Lou S.

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.

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.