Belgarath

Interesting. In my limited experience with DB plans, annual benefit statements are (or were) just sent automatically every year for all participants with a benefit, whether terminated or not. Maybe that has changed, or maybe my limited experience was with plans in the minority.

Just curious - we don't have any plans for "Foster Care Providers" where this would be an issue, so this is simple curiosity on my part. Anyone dealt with this issue on a real plan or plans? Do you specifically question this when gathering annual census data, since it isn't taxable income?

Yes, it is that time of year again – the annual tax lament, to the tune of “Yesterday” by the Beatles. Remember, it is only when the final line is truly sung from the heart that one can appreciate the scope of anguish and angst that the artist is attempting to convey… Yesterday... Income tax was due, I had to pay... All the funds I tried to hide away... I don't believe, I'll eat 'till May. Suddenly... I'm not sure that I am fiscally... Ready for responsibility... Oh yesterday, came suddenly. Why, I Owed so much, I don't know, I couldn't say May be Forms were wrong, how I long, for yesterday. Yesterday... Seemed like prison time was on its way... Now I need a place to hide away... While keeping IRS at bay. Why, I Owed so much, I don't know, I couldn't say May be Forms were wrong, how I long, for yesterday. Yesterday... Taxes due, I filed come what may... Losing all deductions that's my way... Of giving IRS my pay. mm - mm - mm - mm - mm - mm - mm.

https://www.irs.gov/pub/irs-drop/n-22-53.pdf

Any possibility that the 401(k) plan could provide stronger asset protection in the event of lawsuit judgement awards (as opposed to the protection available under an IRA? I'm not referring to bankruptcy, which is a separate issue.) Of course, if there IS stronger protection, and the client is concerned about it, then maybe they shouldn't toll out in the first place.

Thanks! I'll digest this on Monday - after hopefully recharging a few brain cells. Have a great weekend!

It USED to be that once you exceeded the limit, you had to keep filing, even if you dropped below the threshold. However, that changed some number of years ago, although I can't recall off the top of my head. So no, you wouldn't have to file, other than a final when you terminate it. As to your other question, google "401(k) successor plan rules" and you'll doubtless find the information you need.

Perhaps the plan is subject to 5500-EZ requirements if assets aren't rolled out?

Hi Brian - thanks for the response. But, I'm having trouble reconciling the above two statements - and please pardon my lack of understanding on this subject! Does the second statement mean an opt-out credit that is NOT cash - in other words, just used as cafeteria dollars to be used for other benefits under the plan - vision, dental, whatever?

I may be overly optimistic, but with the projected 16 BILLION "government math" revenue estimate for this particular catch-up provision, I find it nearly unimaginable (nearly, I say - Congress works, or doesn't, in mysterious ways their wonders to perform, or not) that these issues won't be addressed in some fashion. In the meantime, I've vowed not to get overly exercised on such an issue over which we have no control at all. Hopefully I can maintain my stalwart resolve. Maybe I'm just suffering from PTSSB (Post Traumatic SECURE Syndrome Burnout).

Curious as to how many Plans you either service, or see, that use the option to INCLUDE Deemed 125 Compensation. I remember discussing this with a noted ERISA attorney many years ago, - I think it was in regard to restating for PPA - and to paraphrase what he said, was that if you include it you'll probably live to regret it. Very complicated for clients and TPA's alike. I've seen some old discussions on this, but I wondered how people felt about it now, years later.

The following excerpt is from a Society of Actuaries write-up from way back that I found on the internet, FWIW: Being defined-benefit plans, cash balance plans need only to provide at death the surviving spouse benefits mandated by the Retirement Equity Act of 1984. However, in practice most plans provide more substantial death benefits equal to the full account balance payable in a lump sum or convertible into an annuity, and in this case, there would usually be no difference in the value of benefits between single and married employees, or male and female employees.

Yes, as I recall, (assuming you distribute by April 15th) the entire excess of $2,000 is reported for 2022. Then the distribution, which will be less than 2,000 due to losses, is reported for 2023 and the participant shows a loss on 2023 tax return. I believe there is an "other income" line on the 1040 where this would show the loss. But don't trust my memory...I don't!

I don't know FTW plan language. Does the "fail safe" language actually provide that you can bring in just participants who don't defer, or does it specify that you bring in participants who are employed on the last day of the plan year with the highest number of hours, then work down from there, etc.? Maybe, coincidentally, the people you are mandated to bring in to pass didn't defer? Just curious.

First, so sorry to hear about your health problems. Best of luck on all that. As to the retirement issue, I do suspect that it will drive some of us out of the business earlier than otherwise might be expected. Trying to be positive, we've weathered big changes before, and eventually adjusted. I remember TRA 86, OBRA, GATT, EGTRRA, etc., etc. - there were a lot of changes over the years, and we managed to adjust. But this has so much more stupidity, and I'm a lot older and less enthusiastic about work these days!

Don't be so hard on yourself! We're all (or at least I am) getting pretty frazzled about now, and when adding 2 + 2 the sum is coming up as a bushel of potatoes, or something similar. P.S. last time I renewed in May. When I never got my renewal in the mail, I contacted them. They were very nice, said they would send out a dupIicate. They sent out the duplicate just before Thanksgiving. But they were very nice, so no big deal.

That's the same one I was looking at. It says April 1, 2014, not 2024.

Are you sure that's what it says? I'm a "6" so I'm in the same enrollment cycle, and my ERPA card says it expires September 30, 2023, (it was issued in 2020) so I'm renewing now, using 2020, 2021, and 2022 credits. I'm looking at the same 8554 you are, and I don't see where it says that my next renewal is 4/1/24. I've always maintained that passing the tests is easier than figuring out these mentally arthritic renewal cycles...

Agreed. Take a look at IRC 414(q) - I think this gives adequate citations and cross references. See particularly 414(q)(7).

Thanks! I will refer them to their benefits counsel, as none of this has anything to do with us, but I can now provide them with some general direction to discuss with benefits counsel.

Suppose a Section 125 plan provides only FSA and DCAP. They also have a "cash in lieu" option where anyone eligible for the company group health insurance can either have a certain amount contributed to the 125 plan to be used for benefits, or they can elect to receive it in cash, taxable in their normal paychecks. The COBRA provisions, if applicable, are "administered" by a third party. Is it allowable for the employer to attach to the SPD a written COBRA explanation provided by the third party? Or must it be in the SPD as part of a self-contained single document? I don't, EVER, have anything whatsoever to do with COBRA, so I essentially know nothing about how COBRA information must be presented. Employer is a retirement plan client of ours, so I'm trying to assist them somewhat with questions, but this is out of my bailiwick. I don't think the the third party "administrator" is apparently being very helpful, or necessarily even doing documents - not like a typical TPA in the retirement plan world. Their 125 document provider from way back is long gone. Thanks for any thoughts. P.S. - while we are at it, same question for a governmental plan (state municipality). Although not subject to ERISA, still subject to COBRA, so other than the "SPD" not really being an ERISA SPD, but rather a "Summary of Plan Provisions" or whatever you want to call it, COBRA information still required. But maybe more flexibility on how it is communicated?

Thanks for the info. I didn't realize insurance companies still did this. "Back in the day" - about 30+years ago, (I'm so OLD!!!) it was fairly common. But anything I've ever seen "recently" - which is still going back many years, the individual annuities were "re-registered" as IRA's - assigned to the former employee, with some special language which might well have varied by company. Fortunately I never see this stuff. The idea of annuities making a comeback as funding vehicles in individually directed DC plans scares the Hell out of me from an administrative viewpoint.

Curious as to how the insurance company is correct? The OP said the insurance company said no 1099 was needed. I'm not commenting on the taxability, or lack thereof, but regardless of whether you believe it is a rollover or a taxable distribution, 1099 still needed. Perhaps by "insurance company" OP meant an agent, who might not know beans about this stuff?

You didn't present enough information to say with any certainty. In general, you can exclude Highly Compensated Employees. If the family members are HCE's (and I'm assuming you are asking this question re HCE's by ownership or attributed ownership under IRC 318) then you should generally be able to exclude them, but "family members" can cover a lot of ground. No attribution between siblings, just as an example. You need to look at the specific ownership and relationships.

Matt - please take heed of the advice in previous comments - they have you and your client's best interests at heart. Among other things, a requirement for plan qualification is that a plan MUST BE OPERATED ACCORDING TO ITS TERMS. If you don't, it is an operational error, and the plan is subject to penalties and potential disqualification. I'll bet the farm that you can't find a valid document out there that doesn't specify that a distribution must be made from the PLAN. There's no IRS approval of a document that says, "Oh, it is ok for the EMPLOYER to just write a check directly to the participant and count it as a distribution FROM the PLAN." If you were to attempt this in your own practice, make sure your E&O is ironclad. Echoing the prior comments, it just ain't worth it. I don't disagree with you that it would be convenient, but that's not the issue when it comes to compliance.