 1/1/21 effective date so they could do a PS contribution for '21. Was there supposed to be a 5500 filed? If so, how do you go about it? Plan wasn't in existence until August, well after the extensions were due. is there a special 5500 rule for plan that are retroactively adopted?