Lou S.

If they work between 500-999 hours in each of 21,22,23 or 23,24 (S2.0) I think yes, at least for 401(k) only. But I think there is some discussion about whether or not they can still be completely excluded by "job classification" even under the LTPT rules.

I agree. I'm just saying this has come up as recently as this year in other threads and others posters have expressed a different opinion.

You still have a 2023 required RMD. Personally I'd pay it to the beneficiary and be done but other threads on this if you search this cite are of the opinion that it should be paid to the decedents estate since it was an RMD due the participant.

If the Plan was in a packaged vendor program, it's possible the Trustee can get the final payout amount from that custodian, assuming they haven't been swallowed by some other company in the interim. It would probably have to be the Trustee that was on record with that custodian and you'd likely need at least the contract number and the participant's SSN. If the client issued their own checks from the trust, we'll best of luck. But yes the letter saying Plan was terminated in XXXX and all benefits have been paid. We show no record of benefit due to you from the XYZ Plan. That usually makes former participants disappear.

The cushion amount an often get you a "deductible" contribution beyond what you could currently pay out under 415 if that's what you're asking.

While the 60-90 day advanced notice of intent to terminate is not required for non-PBGC plan, I'm unaware of any circumstances where you can retroactively terminate any ERISA covered retirement plan. That is the termination date has to at least be concurrent with or after the signing the of the amendment terminating the plan. In some cases advanced notice to participants under ERISA 204(h) may be applicable to certain plans.

Yes but if someone wants a "Net $10K" withdrawal they will need to gross it up for the 20% taxes withheld and take $12.5K gross, ignoring any potential state withholding. This assumes the distribution is eligible for rollover with the required 20% withholding and they're not electing more than 20% because they might be in a higher tax bracket.

I'm a bit confused. SH Match plan is deemed not TH if SH Match is only contrib. If plan is TH and makes additional contrib then it does need to satisfy TH. If you are only making TH than I think that does pass but if you are making more you will need to pass testing somehow and can't exclude the TH in your calculations.

Yes you are taxed on the gross distribution including the amount you add to cover that year's taxes which are then withheld, not unlike someone increasing their withholding on their W-2 wages. One reason you might do this is to avoid penalties for being under withheld when you file your 1040. Another option might be to elect the minimum required withholding from your qualified plan distribution and pay estimated quarterly tax payments or increase withholding on other sources of income (assuming you have the funds available to do that). Which option is right for you depends on a lot of individual factors we can't address here. You might wish to discuss your specific tax situation with your CPA. Belgarath has a pretty good overview above that lays out some of the basics.

No, RMDs are is based on the participant's RBD, not the beneficiary. If you have a participant who dies before their RMDs begin you need to distribute over no more than 10 years (unless exception applies spouse or disabled qualifying for stretch) but I think you can take all out in the 10th year if you really want. If you have a participant who dies after RMDs begin, you still need to distribute over no more than 10 years but you also need take at least the RMD amount each year. IRS recently clarified that in a notice and granted penalty relief if you had not complied for certain years since it wasn't clear. Though I think that relief required you to make up the missed RMDs but I'd have to double check the notice. I'm not sure what happens if say someone age 70 dies and the beneficiary is delaying under the 10 year rule what happens when the participant would have turned 73 and RMDs would have kicked in? The IRS may have addressed that but I haven't had that situation come up so I haven't looked that closely.

That's how I would read it. I think because of the deemed cash out provisions, folks probably should have been deemed cashed out if they terminated in prior years. Folks that terminated in the year of plan termination, I think you'd have a tougher time deeming them cashed out. I'm not sure what the IRS position is on folks who were deemed cashed out in the 5 years proceeding the termination, if you have to restore them because they don't have a 5 year BIS, but I personally have not done that even on Plans that used to be submitted to the IRS for a DL on termination.

Had an account call me this morning. They have a client with a partnership inside retirement plan that is subject to UBTI. In the past, the partnership has generated Net Operating Losses (NOL) so no UBTI was owed so they did not file a 990-T. This year they are going to have a substantial gain and will owe UBTI taxes. It looks like they can offset gains by Net Operating Loss carry forwards, Which seem to have different rules pre and post 2018 but can be used to offset some or all of the gain, in perpetuity. The question is do they have to file past 990-Ts claiming NOL to use these NOLs? And if yes how far can they go back with filings? If the question is too complicated for a post here on benefits link and you know a CPA who deals with these issues in the California Bay Area, I'd be happy to have my CPA contact that CPA directly as this is a bit out of my area of expertise. I know just enough about UBTI to be dangerous.

If the Plan says to forfeit on a 5 year Break In Service then forfeit them.

The IRS website says "Some RMD failures may be eligible for self correction" it further goes on the say the participant excess tax can't be automatically waives, that is you need to pay it and request a refund. It goes on to say that under VCP you can ask for a waiver of the penalty. I'm not sure which RMD failures are eligible for self correction and which are not. Given this is 1 participant who is being corrected in the same calendar year, my guess is the Plan would be eligible fore self correction, but I can't guarantee that. You should check the current EPCRS Rev Proc. https://www.irs.gov/retirement-plans/correcting-required-minimum-distribution-failures

No. Since it is a non-spouse beneficiary the distribution would have to be under the 10 year SECURE Act rule, but since the participant was not RMD age you don't have RMDs. The PS and CB plans may have different death benefit rules though so as always RTD.

If my math and effective dates are correct your first RMD "year" would be - 2019 (or earlier) if born before 7/1/1949 (70/12 rule) 2021 if born 7/1/1949 - 12/31/1949 (72 rule) 2022 if born in 1950 (72 rule) 2024 if born in 1951 (73 rule) 2035 if born in 1960 (75 rule) Also 2020 CARES suspended DC and IRA RMDs, but not DB RMDs. There were no "new*" RMDs for 2020 due to SECURE, 2023 for SECURE 2.0 and 2033-2034 also SECURE 2.0. *and by "new" I mean some one who didn't delay first RMD because they were not a 5% owner and were still employed.

Assuming they are not currently employed or they are 5% owners... Joe turns 72 in 2023 and under SECURE he was not 72 in 2022 and therefore did not have a 2022 RMD. Under SECURE 2.0 Joe does not turn 73 until 2024 and has a 2024 RMD with an RBD of 4/1/2025. The 2nd RMD for 2025 would be due by 12/31/2025. Mary turned 72 in 2022 (70 1/2 in 2021 after SECURE so no 2021 RMD) and under SECURE she had a 2022 RMD with an RBD of 4/1/2023. Under SECURE 2.0 she can not further delay her RMDs because they have begun and has 2nd RMD due for 2023 as of 12/31/2023.

Will he be receiving a 2023 W-2? If not I'd say he terminated/separated/retired whatever you want to call it in 2022 and based on his age would require a first RMD by 4/1/2023 for the 2022 year and by 12/31/2023 for the 2023 year. I think it would be aggressive to say he separated in 2023 but there might be a grey area that allows it. If he will be receiving a 2023 W-2 I think you have a better argument. I agree a with Zeller above. Though you might want to look into to see if you could self correct it by making the 2022 RMD before 12/31/2023 with earnings from 4/1/2023 to distribution along with the 2023 RMD as see if that satisfies the new self correction procedures or not. It would certainly allow for the reduced penalty since steps were taken to timely correct, I'm not sure if eliminates the penalty. IMO it should since the employee is still getting all the taxable income they should in 2023 but I'm not the IRS.

The participant can still rollover it over to another plan (assuming they can find one that accepts it) and as long as the record keeper properly records the 1099-R Code as a Loan Offset and not a Loan Default as the former is eligible for rollover while the later is not. It just may be an extra step when the individual files their 1040.

No, that in and of itself will not effect transition rule testing. It's just going to be a reporting issue with how you treat it and whether or not a you are going to need a short year 5500 for the 1/1/2024 - 1/15/2024 "Plan Year" for the B Plan. It might depend on if you are using cash or accrual reporting and what date your merger is effective.

Joe can go to work for an unrelated company and roll his balance into their plan before 2025. If Joe and Joe's wife's combined ownership drops below 5% and Joe's son is married, Joe's son could transfer his shares to his spouses name. Then Joe would no longer be a 5% owner since you don't double attribute. Or Joe, Joe's wife, and Joe's son can sell off such that Joe no longer owns directly or indirectly more than 5% of the business but continues to work there. So yes there are ways, just probably not the most practical.

Oh I'm sure the participant will be happy with the "found" money. I'm just surprised the IRS would allow a correction that does not require re-running the test with the employee in it allowing the owners to not make refunds, not make one-to-one corrections for the failed test, and not make a QNEC required to pass testing. I mean great if that's the end result, just seems at odds with the IRS correction programs in general.

So you are saying it is better to not tell folks about the 401(k) plan and just give them missed deferral opportunity than run the correct test in the first place?

ADP is a bright line test, you pass the math or you don't. Whether or not that is reasonable or equitable isn't really considered by the math. I'm sure the IRS would say - if you have a low pay owner deferring the max, SH is an option. You also might consider testing on comp from date of entry which might cut your QNEC roughly in half.

I don't think a QNEC to pass ADP/ACP is limited by 402(g), only 415. But I'm not sure what an equitable solution would be is you took this to VCP.