Belgarath

Question I'm not clearly understanding. I know that you cannot include LTPT in testing for some purposes, and not for others. Basically "all or nothing" - that is, 401(a)(4),ADP/ACP. 410(b), etc. What I'm not clear about is, for example, suppose the employer provides that LTPT who defer will also receive a match. Can the employer STILL exclude the LTPT employees, for all the above testing purposes, or must they all now be included for all of the testing? I think it is the former, although it seems counterintuitive, but I'm not certain. (P.S. - I base my theory that it is the former on the proposed Regs, and nearly at the end under Section f(3)(i) Example 1((a) and (B).)

Peter, this compliment is long overdue. You are without question one of the most objective and fair minded observers I've encountered, as well as being a great source of information. If you decide to run for higher office, I'll vote for you!

I'm re-upping this thread. The 8822-B instructions are still from 2019 on the IRS website. While the 2023 5500-SF instructions for line 2a, under the NOTES, still say to inform the IRS via 8822-B for an address change, the 8822-B instructions (2019) still say there is no penalty, and that for a change of address that use of this form is voluntary. Has anyone seen any new movement/information on this issue?

Agreed. As I said, we always specify it is their decision, with the advice of tax/legal counsel. We do provide "discussion points" to educate them and for them to discuss with their attorney, with references to Code/regs. It's just that they hardly ever do. I can probably count on my fingers and toes the number of times in the last 10 years or so that a client actually has done so.

Gotcha - I just couldn't, offhand, see why they would bother if they already passed, but this clears it up. It's been a long week, and my brain obviously needs recharging! Thanks.

Plan excludes bonuses. Plan passes 414(s) test, even excluding bonuses - HCES take big bonuses. Plan passes ADP testing excluding bonuses. Question has been asked as to whether the plan can run ADP test based on full compensation. Well, it CAN, (plan operationally allows for employer to elect any other definition of comp as long as it passes 414(s)) but why would they want to do that? Any ideas as to why this might be beneficial? I'm not seeing it offhand... maybe allowing some shifting to the ACP test by creating more room under the ADP test?

Some of both. But the majority is playing music created by various artists - typical stuff. We always specify that they need to make their own decision, with the advice of legal/tax counsel, but they rarely do... On a smell test, I wouldn't classify this as a "performing arts" situation.

I'm wondering whether a radio station would be considered a "service organization" for these purposes. I think it is not. There is a substantial investment in equipment, transmitters, etc., etc., and there's no personal service performed by "one or more individuals." Any other thoughts?

Looking for conversation/thoughts/opinions, if you are interested. Expanding upon this question a bit, re reporting for QBAD's, Emergency Personal Expense (the "$1,000 one"), Terminal illness, Domestic abuse. As I understand things, maybe incorrectly... None are Eligible Rollover Distributions for withholding purposes, so withholding is voluntary - 10% default, but can elect out of it - or elect more if desired. 1099-R - QBAD is Code 1. For the other 3, it seems there is a choice between 1 and 2 depending upon age/facts and circumstances. No premature distribution tax on any of them, if they qualify. May require them to report properly on their 1040. Thanks for any input! Mom always said I'd come to a bad end - this business is starting to look like it qualifies as such!

I believe the proposed regs say that if you have elapsed time, as long as the waiting period isn't longer than12 months, then LTPT doesn't apply anyway?

I believe that compensation for 415 limits includes comp from all employers participating in the MEP.

Yes, in 2025.

Retirement plan income. I expect it is in some kind of electronic limbo. If nothing happens in the next month I'll have to call the taxpayer advocate. Very strange - in the past, I've actually been shocked at how FAST it was processed! Maybe just an accumulated bad karma debt...

I'm finding this subject confusing, particularly due to the fact that some vendors/recordkeepers are handling the process differently, or their information is contradictory/confusing, etc. So, it is very clear that a QBAD is reported on a 1099 as a Code 1. A PLESA (which I hope never to encounter anyway) is treated as a qualified Roth distribution, and reported as such. For other SECURE/2.0 special distributions, it seems like a Code 2 is possible if the "AND YOU KNOW" clause in the 1099 Code 2 instructions is satisfied. Are you allowed to use a Code 1, even if you "know" - or if the employee certification doesn't convince you - you are allowed to rely on it, but are you allowed to REPORT as a Code 1, or MUST you report as a code 2 if you ostensibly "know" it qualifies? Other observations? Floundering a bit on this... Thanks.

Just curious as to what people may be hearing. Remarkably simple income tax return filed electronically end of January - IRS refund website confirms accepted January 31. Refund still not approved/processed. Return has 2 W-2's 2 1099's. That's it, standard deduction. In the past, these have been processed VERY fast. And everyone I know who filed at the same time this year got their refund processed and received very quickly. There's no option I'm aware of to actually talk to someone at the IRS who can say what the hold-up is. When I did call, the phone message was the EXACT wording that is on the "Where's my Refund" site. I just wondered if other folks you might know are encountering similar delays. It isn't anything critical - it's not like it is needed to pay bills or get groceries - it is just annoying!

It is 3 consecutive years, (technically 3 consecutive eligibility computation periods - watch this if you switch to plan year). Two, starting in 2025.

Yes, so would I.

Well, the position of the IRS is that the existing formula gives the participants a "protected allocable share" (i.e. IF an allocation is made for 2024, it must be pro-rata) and that such an amendment couldn't be implemented until 2025. I've seen arguments that the IRS' position is inaccurate, but I wouldn't want to fight that battle

Thanks Peter!

So, non-profit employer "A" sponsors a 403(b) plan. Employer "B" is a disregarded entity, but signed on as a participating employer to "A's" plan, on the advice of counsel, just to make things clear. Now employer "B" is breaking off from Employer "A" and is going to change to a for-profit entity as of the separation date. "B" is going to, probably, install a 401(k) plan, although probably not with us as the investment person is hyped on bundled arrangements. Que sera sera. It seems to me that this would be considered a termination of employment for these participants, and they would be eligible for distribution or rollover as they choose. Is my thinking on this flawed?

Interesting. I'm completely unqualified to opine on the legal technicalities - but what (for me) passes as common sense, leads me to ask why in the world would an employer attempt to litigate this when the only practical effect is allowing certain employees to defer ONLY - no employer contributions, top heavy, etc., etc.? Seems like the expense, and hassle, is the losing end of a bad deal.

I tend to agree, but I would defer to ERISA counsel. Depending on the timeframe involved (going back for how many years) there could have been lots of changes in the beneficiary populations - death, divorce, marriage, etc. - and I don't know what effect that might have. Also, the amount of money involved may have an effect - if small, the tendency is to take more "risk" for the sake of administrative sanity, whereas if the amount is large, more caution is usually exercised.

And if you handle 403(b) plans, that's an additional workload (restatements) that hits sooner.

The amendment date should be after the date the practitioner is planning to retire.😁 (If there is anyone reading this who doesn't have a sense of humor, please ignore the above comment) But seriously, to a certain extent the amendment date may also be driven by other factors - staffing, number of plans, other projects such as restatements, etc.

Thanks Peter!