pmacduff

Peter - For our small employers; I suppose one thought would be weighing the cost of the audit to the cost of maintaining two or more qualified plans. I don't know what others think but I'm thinking that because the auditors are going to lose plan audits on some plans (in my world anyway) they might raise their fees for those they still have or for any new ones with the situation above where the client's plan is now in the audit realm. We are exclusively in the small company plan market and our clients seem to be cost conscious above all else the majority of the time 🙂!

Hi Lou, Yes - exactly - pooled aren't yet reconciled.

If I follow you, we'd be transferring the account to another investment within the plan, which should be allowed in theory. Thank you for the idea, unfortunately I think that would take as long or longer to accomplish that because the platform doesn't recognize that there are outside assets. If they did I think they would allow us to roll 100% out without requiring the RMD to be withdrawn first. Not a big deal really, it is what it is. Just trying to make it easier on the beneficiary if I could at all.

After reading through the Federal Register I found the appropriate section and it appears that the long term part-time employees who elect to contribute and therefore have plan balances will, in fact need to be counted for 5500 purposes. Depending on the industry and how LTPT interest shakes out, we could end up with some clients who will actually go the opposite way and will now need an audit. (previously under 100 and eligible for audit waiver, now over with the LTPT with balances included). I guess since it's down the road a bit, no sense in worrying right now

Agreed, thanks Bird. I think I just needed to vent about it in my frustration 😁

I realize it won't be an issue right away - but does anyone know if the long term part-time employees contributing will need to be counted as participants w/balances for 5500/5500-SF purposes? I know they can be excluded from testing, but haven't been able to find information as far as the 5500 return counts. Thanks in advance!

Plan has assets with one of the big 401k vendors as well as outside pooled managed funds. Owner participant (who was already receiving RMDs, born in 1939) passes away. Past RMDs have been calculated by the TPA on the entire balance and distributed from the pooled managed funds. Spouse is the beneficiary and plans to roll the decedent's balance out of the plan to an IRA. Vendor wants to process RMD prior to rollover. Anyone ever been able to convince the vendor that the beneficiary can roll 100% of the account that they hold and the RMD will be made from the outside plan assets? I would think that if the Trustee of the plan directed them to pay out 100% of the deceased participant's account to the beneficiary they would have to do that. It will probably end up that the vendor will take the RMD anyway for their portion and then the TPA will calculate and have the Trustee pay the balance of the RMD from the pooled funds but it would be nice if the beneficiary only had to deal with one total RMD payout.

I was helping a client make his #945 payment through EFTPS a few weeks back and he was asking me which tax type to select (i.e. 941, 945, etc.) so I'm of the opinion that you could use the same pin but I don't know that for sure.

Yes - that's the form. ( I was looking, too for it but C.B. beat me to it!) When my husband was first disabled a few years back we received a 1099-R from an IRA withdrawal that was coded with "1" because he was only 57. I prepared and sent the 5329 form with our return to show that the 10% did not apply.

ok - this one is new for me. 31% owner of company, retired in 2017. After 2017 the ownership is now in the name of a "dynasty trust/owner's name" and that trust has 37.04% ownership in the company. Owner's daughter (age 54) comes to work for the company in 2023 as CEO. Is she considered to be highly compensated and/or key due to attribution? (Her compensation is under the HCE comp limits.) Thanks in advance for any insights!

We too (as TPA) have (and have had) clients on the Vanguard platform with Ascensus. I hope this isn't anything new!

Thank you for the responses. The receivable contribution is the 2022 profit share declared by the retiring dentist and he will be funding that from his practice's account.

Dentist is retiring and another dentist in the office is taking over the practice. New EIN and Employer name. Can the existing 401k simply have a change in Plan Sponsor/EIN? What if the retiring dentist has receivable contributions under his practice name/EIN that will not be paid into the plan until after the change?

here is the John Hancock info I received: Changes to IRS forms and income-tax withholding Effective January 1, 2023, the IRS is mandating changes to the way John Hancock (payer) collects federal tax withholding information from plan participants (payees). The changes vary based on your plan type and the distribution type requested by the plan participant. Defined contribution plans For nonperiodic payments that aren’t eligible for rollover (e.g., hardship distributions and required minimum distributions), participants may elect a federal tax withholding other than the default 10% (which remains the default if the form isn’t returned), including 0% withholding, by completing Form W-4R. For eligible rollover distributions, participants may elect a federal tax withholding greater than the default 20% (which remains the default if the form isn’t returned) by completing Form W-4R. Defined contribution form availability Our automated forms will be updated and available for use on January 3, 2023, the first business day in the new year. Visit the plan sponsor website to download the forms as needed. The prior versions of the forms will be accepted through March 31, 2023. Starting April 1, 2023, the old forms will no longer be valid and accepted. Defined benefit plans Starting January 1, 2023, all tax withholding information for defined benefit plans will be collected using IRS Form W-4P and Form W-4R. The new Form W-4P is completely revised and requires participants to input specific information to determine their federal tax withholding for periodic pension and annuity payments. Participants can still elect to have no federal tax withheld from these payments. Form W-4R will be used for nonperiodic payments and eligible rollover distributions in the same way as defined contribution plans (outlined above). Defined benefit form availability Our automated forms will be updated and available for use on January 3, 2023, the first business day in the new year. Visit the plan sponsor website to download the forms as needed. For periodic pension and annuity payments for participants whose paperwork was generated prior to January 3, 2023, John Hancock will accept the prior version of the form until January 31, 2023. If you have any questions or want additional information, please contact your John Hancock representative.

unrelated question...why is she not eligible in her own plan? We're in the small plan market where the plan is normally set up specifically to try and maximize/benefit the owners, so I'm curious as to the reasoning.

Anyone know if login.gov is the same as the irs.gov "ID me"? I had to get the "ID me" credentials in order to electronically file the 8955-SSA forms with our existing TOC code. Still haven't completed the process though to actually be able to file the 8955-SSA forms because the site requires two people to be listed and the other person in the office hasn't yet completed the process to be able to log in. It was a bit of a hassle and I'm hoping I don't have to do another for the login.gov for the EBSA.....

My two cents and to quote some famous people on the boards..."what does the plan say"? I would think if the DB and or SEP balances are effectively "rollover" balances in the 401(k), then unless the Plan Doc states something different for the origin of the rollover source funds, the rollover assets can be rolled out according to the plan in-service provisions for that money type.

Thanks Bird, I thought so too. So....the wife will need to take one 2023 RMD from his account before she rolls it to her IRA, and another from her own account with each based on her life expectancy factor - do I have that correct?

Can't seem to get this straight in my head. Participant passes away late in 2022 and has already taken his 2022 RMD. Spousal beneficiary (also a plan participant) has not yet taken rollover of husband's plan balance. She plans to rollover his balance in 2023 to her personal IRA. Is a 2023 RMD required from the deceased participant's plan account prior to the 2023 rollover to spousal beneficiary's personal IRA? (Both participants are owners, well over age 72 and have already been taking RMDs from their plan account balances.)

Thank you Bri. Just setting it up now on the system. The short plan year runs from 01/01/2022 through 06/30/2022 and I did put those dates in when I set it up. I thought I recalled a spot in the specs where you checked a box for a short plan year but perhaps that was on an old version! (I've been working on Relius since 1990 so it may just be that my old brain is not remembering properly!)

Hey Relius users - anyone recall where the specification is to tell the system it's a short plan year? I used to be able to log in to the old relius.net, which had all of those types of questions/answers but I can no longer access that. The new FIS log in doesn't appear to have a similar Q & A section and I didn't want to have to wait to post an "incident" for such an easy question! Thanks in advance...

There is an old thread from February 26th, 2003. I don't know how to insert the connection to the thread but if you search in the following board you'll find it. Originally referring to the ADP/ACP tests but I think may be relevant to the discussion: Retirement Plans 401(k) Plans ADP test and HCE w/ $0 comp I'm in the small plan/client market and have some industries where this happens all the time, mostly because the employee doesn't get terminated timely for a variety of reasons. FWIW - I've been doing this for 32 years and was originally "taught to" and have always excluded them from everything (whether NHCE or HCE), and never had issues on audit.

My two cents - I found this on the IRS website. Example: Employer X maintains a 401(k) plan that has 21 participants and plan assets of $715,000. For calendar year 2020, Ann deferred $20,000 to the plan. None of the elective deferrals were designated as Roth contributions. Ann is under age 50 and isn't eligible to make catch-up contributions. Ann has excess deferrals of $500 because $19,500 is the 402(g) maximum amount permitted for 2020. Employer X didn't discover this mistake until after April 15, 2021. On November 1, 2021, X distributed the excess deferral (plus earnings of $10, totaling $510) to Ann. For 2020 (year of deferral), Ann must include $500 in gross income. For 2021 (year of distribution), Ann must include $510 in gross income. Employer X would report this amount on Form 1099-R. In addition, Ann must pay the additional 10% early distribution tax under IRC Section 72(t). Therefore in your example I think the $1000 from 2021 is reported on a 2022 1099-R with a code "P" (taxable in previous year). The $1020 is also reported on a 2022 1099-R with a Code "8" (taxable in current year). Two 1099-R forms and then it's up to the participant to revise their 2021 taxes as applicable -

Not sure of VOYA's reasoning on that... For a work around what if the spouse requested rollover of the death benefit, payable to VOYA and then rolled it back into the plan into her account as a rollover using the VOYA rollover form?

Found this in the IRS website: Exceptions to the 10% Additional Tax Distributions that aren't taxable, such as distributions that you roll over to another qualified retirement plan, aren't subject to this 10% additional tax. For more information on rollovers, refer to Topic No. 413 and visit Do I Need to Report the Transfer or Rollover of an IRA or Retirement Plan on My Tax Return? There are certain exceptions to this 10% additional tax. The exceptions below apply to distributions from a qualified plan other than an IRA. For a complete list, look at the Appendix for Notice 2020-62PDF. Distributions made to your beneficiary or estate on or after your death. Distributions made because you're totally and permanently disabled. Distributions made as part of a series of substantially equal periodic payments over your life expectancy or the life expectancies of you and your designated beneficiary. If these distributions are from a qualified plan other than an IRA, you must separate from service with this employer before the payments begin for this exception to apply. Distributions to the extent you have deductible medical expenses that exceed 7.5% of your adjusted gross income whether or not you itemize your deductions for the year. For more information on medical expenses, refer to Topic No. 502. Distributions made due to an IRS levy of the plan under section 6331. Distributions that are qualified reservist distributions. Generally, these are distributions made to individuals called to active duty for at least 180 days after September 11, 2001. Distributions that are excepted from the additional income tax by federal legislation relating to certain emergencies and disasters. Distributions up to $5,000 made to you from a defined contribution plan or an IRA if the distribution is a qualified birth or adoption distribution. Distributions made to you after you separated from service with your employer if the separation occurred in or after the year you reached age 55, or distributions made from a qualified governmental benefit plan, as defined in section 414(d) if you were a qualified public safety employee (federal state or local government) who separated from service in or after the year you reached age 50. Distributions made to an alternate payee under a qualified domestic relations order. Distributions of dividends from employee stock ownership plans. Refer to Topic No. 557 for information on the tax on early distributions from IRAs. For more information, refer to Publication 575, Pension and Annuity Income and Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs).