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.

When the excise tax is "de minimus", we deposit the amount of the excise tax into the plan, allocated to the effected participants. This came from an Ask the Experts panel at an ASPPA ABC conference. It's 10 years old now, but we still do it. Here is the original discussion:

When an HCE defers over the 402(g) limit we use the full deferral amount in the ADP test. If the plan fails the ADP test, does that mean the plan must return the excess deferral and the excess contribution (which ends up including the amount over the 402(g) limit)? Essentially returning the excess deferral twice? Example: HCE under age 50 defers $21,800. 402(g) excess deferral of $2,800 plus earnings needs to be refunded. The full $21,800 is used in the ADP test which fails. The refund required is $3,135.58 plus earnings. If we used $19,000 in the test (which we can't), the refund would be $335.58. We think that is correct that the participant would receive a refund $2,800 plus earnings for the excess deferral and $3,135.58 plus earnings for the excess contribution, but wanted to make sure.

Not sure if this is a pooled or participant directed plan. I'm also not sure how much the 2018 deferrals were. Is it $30,000? Is it possible to take the position that the full $41k deposited was employer contributions? And then correct the late deposit of deferral contributions through VFCP? If the plan is participant directed, it might be more difficult to do.

I have been searching to see if there is a waiting period for eliminating QJSA from a profit sharing plan. I thought I remembered that there was one. I see that the proposed regulation had a 90 day notice, but the final did not include that. Am I correct that there is no waiting period for eliminating the QJSA from a profit sharing plan?

I'm not sure the OP is saying the 2 loans weren't outstanding at that same time which is what the IRS example highlighted is talking about. The maximum loan is the lesser of 50% of the vested account balance (minus outstanding loans), or $50,000 reduced by the highest outstanding loan balance in the last 12 months. It's not 100% clear if the $78,150 above is inclusive of the loan balances - I'm assuming it's not. (if it is, it's still the same answer anyway). Therefore if the OP pays off loan #2: 50% of the vested account balance reduced by the remaining loan #1 is $37,775 - $104,150 X 50% minus $14,300. (if the $78k includes the loans, the amount here is $24,775). $50,000 minus the highest outstanding loan balance in the last 12 months is $17,330. Maximum new loan is $17,330. With these facts, it would be the same regardless of which loan was paid off or if both loans are paid off.

Yeah it doesn't make a lot of sense. And one has to apply in May or June for the September expiration date. And when your completing the renewal form, if you discover your short CEs, well it's already too late to make any up. Bizarre

It is my understanding that it's the first.

We did this recently where we used the RMD forms from our system. After being generated, we changed some of the words as necessary - like "Reason for Distribution" from "RMD" to "Death Benefit" and where it requests the participant SSN, we changed it to "Trust EIN". This way we got a form to get the needed information and signatures, but didn't have rollover and mandatory withholding options.

We calculate the amount and give it to the participants - we don't send it or the 5330 to the IRS. This is based on this informal guidance: From the thread called "Late Deposits" (link above): "At the 2011 Mid-Atlantic Benefits Conference in Philadelphia on May 5-6, the issue of the excise tax was discussed at one of the "Ask the Experts" sessions. George Brim and Michael Sanders of the IRS said there was no set number. But they clearly 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." As far as how much is the de minimis amount that it's ok to do this - a lot of people say $100, but I've never really heard there is a magic number. The second part of the question about how to handle it with the DOL was never answered at the time (we asked the DOL at the conference and after by email). We haven't seen the directions RatherbeGolfing gave (but haven't looking into it either). We haven't done that part yet.

"C" - we give the excise tax amount to the plan participants as additional earnings See prior discussions: