D Lewis

We send a notice that gives them the opportunity to elect the withholding, but it tells them if we don't hear from them by X date, it will be processed with 10% W/H I suppose if I was every up against the deadline we might just process them, but that isn't typical for us.

I knew something was off in my thinking. This is the light bulb moment for me. Thanks everyone.

I'm trying to confirm if the new new law changes the RBD for a non owner participant in a qualified plan that turned 72 in 2022, and retired in 2023. Is his RBD 4/1/2024 for a 2023 RMD under the old rules? Or since he retired in 2023 his RBD 4/1/2025 for for a 2024 RMD? Thanks

We use Ft William and need a csv file for importing. I've been able to open the MM/Empower txt file and save it as a csv and import it into our system. It's been a long time since I worked with Relius so I don't know if you can save or convert the text file to a dat file. I would suggest contacting Relius support and/or Empower for the solution. There must be one.

Thanks for your comments. We didn't think there was a way around it - just wanted to see what others thought.

A CPA came to us with this situation. A woman suffered a stroke a year or so ago. She needed cash to buy some type of long term care or medical policy. Not sure exactly what it was, but it doesn't matter for this question. In late December 2022 she took a $450,000 cash distribution - $90,000 was W/H. A couple of days later, but still in 2022, she unexpectedly died. The money is no longer needed and the husband would rather it not be taxed. Normally she would have 60 days to roll it over if she came up with the withholding. Husband said he could afford the $90k, but the wife is deceased, so I don't think there is a way to do that. If it was in the plan, he could roll it to a spousal IRA, but I don't think that can happen without having the distribution reversed first. The check for the $360,000 has not been cashed. Husband has it in his possession. I doubt the plan can reverse it. Can the plan limit the damage by voiding the $360k check and making the distribution $90k - 100% withheld? Any other options, or are they stuck?

I don't have an answer for how to handle this in your payroll system, but from a plan perspective it's not a catch-up until a limit is exceeded. Electing it on a form doesn't make it a catch-up. It's a catch-up once the annual limit is exceeded (or another plan limit). We find many payroll systems and record keeper forms do not handle this well.

I don't know if there is a way to find out. I do know that if the number is not used for a long period of time it gets deactivated. It's a big hassle and takes a long to time to get it active again when the IRS deactivates it. I would wait until it's needed to process a distribution, and then apply for a new one at that time. Use a more recent plan effective date. We have done that and not had an issue.

Sorry - I don't know. One would have to rely on Albany's plan then. I sometimes forget there is a bigger world out there then the small plan market I'm in.

Why not have the sponsor sign one on paper and mail it? Then there is no question.

It depends on how the resolution to terminate the plan was written. If the resolution states the plan is terminated on 8/31/2022 and no new contributions will be allowed after that date, then deferrals can continue until that date. If it doesn't spell it out, then the Plan Administrator will need to make an interpretation. Check how the resolution was written.

If you are referring to employee deferrals, that is a tax payer calendar year limit, not a plan limit. There is no proration to the 402(g) limit or need for a correction.

Check the buyer's plan. Most plans allow for rollovers before becoming a participant. All of ours do.

This is very old now and informal: At the 2011 Mid-Atlantic Benefits Conference in Philadelphia, the issue of the excise tax was discussed at one of the "Ask the Experts" sessions. Someone asked if there was a de minimis amount where one did not need to file the excise tax return. Someone else said that they had heard that if the tax was under $100 it did not need to be filed. George Brim and Michael Sanders of the IRS said there was no set number. But they stated that if the cost to calculate, fill out, and file the 5330, PLUS the cost of the IRS to process it (who would know what that amount is?), was more than the excise tax, they didn't want it filed. Instead they said to calculate the tax, and add it to the lost earnings, and give it to the participants. What no one knows is if this would be ok with the DOL if the sponsor receives a letter from them. If one has done all of the self correction steps, one is supposed to be able to get a "no action" letter from the DOL without filing under VFCP. I asked a DOL agent once a a conference and he said it was a "fascinating question". He asked me to email it to someone at the DOL. Of course I never got a response. I also asked @Ilene Ferenczy about this once. I don't pretend to speak for her, but my memory says she didn't like the idea and thought the excise tax should be paid no matter how small.

This is pretty old now, but if the excise tax is de minimis, we still add it to the lost earnings and give it to the effected participants.