Belgarath

Hi Tom - whatever the reason, that's great news! Sincerely hope you continue healthy!

Thanks for the detailed analysis!

Thank you both for the comments. FWIW, the reason I'm concerned with this because I don't necessarily find the DOL to be reasonable...

These blasted things. The DOL has stated: Section 105(a)(2)(B)(iii) of ERISA provides that participant-directed individual account plans that furnish quarterly benefit statements under ERISA § 105(a)(1)(A)(i) must include the lifetime income illustrations on only one pension benefit statement in any 12-month period. So let's look at a participant directed quarterly valuation plan. Suppose the 12/31/2022 valuation is completed, and the valuation and lifetime income illustration is sent on February 15, 2023. Then the 12/31/2023 valuation and lifetime income illustration is sent on March 31, 2024. This is more than 12 months later. What's your interpretation on this? Is it out of compliance?

Thanks for the response. Yeah, that's where I was coming out. I was hoping that a valid argument could be made along the following lines: It is permissible to amend a DC plan to eliminate FORMS of benefit (installment, etc.) as long as a lump sum distribution remains available. For this post-severance distribution, a distribution is still available at any TIME, just not at multiple times. Since it is available at any time, and since it is permissible to offer only lump sum, it is ok to amend to remove the partial distribution option for these post-severance payments for current accrued benefits. Quite a stretch, I know, but I didn't know if anyone has seen/done it, etc...

Just checking myself - ERISA 403(b) plan allows "ad hoc" distributions - i.e. partial withdrawals for terminated participants. Is it allowable to eliminate this option for current accrued benefits? (Plan provides for lump sum distribution.) Note that this is not an "in service" distribution question.

Best of luck - hopefully it won't be too severe. We're pulling for you!

And now it has been formally extended to the same date as the RMD extension. Not sure - we'll probably end up proceeding with the 12/31/22 deadline to get it out of our hair (not that I have much after a lifetime in this business...). Certainly don't want to wait until 2025! But nice to know there are options for something that gets missed, or on takeovers, etc. https://www.irs.gov/pub/irs-drop/n-22-45.pdf

Yes, the 402(g) limit is a calendar year dollar limit. So the fact that the plan is terminating mid-year doesn't alter the maximum dollar deferral allowed.

Yeah - we said they should check with their payroll/corporate tax advisor before we proceed. I'm sure the answer will come back as we expect, but I thought I'd see if anyone here had ever heard of such a thing. I'm not a CPA.

We have an employer who wants a projection for a 2022 profit sharing contribution. Client insists that the bonus being PAID in February or March of 2023 (which is based on 2022 compensation) will be reported on the 2022 W-2. I don't see how this is correct, or possible, and although it isn't our problem (we use the projected figures we are given) and it is only a projection, I'd still like to confirm that I'm not crazy (on this issue - be nice!)

I have a nit-picking question on this. Section 404(a)(3) refers to a deduction limit which takes into account the compensation of "beneficiaries" under the plan. the IRS, In PLR 2012229012, as noted above, appears to say that this means the employee who is eligible to defer, even if they DO defer, does not have their compensation counted unless they receive an "employer" contribution. What about in an ESOP? 404(a)(9)(A) refers to the compensation paid to "employees" when calculating limits. That's a difference from "beneficiaries." Does this mean that compensation from employees who receive no allocation may be considered? Seems like a stretch to me.

Completely agree with CuseFan's response. And we don't state a reason (other than referring to the contractual resignation provision) - it can only lead to trouble, IMHO.

Many (possibly most, I don't know?) IRS pre-approved plans provide for a consecutive month (not more than 12) with at least (not to exceed 1,000) hour requirement for eligibility. And as Lou suggests, if they don't meet it in the initial eligibility period (of less than 12 consecutive months) they are swept into the 1 Year of Service requirement. I see no problem with a 6-consecutive month/1,000 hour eligibility, as long as you have the "fail-safe." We have a couple of employers who use it.

Not sure I understand the question. Was the lump sum distribution was paid directly to the former employee, with the check issued to the employee? If so, there was a taxable distribution with 20% mandatory withholding, and a 1099-R would be issued accordingly. There's no subsequent 1099-R when the individual then rolls to another IRA, or to another qualified plan. The participant would have to show the rollover on their individual tax return for the year in question. I'm wondering if there s some additional detail that you can provide, if there's something else you are really asking?

Your brother.

Agree, but it doesn't matter anyway. You need to have at least 80% for the "controlling interest" test, and you don't have that. The controlling interest test is where the same 5 or fewer people have ownership that equals or exceeds 80% of both corporations – and they must own at least some stock in each corporation to be considered.

Interesting question. Experiences? None. Thoughts? I would never go down the rabbit hole as to when an individual is "born" or "legally adopted" for purposes of this question in the context of either a cafeteria plan or a qualified plan. LEGAL COUNSEL all the way! My preferred choice is not to allow the QBAD's in a plan to start with, although your situation is probably rather uncommon.

Funny - I just checked their website again, and the SECURE Amendment and instructions are there, posted on 5/31/22. Unless they are planning to take it down and issue a new one, it can be used for both governmental and non-governmental, as per the following election on the amendment: (6) [ ] 457(b) Plan (select one): [ ] Governmental employer [ ] Tax-exempt employer

I'm working. You mean Labor Day doesn't mean you are supposed to be laboring?

Thanks all.

I'm certainly no lawyer, but if I were the Plan Administrator (and so foolish that I didn't believe in paying for legal advice, so making my own determination) I would interpret this such that the contingent beneficiary(ies) would receive the death benefit. If the amount involved is quite small, I think it would be reasonable to take the "risk" - such as it is - of making my own determination as Plan Administrator.

I've done SIMPLE VCP's, but I don't ever recall doing one for a SEP. Certainly not recently. But IMHO, I'd be surprised if the IRS would accept this. They don't generally like a fix that screws a NHCE. Unless you can convince them that depositing it all to the wife's account was a mistake, and this is just correcting it...they might go for that. If 'twas me, I'd just play it straight.

Ok, thanks. Since it was prepared by their attorney, I'm happy to accept it. I was just curious, for my own info.

Amendment just came in. The adopting resolution language says it was "duly adopted" on August 25th. However, it was SIGNED on August 31. Is it still valid, or do those dates need to match? Does it depend on state law? P.S. I'm talking about the corporate resolution. The amendment itself, while being signed on August 31, isn't effective until November 1, so no worries there.