Lou S.

Fix payroll? Amend W-2? Is this for 2022 or 2023 or both?

He would have to use a prototype SEP and can not use IRS FORM 5305-SEP to maintain the SEP. But as Belgarath points out, he still has only one 415 limit.

Sounds like some good Fiduciary Guidance Questions. Assuming the Plan allows for payment of expenses with forfeitures, most do but some do not. I think would be pretty comfortable for non-settlor fees for the current year. I think I might be comfortable with non-settlor fees for the prior year if billed in the current year. I think any further back and you're getting on very thin ice and would want ERISA counsel to opine.

Another option, though I'm not sure it's the best is to file the return under the old EIN so it matches 5558, then file an amended return with the new EIN and note the change with the old EIN in question 4.

I'm really not sure. I'd be concerned if there are a lot of HCEs getting the catch-up in the SUB where it is automatic and a lot of NHCEs getting limited to 402(g) in the other SUB. That is worst case you have a potential BRF to test. Best case it's a non-issue. But honestly it is not something I've seen before or considered. I think if you have documented HR procedures from each SUB on how they handle it, you are probably fine, even if the document procedures are lets say a bit more generic. With the usual disclaimer that I am not an ERISA attorney.

Is the client on extension to file taxes? You can get a copy of that extension and use it as automatic approval if the IRS questions old EIN on your submitted 5558. Otherwise I'd go with Bill's suggestion which seems reasonable.

I'm not sure it's a problem. It sounds like an administrative procedures by SUB issue. It sounds like everyone has the effective ability to make catch-up, it's just some have to affirmatively elect on a year by year basis and others get it automatically. It's not ideal and it sounds like you are taking steps to make it uniform but I'm not sure it's a problem if SUB1 and SUB2 have clearly documented administrative procedures that have been uniformly followed.

Don't think that's allowed.

That is my understanding as well.

I'd prefer a separate paper trail, especially since one $4M transaction will "look" to be over the 415 limit. But I don't think you need two transactions, especially if you have her completed elections for both her benefit and her husband's as his beneficiary and can account for the two even if they are sent in 1 wire/check. Though you will need separate 1099-Rs.

Wow the mail is even slower than I thought.Though I'm sure that was just a simple typo, I couldn't resist. I've yet to see this one but in the past I've often sent in non-calendar year plan extensions and the extended date was often what you would see for a calendar year plan. I think sometime they forget to change the PYE when they move from one form processing to the next, that's the only thing I can think of. Electronic filing of 5558 can't come soon enough. Though I'm sure they will find a way to mess that up somehow.

I believe you can make any source eligible for ROTH conversion, though I think it does have to be 100% vested to convert. However, you do have to preserve the pre-ROTH characteristics (such as distribution timing) of the funds being converted so you'll likely need to track a separate ROTH source for each source of funds that is converted to ROTH.

M&A is not my specialty but I think you'll want ERISA counsel to weigh on whether the amendment assigning Plan from Client to Parent is valid without the 204(h) Notice as it clearly will reduce future accruals of the employees in Client since they will be no longer be getting credits under the Plan since the Plan is transferred to Parent and the employees of Client will no longer be employees of Parent's controlled group. There may be some exceptions in M&A that I'm not familiar with though.

If both plans have signed on to the document and each plan passes testing on their own, the hardest part sounds like it's covered and all good. I think if you want to correct it properly you "simply" need to amend Form 5500 for all years where a single employer return was filed and replace it with multiple employer Form 5500 with the right attachments. But you might want to check with ERISA counsel to see if there are other issues that might need to be addressed.

If the plan pays it to the spouse, the spouse should receive a 1099-R under her SSN from the Plan with Code 4 in Box 7. Presumably if the Plan withholds taxes it would transmit that to the Fed/State timely, report it on the 1099-R and file any required year end Form such as 1096 and similar state forms. Though often with an owner RMD I see they elect no withholding and they just pay estimated taxes and 1099-R just shows the gross amount with no withholding.

I don't know if we have enough info to fully comment on this but it sounds to my non attorney ears that this individual has become a Plan Fiduciary, exercising control over plan assets, whether they wanted to be or not.

Invoice them for 2022. You can threaten collections or not if they don't pay, your choice. You can resign from the client for 2023 or know you'll probably be going through this with them next year. Lesson learned, some folks are just not worth having as a client. If they are on your preapproved document kindly remind them they can no longer rely upon your opinion letter and will be considered an individually designed plan and that you are not responsible for timely amending their document.

If he's been in pay status, that is this is not his first RMD, it will need to be made by 12/31 this year. As to who it is made to, there are some other threads on here if you search that tend to have 2 different conflicting answers. The first answer is that it is payable to the participant's estate as it was owed to the participant as an RMD. The 2nd answer is it is payable to the beneficiaries in proportion to their beneficiary percentage as it is a payment due from the Plan. Which is the correct answer, I'm not really sure. Either way it is not eligible for rollover. Now if he has not reached his RBD, I think you are looking at a different set of rules under the 401(a)(9) regs.

https://www.irs.gov/retirement-plans/fixing-common-plan-mistakes-plan-loan-failures-and-deemed-distributions I believe the IRS fix would be to default the loan now, issue a 1099-R for the loan amount plus accrued interest. I'm not sure if it can be self corrected or requires VCP. It used to require VCP but it seems like now it may be eligible for self correction though if it's more than 2 years old or to an former HCE VCP may still be required.

If it's an NHCE bringing him by corrective amendment is fine. You should be fine if you test on an otherwise excludable basis for safe harbor. However, I think you will blow the TH exemption if he's not getting the safe harbor. Though Secure 2.0 might change that but I don't think it changes it until 2024. At least that was my understanding last time I looked at the issue but it's been a while.

CuseFan has it. If he gets a PS allocation of $47,000 then you would reclassify $6,500 of his deferral as catch-up. Might impact what other EEs have to get to pass testing depending on plan design and employee demographics but it works just fine from a catch-up standpoint.

Yes. That's seems like their options.

Since he had a 2022 RMD that was not made due to 0% vesting, I believe he will need to take his 2023 RMD by 12/31/2023. To use the DC method for CB Plan I think he needs to elect a lump sum in which case you can use the DC method on the amount being distributed which is not eligible for rollover. But you might get different opinions from different people as I don't believe this specific fact pattern is covered perfectly in the regs and could be open to other interpretations.

I'm not so sure I agree. I do dislike off calendar 401(k) plan years for some the sticky questions surrounding catch-ups but under current rules if you recharacterize contributions as Catch-up in an off calendar year plan to pass ADP testing (as opposed to exceeding the 402(g) limit which is always the calendar year occurring) then that recharaterization is considered a cacthup as of the last day of the Plan year which would be for the calendar year in which the plan year ends. As such a non calendar year plan that ends after 12/31/2023 would seem to require making that catchup recharacterization as ROTH to remain in the Plan. Absent additional guidance from the IRS on the subject. Just one of a number of things where we need additional guidance.

The "deemed not Top Heavy" is a year by year determination. Get rid of the policy or the premiums driving a contribution and you get rid of the problem in the future. Doesn't help for 2022 but if the premium hasn't been paid already by the company in 2023 there may be time to fix it.