Lou S.

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.

I could be wrong but I think what his is asking is assuming max compensation and funding for a maximum 415 benefit at retirement age, what is the annual level funding using reasonable actuarial assumptions given an employee's current age and future retirement date.

I don't think you need to change either but the question then becomes is it eligible for rollover and subject to the 20% mandatory withholding if before the date stated in the regs?

Generally yes. See Rev. Proc. 2017-56.

What? New "forfeitures" in a DC plan simply are internal transfers from the participant account to a plan holding account. They are not a distribution, contribution, or income. If forfeitures are used to reduce employer contributions from the forfeiture account, you would reduce contribution shown by the forfeitures reallocated.

I've never done it but I think the fix involves VCP with requested return of the ineligible distributions from affected participants. I'm not sure what happens if you are unable to recover the funds. That is the participant says no I'm not returning it, I already spent it, or something like that. For taxable payments to employees my best guess is the IRS will simply let it go if you make good faith effort to recover, for funds that were rolled over to an IRA they would probably want those treated as ineligible for rollover (unless there was another distributable event) with amended 1099-Rs if the funds are not returned.

ADEA?

I missed that it was $5, I thought it was $5K. I mean technically my answer is still correct, but I'm not sure I'd go through the trouble for $5.

You have a late deposit to the 401(k) Plan. Deposit the additional amount along with earnings to the trust. If the trust is closed, they may have to go down to a bank and open an account in the name of the Plan. I'd first ask the original custodian if they can and process the deposit and issue a residual distribution for the employee.

Why isn't state unclaimed property the answer? Is Plan forfeiture an option under the document with restoration if kin can be found? Is a check payable to the estate an option? That would probably require someone to open an estate.

Then why are you asking here?

The Plan Sponsor simply needs to maintain a copy of the tax return extension in their files and produce it should the IRS request it.

Contributions to the plan depending on the terms of the plan document could include any of the following sources and I may be missing some: Employee: Traditional 401(k), ROTH 401(k), Voluntary After Tax, Rollover Employer: Matching, Safe Harbor Matching, Profit Sharing, Safe Harbor Non-elective, Qualified Non-elective, Qualified Matching, Prevailing Wage. You might also have ROTH conversion sources for the sources above if the plan allows for in-plan conversions, rollovers or transfers. All of them might have slightly difference rules that they need to follow with respect to vesting, timing of deposit, and withdrawal eligibility. Your TPA should be able to help you out with specific questions about your plan.

If the client is setup as the Administrator on the PBGC site, they can grant you access by inviting you. If the prior TPA did everything you might need their assistance. As for the premium, if it's a small plan using the lookback, the premium might be high since the interest rates lag what's been going on.

See instructions to Form 5500, you can if you meet the following conditions. An automatic extension of time to file the Form 5500 Annual Return/Report until the due date of the federal income tax return of the employer will be granted if all of the following conditions are met: (1) the plan year and the employer’s tax year are the same; (2) the employer has been granted an extension of time to file its federal income tax return to a date later than the normal due date for filing the Form 5500; and (3) a copy of the application for extension of time to file the federal income tax return is maintained with the filer’s records. An extension granted by using this automatic extension procedure CANNOT be extended further by filing a Form 5558, nor can it be extended beyond a total of 9½ months beyond the close of the plan year. Note. A tax-exempt organization is not required to file a federal income tax return. However, if the organization uses a Form 8868 to request an extension for its Form 990 series return, the filer is automatically granted an extension of time to file the Form 5500 until the extended due date of filing Form 990 series if all conditions listed above are met. An extension granted by using this automatic extension procedure cannot be extended beyond a total of 9½ months beyond the close of the plan year.

Assuming the plan doesn't currently allow for discretionary match I would assume they would need to adopt the amendment before they started depositing the matching contributions to the plan but not later than the end of the plan year for the discretionary amendment. That said, if they did start depositing the match early, I think the eventual amendment would most likely work as a self correction under the newly expanded IRS rules.