Lou S.

In order to recognized the ROTH conversion for 2023 they would need an election to make after tax, a deposit of said contribution, and an election and conversion all completed on or before 12/31/2023. You would then need to issue a 2023, 1099-R for the conversion. If the election is made in December but the deposit is not made until January, then the earliest you could do a conversion is in 2024 since I do not believe you are allowed to "convert a receivable".

You can try FORM 945-X. Also IRS Publication 15," Employer's Tax Guide" may have some relevant information.

Because the way you value liabilities and assets for the 5500, might not be the same as if you terminated the Plan and had to pay out all participants. The IRS mandated interest rates for valuing the Funding Target might produce a number that is higher or lower than the sum of all hypothetical balances in plan which might be different still form the actual assets in the Plan. Also if the Plan is using Actuarial Value of Assets instead of Market Value of Assets to smooth out losses, the Assets reported on the 5500 for calculating that "overfunding" might be more that what is currently in the Plan. That is a long winded way of saying, it's complicated.

I think you need the change before the end of the plan year. I think the rule on time limit Bird mentions was maintaining the current method for 5 years before you can switch. Though I think that was if you wanted to switch to "prior year", I don't think the same restriction applied to changing to "current year".

I think truphao is correct. But I'd also check the document language that coordinates 416 and confirm that it only gives him 3% and not 5%.

The owner should sign a form electing an in-plan conversion of $x and indicate which source is being converted if there are multiple. It's possible your document provider has model forms you can use, ours does. A 1099-R should be issues for the transaction. Ideally I'd like to have it transferred to another sub account at Schwab so it's clear, but you can "lump it one in account" if your on paper tracking is excellent and beyond IRS audit reproach.

Correct. No principal credit in years where he is in the excluded class.

Well I told them to terminate 2 years ago when there was no issue but you know how clients can be. Delaying now not an option as the business has closed. Could allocate the excess to others but 1 man shop so no one else to allocate it to.

If it's a Cash Balance Plan and 417(e) doesn't apply to the can you use the rules in (c)(2) in which case you could use 5% interest and applicable mortality and (c)(3)(C) would not come into play? That doesn't seem right but it would be a result I would like. And if you do need to use (c)(3)(C) it would seem August 2022 5 month look back would be best. Can you amend to a 5 month look back since when you calculate the greater of the 2 on the change the Participant will always come out better, but are you locked into the existing election for 415? Which in this case would be November which might further limit based on 5.09/5.60/5.41 but August 3.79/4.62/4.69 is unlikely to further restrict.

Lets say I have some one age 83 what would max Lump sum be? Assume all RMDs have been made and distribution will comply with MASD based on prior RMDs. Will check that separately. Trying to make sure my software is calculating max lump sum since participant is close to limit. 3 year high salary $200K Plan AE 5% and current 417(e) table so 2023 Applicable Mortality Table. APR 6.44 * 200K = 1,288,000 But I also need to check against 5.5% and 417(e) Table which would be the same 2023 Applicable Mortality Table correct? So APR drops to 6.30 and lump sum limit would then be 6.30 * 200K = 1,260,000 Do I have that right?

I think relief is offered through VCP in these situations. I'd have to go back and check the latest IRS Rev Proc on EPCRS but I'm pretty sure the correction under VCP that would most likely be approved is making the missed payments with interest and request a waiver of the excise taxes with the submission. But I don't think DB RMDs are eligible for Self Correction. I'd like to be wrong on that so if someone has something where this would be allowed as a Self Correction, that would be great if they had a citation.

Well the "best way to fix" could vary from "somewhat easy" to "somewhat expensive" depending on the facts at circumstances, nature of the Partnership, how many employees there are in the partnership, how many other partners and what if any other Plans exist. I'd say your best course would be to contact a local ERISA attorney to at least get the scope of the issue and what your correction options will be.

As CuseFan says, read the document as to how Forfeitures are allocated. Most typical in this situation is the forfeitures would be used to pay administrative expenses if allowed or allocated as a "Profit Sharing" contribution to eligible participants under the Plan's allocation formula . It's also possible it might be allocated as a match if the plan allows. And as CF points out, it is an annual addition subject to 415 limits and any other applicable IRS testing included but not limited to ACP, 401(a)(4), 410(b) and 416, if applicable. Though they don't count against 404.

It sounds like you are doing a correction under EPCRS. If that's the case it is typically taxable in the year received and I believe the 1099-R Code is "E". So one 1099-R for 2023 with the total of all 3 plus/minus gain/loss.

If it's eligible for rollover, it's subject to the 20% mandatory withholding.

I believe the DOL equivalency options are all pretty generous for the employee 10 hours per day 45 hours per week 95 hours semi-monthy 190 hours monthly. So per diem - 51 days would would put them over 500.

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.