Belgarath

SHA - what is your role in this? TPA, investment advisor, friend, whatever? If you are skeptical about the advice being given here (which is reasonable - as CB Zeller says, free advice is worth what you pay for it) then just give this client your thoughts (perhaps the advice you are being given here, or not, as you choose) TO BE DISCUSSED WITH THEIR OWN TAX/LEGAL COUNSEL. That way you are being "helpful" without being responsible, assuming you use appropriate caveats.

Hi Bill - have they given you any indication about even a guesstimate timeframe? Ours is "near future." I'm not blaming them, mind you - I pity their situation! I pity mine, too...

I believe that 415 and W-2 are NEARLY identical, with the exception of non-qualified deferred comp distributions unless the plan provides otherwise, and treatment of certain stock option situations. Also maybe tips. A long-winded way of saying I agree that what you describe would be 415 comp.

I agree with Rocknrolls2. I find this whole matter extremely complex, but my understanding of IRC 408A(d)(3)(F) is that it is meant to prevent someone from making an External Roth rollover to a Roth IRA (as in your situation) and then attempting to withdraw this amount under the "normal" Roth IRA first-in-first-out" rules without having to pay the premature distribution penalty if it would otherwise apply. As Rock explains, since this person is not otherwise subject to the premature distribution penalty, being over 59-1/2, it wouldn't apply in this situation. Personally, I'd advise the client to confirm with tax counsel. And I offer no opinion whatsoever as to whether converting to Roth IRA is wise or unwise - that's a very individualized decision.

Since terminating plans are forced to amend for compliance even though "regular" plans have a greatly extended remedial amendment compliance period, seems like this may be a challenge. Coming up with a comprehensive plan termination amendment is quite a tough assignment. Any thoughts about how reasonable the IRS may be about a "good faith" plan termination SECURE 2.0 Amendment? I'd like to think that any "reasonable" attempt at such an amendment would be a case of, "Pass, Friend" without any minute scrutiny for perfection.

Just curious as to what most people do. In general, for plan allocation purposes, do most documents you see INCLUDE all or most categories of "post-severance comp" or EXCLUDE all or most categories of "post-severance comp" FWIW most of the plans I see INCLUDE it. I'm reviewing a potential takeover where it is all excluded, which brought this question to mind.

Never mind.

deleted - never mind.

I don't have a citation, but IMHO, you need the notice for 2023. Not that difficult to do anyway - why take a chance?

I think you are dreaming. As I understand it, the SECURE 2.0 fix is to disregard community property ownership for attribution between spouses, which would have the effect of allowing them to use the spousal noninvolvement clause. In your situation, each spouse works for the other's business, so the spousal noninvolvement clause would not be available. There's also a change to the attribution through a minor child to the other spouse. This isn't a complete "technical" explanation... P.S. - see SECURE Act Section 315.

Seems correct to me. Of course, the employer can't deduct the 50,000 contribution, so the ACTUAL net benefit won't be quite so high as 50,000. I'm sure some clever CPA's somewhere will do a chart of the "net" benefit at different brackets compared to the benefit from taking a deduction instead. Also, I have no idea if taking these tax credits will adversely affect other deductions/credits that might be available for other items/purposes. Again, that's a CPA issue.

Gracias. That makes me feel better.

Revenue Procedure 2021-30, Appendix B, Section .05(9) provides a special safe harbor correction method for plans that did not necessarily contain a automatic enrollment/increase feature. An "Employee Elective Deferral Failure" is defined for these purposes in Section .05(10), which includes a failure to implement elective deferrals correctly, "...including elective deferrals pursuant to an affirmative election or..." and then goes on to list the Automatic Contribution feature and the improperly excluded employee situation. Section 350 appears to confine this special correction to plans with Automatic Contribution/Escalation provisions, or failure to afford an eligible employee the opportunity to make an election by improperly excluding them from the plan. Try as I might, I can't get to a reading of this that covers this other currently allowable special correction. Section 3 says no QNEC required if the requirements of (2)(B) are satisfied with regard to a reasonable administrative error described in 2(A)(i) or (ii) - and neither (i) nor (ii) appear to cover the special fix for the situation I'm considering. Other thoughts/interpretations? Agree/disagree?

I think what you may be looking for is 1.410(b)-7(d), 1.401(a)(4)-9(a), and 1.401(a)(4)-1(c)(4). And possible subsections for special situations, cross references, etc...

Ah - yes, I didn't read OP carefully enough. My bad.

It is a damn good question, and here's what is probably a damn poor opinion... I'd say it is risky to assume that this is a reasonable business classification when everyone is in their own group. I believe the IRS opinion is that everyone in their own group is tantamount to "enumerating by name or having the same effect" - and therefore is by definition not a reasonable classification - so that would automatically preclude the ABT for coverage. Yes, my answer changes if you bring in one or more persons via an 11(g) amendment, if that allows you to pass the ratio test. Once you pass the ratio test, you can then move on to your rate group testing, because once you get to the rate group testing, the "reasonable classification test" does not apply under 1.401(a)(4)-2(c)(3)(ii).

Boo! Hissss! Absolutely awful! Tom, nice to see your return. Hope all is well.

Hmm, interesting question! Just off the top of my head, I'd guess that the contribution calculation will remain the same, but the DEDUCTION on the 1040 will be reduced by the amount of "employer" Roth profit sharing/match contributions made on behalf of the self employed owner/partner. Obviously not sure - I hadn't even thought about this question. Some of the CPA types on this board are likely to have a much more informed opinion!

Suppose you have two non-governmental tax exempt employers, each of whom sponsors a 403(b) plan with, for all practical purposes, identical provisions. Both are calendar year plans. Are there any particular problems with permissively aggregating them for coverage and ACP testing, if one fails, but permissive aggregation would allow them to pass? I'm not seeing any, but perhaps I'm missing something. It occurs to me that the original post left out the fact that they are a controlled group - a rather important piece of information! Gracias.

Too much detail, not enough time, and too few functioning brain cells remaining. I'm getting too old for this stuff!

Yeah, me too. I missed this little detail entirely. So Gilmore - looks like you had it right! I did send this question to ERISApedia for their Q&A session (late February) just to see if they concur.

Re-upping this. In ASPPA webcast yesterday, the presenters had a discussion after the slide on this subject was shown. What I understood (or misunderstood) them to say was that pre-2023 eligibility service was not ignored for 401(k) - only for 403(b), so that for 401(k) purposes, someone who had 500 hours in, say, 2022 and 2023, but not in 2024, would enter on 1/1/2025. Did anyone else watch this, and if so, did you hear the same thing?

I'd resign regardless of whether they ultimately decide to correct or not. Life is too short to deal with this type of client. We would certainly seek counsel re our obligations to report or not report, etc. Rock - TPA - Hard Place.

Yes, because it is reportable, and the IRS needs to get their information.

Very confusing, as you all know, to follow "insert comma after x, add the following text after y, delete the words z and b" etc., etc. Do you know of a source where all this has been done, and there is final updated text of all the updated provisions?