Lou S.

Maybe Peter but in this particular case it might be hard to argue the inadvertent part for someone who was a 5% owner who had been taking RMDs and then for some reason seems to have stopped "about 5 years ago" as the OP puts in their post. Your highlighted text is interesting. As for what the IRS will deem a reasonable time frame in practice I can't say for sure but looking toward existing current guidance on the IRS self correction program it seems like correction within 2 years would be deemed reasonable. Beyond that might get into some gray areas on reasonableness. Maybe the IRS will use one of their ever popular facts and circumstances approach unless they publish a bright line deadline in future guidance or maybe they will deem any self correction that is done is done in a reasonable time frame.

Then it would simply be a gain/loss item. The question then becomes whether or not it is subject to UBTI.

I'm confused. Does the Plan have an investment in a Real Estate LLC? And does the Real Estate LLC payout something like dividends that are deposited to one of the Plan's Trust accounts? If so wouldn't they be treated as earnings?

Just a guess. These are individual brokerage accounts for each participant, the guy who didn't take the RMD used to be the head hancho at the company and his golf buddy broker told him he didn't need RMDs because he's not a 5% owner anymore? But yeah as Jakyasar says, something doesn't sound right here.

I'm a little confused by the timeline. Has it always been the same TPA? What does the TPA service agreement with the client say? Is the Participant being asked to pay the Plan Sponsor's VCP submission fee? If I'm the participant my response is here is my lawyer's phone number.

I agree with CuseFan approach assuming this is an NHCE. Maybe a simple amendment that preserves the the 417(e) lump sum as of date of the request for participants who submit a request for payment in 2022 but is not processed until 2023 due to administrative delays beyond the participant's control. Oddly specific but I would think it would cover this situation and make everyone happy. Might be a question about whether such an amendment might take your document out of prototype status but I think the IRS would be OK with it. Especially if the plan is "well funded" and the participant has always be an NHCE.

What was the reason for the delay? If the sponsor was pushing for it to be done in December, why didn't it get done? Was the participant late returning paperwork? I don't think you can process it now using the 2021 417(e) rates as you would not be following the terms of the plan.

Ultimately it's a decision of the Plan Administrator to interpret the terms of Plan and make a decision. That said unless the Amendment specifically states that the reduce hours requirement will only be applied prospectively to employees after the Amendment is signed then I would be inclined to interpret in favor of the participant that the 800 hours requirement would apply retroactively as of the adoption of the amendment.

I could be wrong but believe if you have language to forfeit sooner than the earlier of 5 yr BIS or payout then your document also has to have language automatically restoring forfeitures if the participant is rehired within 5 years.

Without actually reading your document I can't say for sure but my best guess is they entered November 1, 2022 when they met the 6 month rule.

When you say "reverts to plan year" what does that mean in this case? What do your service spanning rules says?

To expand on Bri, Catch-ups don't count toward any applicable limit (which includes 415(c)) You still need to have compensation to make a 401(k) deferred contribution, that is you can't defer compensation you don't earn, but you can go over the 100% of pay limit or the 415 dollar limit if employer contributions push you over the regular limit but not past the catch-up limit plus the regular limit assuming 401(k) contributions are at least equal to the catch-up limit, the participant is old enough to qualify for catch-up, and they plan allows catch-ups.

Yes In theory. In practice you may have some trouble with payroll taxes.

I don''t know of any provision in the code that would let you use a Plan suspense account that way in a QPR or any qualified plan.

Bird, I though they made ROTH Conversions irrevocable a few years back. I agree with Cuse fan but it seem like the conversion itself is an excess IRA contribution and you would withdrawal the excess from the ROTH under the IRA procedures +/- G/L for withdrawing excess IRA contribution before the due date of the tax return.

I think they have made this needless complicated and introduced the potential for errors from: the participant, the payroll departments, the payroll company, the TPA, the custodian, and the educational materials and or deferral election forms and systems. That's not to say that these errors will happen but there is the potential for them at multiple steps in the process.

I'm pretty sure he will require a T-H minimum as he was an eligible for participant for of the year, was not a key employee, and is still employed on the last day of the plan year year so he would appear to fall into the 416 definition of who must benefit. And the TH minimum is on 415 compensation so that would be his full year comp maybe I'm wrong but that's been my understanding of TH. And that will also a trigger a gateway for the individual since he's a NHCE. At least that would be my understanding. And as for the gateway the 5% rule is on 415 comp but the 1/3rd rule is on 414(s) comp which could be different. Though I think for gateway you can limit to comp while a participant if you do that uniformly for all participants. You can ask FIS how their document addresses the situation.

Sole Proprietors don't receive W-2 from their sole proprietorship, they have earned income that is reported on Schedule C. Since you said he has S-corp pass through income I'm going to assume you mixed up Sole Prop and S-corp. But who knows maybe he has both for some reason. The answer to your question that the accountant should be able to tell you is to increase in 415 limit he'll need to pay himself higher W-2 wages (or have higher earned income if it really is sole prop) instead of dividend or distribution income from the S-corp. I mix up the correct term on distribution/dividend because I'm not a CPA but his CPA should be able to tell you.

Sounds like it might be legit if it is about Login.gov which seems to be a thing that US government agencies are using. I had to set mine up for PBGC last year but I'm pretty sure it ties into multiple government logins. That said I have not seen this particular email and can't confirm it's not a scam. As always if you're concerned and it is something you do use, I'd suggest not following the links but go directly to the website URL in question that you know is legit to verify.

Secure (1.0?) might have already brought a number of those into the plan as of January 1, 2023...at least for eligibility for 401(k).

SECURE extended the deadline to adopt to due date of the tax return with extension. Though if there is a 401(k) component, you can't make the 401(k) contributions retroactively.

You still need to comply with 415 limits and the overall employer deduction limit is going to be capped at 25% of pay under 404. Just because you have a match instead of a profit sharing doesn't get you around the limits. That said if you have a REQUIRED match in the document it might force you over the 404 limit on deductible contributions and force a nondeductible contribution subject to an excise tax which might be one reason some "solo-k" documents don't allow matching. For example say you have a document that that requires you match deferrals dollar for dollar with no cap. And have the following set of facts - W-2 owner (only employee) pay $20,000. W-2 401(k) contribution $10,000 Employer required match $10,000 The match is clearly required by the document and clear not in violation of 415 limit so it has to be made. But compensation is only $20,000 so the 25% deductible limit on employer contributions is 25% or $5,000. Therefore $5,000 of the match would be required but non-deductible and also subject to a 10% excise tax. Not an ideal result and not a set a facts you'd be likely to see but just an extreme example of what could be allowable and still get you a bad result.

Then you are a reading a document that doesn't allow for matching contributions. A Solo-K is simply a marketing term describing a 401(k) plan that covers only the owner. But often times it just has has limited document choices about that is offered in the document and may not offer everything that might be allowable under the code.

I've always sent them in UPS or Fed-ex and have not had a problem. Knock on wood. But yes electronic filing of 5558 would be a welcome change.

After tax voluntary contributions can be made if allowed. They are considered an annual additions under IRC §415 and must be tested in the ACP test. So if is a one person plan you don't really need to worry about ACP testing but you do need to be mindful of 415 limits. And obviously you need to track the source separately along with the after tax basis.