Lou S.

It's going to be deducted on the 1040 so I'm not sure it matters which account it comes from as long as they keep good records and the accountant can follow it for deductions and you're able to support it to the IRS in the event of an audit. If it was me, I'd do it from the LLC bank account.

In simple terms, that could possibly get you in trouble, it's essentially based on funding for the lump sum equivalent of the 415(b) maximum annuity. The age, service,salary of the participant and actuarial factors of the plan among other variables can all impact it.

Yes. Unless it qualifies as a 1 person plan with less than $250,000 in assets. Whether you report an EOY balance and/or contributions will depend on whether you use the CASH or ACCRUAL method of accounting.

Under $1K can be cashout to participant as taxable, above $1K requires rollover to IRA. As long as forced distributions between $1,000 - $7,000 are rolled to an IRA I personally don't see a problem with adoption the conforming amendments by the end of the Secure 2.0 remedial amendment period. That said, the IRS may view it as a discretionary amendment and might require adoption sooner to raise the limit even from $5,000 to $7,000 let alone changing from $1,000 to $7,000.

Restate to age 62 NRA, provide fully subsidized ERA benefit at age 50? Fund for the fully subsidized benefit assuming 100% or participants will opt for it? Just a couple thoughts that may help with the prior valuation issues. I seem to recall doing something similar when we had to raise the NRA of a few plans when the IRS came out with the age 62 as reasonable but that was some time ago. Not sure I've seen a document with a pre 62 NRA in some time. Don't know if it is SCP correctable or requires VCP.

As a surviving spouse she she can treat the rollover as her own by rolling it over to her IRA or a her account in a Qualified Retirement account (assuming it accepts rollovers). If she does so, the funds lose the "death benefit" characteristic and simply would be a rollover account of the participant in the Plan. Alternatively she can roll the funds to an Inherited IRA. In which case the funds retain their "death benefit" characteristics but run under the RMD rules based on the participant. In either case, as a surviving spouse she is not required to distribute the assets under the 10 year rule. Whether she is better off treating the rollover as her own or an inherited IRA from a tax perspective can depend on a number of factors.

You can always roll the QNEC to an IRA and convert it to ROTH but as Mr. Bagwell points out you did get paid 150% of what you were going to get had they done it right in the first place so I'm not sure what the complaint is. You do realize if they had done it as ROTH in the first place you would still owe the taxes on it now because that's how ROTH works right? You don't get a current year deduction for it, rather the goal is to take it out down the road as qualified ROTH withdrawal (after age 59 1/2 and at least 5 years after 1st contribution) so the earnings never get taxed.

Lay out the options for the client and let them decide. Talk to whoever is spearheading the past filings and see what they suggest. FWIW, I'd also suggest filing all the past and current filings at the same time with the appropriate audits under DFVC Program as you suggest.

I don't believe this is a self correction issue if by self correction you mean get a plan installed for 2022 and take a valid deduction. You have no plan by the due date it was required to be adopted.

Besides unwind the deposit because he didn't have a plan, and file an amended tax return not taking the deduction? And/or refer him to qualified ERISA counsel?

It's facts and circumstances. The IRS has informally said they are good with Prime +2% but if you can justify Moody Bond Rate as reasonable based on rates commercially available by banks in the Plan Sponsor area then that's might be OK. As far as I know there is no stated safe harbor interest rate but some rates are less likely to be challenged by IRS or DOL than others.

For what purpose? For 1563 which is used in controlled groups no attribution in this case. Dad has more than 50% so he would be deemed to own Son's % if son had any. For 318 or 267(c) which are used for HCE, KEY, 401(a(9), prohibited transactions, ASG and few other items there is attribution.

Sure it's allowed. In fact if the Plan Document says comp is not limited to when they are a participant, not only is allowed, it's required.

Well sounds like some decisions need to be made before 1/1/24 with respect to whether Plan will allow ROTH or eliminate Catch-up. And if they allow ROTH, confirm the TPA can record keep it or start a search for a new TPA.

If by feasible you mean allowable then yes. You can eliminate catchup if you don't want to deal with ROTH. Depends on the client how the employees will receive that. As for seeking advice on establishing a ROTH-IRA, I'm guessing most of the folks who will have mandatory ROTH catchups will be over the income limits to directly do a ROTH IRA contribution. Though some folks who max out including CATCHUP, also max out their IRA contribution already, whether that is ROTH, nondeductitible, or backdoor ROTH via nondeductible.

Probably no issue unless you run into a BRF issue with respect to timing if HCEs got their 3% earlier than NHCEs. As long as everyone gets what they are supposed to in the end, you should be fine.

It's for everyone who had earnings over the limit in the prior year. Presumably the TPA is tracking the sources otherwise how are they doing ROTH now?

Yes the limitation year can be different in the document and there are rules in the code about the limitation year as well as any changes if you want to change the limitation year or you have a short limitation year. The most common limitation years are either the "Plan Year" or the "calendar ending within the Plan Year" but I believe the limitation year can be any 12 consecutive month period though I think it has to have some over lap with the plan year.

The FIS Corbel Cycle 3 document also has it.Though FIS seems to be lagging on putting the Cycle 3 DB document on their document system which is starting to irritate me.

If it were my own plan, I'd change it prospectively. If you're concerned about it, I'd file an amended return for any open tax years but I doubt an auditor would raise a stink over the correction to the effective date of the plan that was running for over 25 years and doesn't really impact anything current. Either way you should present the options and costs to the prospective client and let them make the call. 1 fix it prospectively 2 fix open tax years that could be subject to audit 3 fix all years back to 1998 (which seems kind of crazy to me but I suppose it's an option)

As long as it's a 401(k) plan that allows participants to change their election with sufficient frequency to allow it, then sure. I have a small client who pays out bonus in December and sends out a reminder e-mail that they employees can make an election to defer as much of their bonus up to the 402(g) limit allowed if they would like to defer taxes on it. That bonus is part of the W-2 so I do remind the client that they will giving the 3% Safe Harbor and and required gateway on top of the bonus since it is part of the Plan's compensation definition.

415 is limit is based on PYE, so in your case, yes, 2024. And you won't know that until sometime in October. 402(g) limit is always calendar for the participant. 401(a)(17) is based on PYB, so that would be 2023 in your example.

Many pre-approved documents have language to support just this type of formula so it's allowable by the IRS from a document standpoint. I think in our document the question in the AA is written something like "the lessor of X% of pay or $Y".

Is that a question or a statement? FWIW, I believe the participant can choose any combination of Traditional or ROTH to satisfy the RMD requirement inside a Plan prior to 2024 as the Plan has the RMD requirement and there is no mention of individual sources having to independently satisfy the RMD requirements in the regulations. Just that after 2023, ROTH is excluded from the calculation. I'm not sure if it is address if a participant can take from the ROTH source to satisfy RMD after 2023 but my guess is that distributions from ROTH will no longer satisfy RMD requirements after 2023.

I have not seen anything in SECURE or SECURE 2.0 that changes Form 5305-SEP to allow for other Plans if that's what you are asking.