Belgarath

Yeah, I saw that - thanks. As things stand now, it would be my goal to have all our 403(b) plans restated by 12/31/2025, so that 2026 could start with a clean slate, in a manner of speaking, for restating 401(k) plans. But things rarely work out so well. I'd also like the SECURE amendments to be done by 12/31/2025, in spite of the extended deadline. But a lot could change between now and then!

Just wondering... The 2-year restatement window for 403(b) plans is currently scheduled to open 1/1/2025. If the restatement window for 401(k) plans opens 1/1/2026,then the two will overlap. Originally, (in a galaxy long, long ago and far, far away) I seem to recall that the "regular" pre-approved plan cycles were going to be timed such that they would not overlap, but I'm not certain of that. This could create some challenges. Do you know if anyone has suggested to the IRS (document providers, ARA, etc.) that the 2-year DC Cycle 4 restatement window not open until 2027, to avoid this overlap? And if so, even unofficially, was the IRS at all receptive to the suggestion?

We just had one that was very timely submitted, (early December) and the custodian botched it. Didn't cut the check until 1/2. To give them credit, they said, in writing, that if the IRS won't waive the 10% penalty, then they will pay it. I'd be a little surprised if the IRS won't waive in such a situation. Historically, at least in my experience, they have been very reasonable about this type of thing.

I don't think the Code/Regs require any specific ordering. But the Plan may. Our docs specify that the distribution shall be made from the pre-tax or Roth account, as "operationally determined by the Administrator." But the distribution must be made first from unmatched deferrals, regardless of whether they are attributable to pre-tax or Roth.

Interesting information!

I think the term "SECURE 3.0" should be outlawed. Too many negatives associated with the term. Call it Breckenridge's Scourge or something like that. (Some few of you might be old enough to remember "The Court Jester.") And as an aside, if you do remember it, Glynis Johns just passed away, at the age of 100.

You may want to take a look at IRS Notice 2024-2. I haven't read it in-depth to apply it to a specific situation that you describe, but I almost think that my initial skim read it providing for using the safe harbor correction in RP 2021-30, for the lower QNEC amount, even for a terminated participant. Not sure about that, however, you'd want to read it thoroughly!

Doesn't have to match, but if it doesn't, you lose your automatic top heavy exemption. Of course, if you have profit sharing contribution, you lose it anyway, so it may not matter.

Interesting. Although I'd defer to the CPA, I'm inclined to think it would qualify - the "value" of the non-compete agreement to the purchaser, and payment to the sole prop, is probably due to the material income producing efforts of the sole prop in 401(c)(2). Just IMHO. Seems a little "gray" to me.

You work in an arena with which I am unfamiliar!

Was there a corporate resolution done specifying the contribution amounts to each participant? I think this is a question for the lawyers. I don't know if whatever was done created a right to the allocation under applicable employment/contract law, etc.. I'll be interested in the responses!

Honestly, I have not developed an opinion as to what is "best" - I know some people have strong opinions, but I'm not one of them, and I'm not at all sure there is one "best" solution. Plans and employers have some wildly different situations, and we haven't yet worked with enough real life situations to really get a handle on what may generally be the best solution. I expect you will get some recommendations from other members.

SKREEEEEEEEEEEEEKKKKKKKKKKKK! Fingernails on a chalkboard.

Here's a somewhat similar discussion that may be helpful. I'm not venturing any opinion.

I assume you also mean there is no Affiliated Services Group? If neither CG nor ASG, then I agree.

I'd say 99% of the time you are right. But we do have situations where one spouse makes a ton of money and the other just works part time, or perhaps a family business where the child works part time, etc. so it does sometimes happen.

With no research or deep thought, my inclination, IF the current vested account balance exceeds $7,000 (assuming you switch to $7,000) while excluding rollovers, then the money stays in the plan. If less than $7,000, excluding rollovers, then force the distribution. Yes, there's a prior operational error, but it really is a no harm no foul situation - participants haven't lost anything. Clean it up using the appropriate rules going forward, and let bygones be bygones. Others may disagree.

I've decided that from my purely personal TPA viewpoint, SECURE/SECURE 2.0 are misnomers. I call it TERISA. (The Early Retirement Incentive Stupidity Act.) The timeframe keeps getting shorter...

Funny, my Dad said the same thing - but fortunately, I didn't listen. However, the man has the most prodigious vocabulary of anyone I've ever known. I'm with you - I'd rather know less, and use the dictionary more.

Post hoc ergo propter hoc, ipso facto, mephitis mephitis, illegitimi non carborundum, non sum dignus, all to say I have no idea. I took 1 semester of Latin in 7th grade, and by the time I got to 5th declension plural ablative, decided it was a language fit only for masochists. But seriously, I think Bill and Bird have it covered. Bufo Americanus.

Too bad - those were always VERY helpful. I had a tendency to prefer the RIA version.

No, I don't think it matters based on that assumption. Of course there may be a possibility of a match in the 401(k). Assuming no match, I'd still vote for maxing out the Roth IRA first - that extra flexibility can be a wonderful thing. When you want available funds for that once-in-a-lifetime opportunity for the cabin on the lake, the ability to access a chunk of money without paying tax on the distribution is a pretty important feature. Just my personal bias - at my advanced age it doesn't make any difference!

Tax treatment of distributions? FIFO for the IRA?

And the daylight hours start s l o w l y getting longer again. Woohoo!

If you give me Ohtani's contract, I would be THRILLED AND DELIGHTED to pay any and all taxes that might be due. Overall taxes are whatever, so what if they are, say, 60%? If I "only" get 40% of my $700 million, I'm still getting $280 million. Of course, that would be a big cut from what I make in the TPA business... I wish I had a tax problem like this - I think I could handle it.