Bill Presson

It's the government and they're here to help you.

It's effective for taxable years beginning after 12/31/2022. Don't think it will matter when it's adopted.

I've seen it used for real estate agents and for liability attorneys. In both situations, they were making about $100k every year, but every third year or so, they would make $500k, so the increased pay credits were set for above $150k, if I remember correctly. Obviously limited to max comp for the year.

Having a zero compensation employee has been pretty rare in my experience. I've seen it where an owner just doesn't take compensation because of the business economics or when an employee is on some kind of leave of absence. But in that case it would be 12+ months and that's unusual. What other employees aren't getting paid, especially a "substantial number?"

Also, the plan can't be a safe harbor plan because deferrals weren't allowed starting 10/1/22.

Thanks. I remember that being an issue (don't remember details), but I don't work on IRAs.

Does it allow for the withdrawal of Roth at any time? Likely not. Once he converts, it's Roth and not after-tax.

https://www.irs.gov/retirement-plans/plan-participant-employee/when-can-a-retirement-plan-distribute-benefits Not exactly a cite, but first thing I could grab in a pinch.

So, he could take PS money, but only if the plan allows for in-service distributions of that source and at that age.

And, I assume you mean a participant wants to take the distribution. Owner, trustee, etc are irrelevant to this discussion.

I think this was the wrong thing to do. You weren't filing a 2017 return. This was bad (stupid?) advice and you were wrong to take it.

Agree with Lou.

Correct.

Albany, assuming there is a refund, remind the HCE, that getting a refund isn't the worst thing to happen. The worst thing to happen is choosing to defer less and passing the test. Because that means he/she COULD have deferred more. Getting a refund means they deferred the maximum allowed by law.

John is correct if you're really talking about 2021. If you're talking about 2022, I would only choose option 1. The other two don't make any sense.

I recommend this: https://www.lfg.com/wcs-static/pdf/Attribution of Ownership in Retirement Plans - PDF.pdf

Couple of thoughts. 1. If you agreed to bill by the hour, then bill by the hour. 2. There is a value in the services that isn't tied to time. It's tied to knowledge and efficiency. One shouldn't be punished for being smart and working quickly. 3. If you bill less than estimated, be sure the client is aware. And remind them that things sometimes go the other way and you would still expect to be paid.

First, make sure you eliminate it for 2023 AND let them know if the plan is top heavy and what they need to do to avoid any TH minimum. At this late date, you aren't going to avoid the SH because you have to give 30 days notice and that puts you to the end of the year. Agree with Bri to see if you have leeway. We draft our documents so that the HCE SH is optional. Then start discussing a plan to make the 2022 contribution.

I'm just going to say that they need to either do a SIMPLE IRA or a 401(k). No one has listed anything.

We don't see clients do that.

Tell them how much you'll charge to allocate and distribute a handful of pennies.

The merger documents can provide that the two trusts are effectively merged as of XX date without having to physically combine them. What if you were just changing the name of the trust? No way that happens on the effective date. It happens later, but the document says when it's effective.

The plan has to have entry dates and they are written into the plan. Typically they are the first day of the plan year and six months following (ie 1/1 & 7/1) but can be more frequent. So assume your person was hired 10/10/21. They complete their 6 months eligibility 4/10/22. They would then enter the plan on 7/1/22 and be eligible to defer on 11/1/22. The 11/1/22 effective date for deferrals means that's when deferrals are first allowed in the plan. Not uncommon for a new plan to specify a date on or after the plan is signed in existence. As to vesting, I'm going to give you the most common example and one exception. Your plan defines exactly how it is determined. You just look at the plan year and ask "did the person work 1000 hours"? If the answer is yes, they get credit for 1 year of vesting service. Hire dates and termination dates don't matter for this measurement. The one exception is if the plan excludes service before the start date of the plan. But, in my example, the plan year, the hours, etc could all be different. Read the document.

This doesn't make any sense.

I know they're trying to save some money. But don't let their problem become your problem. Unless you're an attorney, don't try to create a DRO.