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Everything posted by Belgarath

  1. 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
  2. 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?
  3. 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.
  4. 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.
  5. And if you handle 403(b) plans, that's an additional workload (restatements) that hits sooner.
  6. The amendment date should be after the date the practitioner is planning to retire.šŸ˜ (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.
  7. I'm looking at a 457(b) document and adoption agreement specifying that payments must commence no later than April 1 following date of termination. Obviously done back when that was the required beginning date. I just want to confirm - for a 457(b) plan, I assume it is still ok to retain this provision, (if they want to) even if RMD date for active participants is the new 72 or 73, depending upon DOB?
  8. Well, I guess there is a fine distinction sometimes between "knew" and "understand." I would say that they "knew" but I doubt they really had an understanding. Honestly, I don't know the arguments AGAINST including QDRO provisions - my general thought would be, "Why not?" I'll be interested to see how the discussions here play out.
  9. My experience in this arena is limited, so I can't really address your questions. I can say that all the 457(b) plans for tax exempt or governmental that I've seen include QDRO provisions.
  10. If the DFVCP filing is done promptly, it won't be anywhere near $750 - more like $250-$300. Go the the DFVCP calculator and enter the appropriate information. IMHO, absolutely file under DFVCP in this situation. The amount is so small that it overrides the hassle of requesting relief, even if you would be "guaranteed" to get that relief.
  11. I figured some people might get that reference.
  12. Let me see if I can give you accurate information pertinent to the question. XXXX is the business sponsoring the XXXX plan. Joe Schlobotnik is a 70% owner of XXXX, which is an LLC taxed as a partnership. Joe has ownership in some other LLC's taxed as partnerships, but not considered a CG nor an ASG. None of the other LLC's are signed on as participating employers. ???
  13. So, I'm not a CPA, and I wondered if this statement from a client's CPA makes sense, where there are two or more Schedule k-1's, but not a CG/ASG, and there are no participating employers? To me it seems odd, but perhaps it is perfectly normal: The K-1 from that (other LLC) will have a substantial effect on his K-1 from (XXXX), but it won't change his earned income from (XXXX). His 2023 self-employment income from (XXXX) is expected to be ($$$$$) prior to employer contributions and reduction for self-employment taxes.
  14. So, the wording in IRS Notice 2004-2, Q&A L-2, and similarly in Q&A L-9, seem to contemplate the taxable year when "allocated" in a different manner than the normal interpretation of "allocation" for valuation, deduction, and 415 purposes. In this case, "allocation" seems to be synonymous with "deposited" or "contributed." Which makes sense - since it has to be reported on a 1099, how could it be done otherwise if the employer went on extension, and the employer contribution wasn't made until September, for example? Any other thoughts on this? Q. L-2: If an employee designates a matching contribution or nonelective contribution as a Roth contribution, for which taxable year is that designated Roth matching contribution or designated Roth nonelective contribution includible in the individualā€™s gross income? A. L-2: A designated Roth matching contribution or designated Roth nonelective contribution is includible in an individualā€™s gross income for the taxable year in which the contribution is allocated to the individualā€™s account. The preceding sentence applies even if the designated Roth matching contribution or designated Roth nonelective contribution is deemed to have been made on the last day of the prior taxable year of the employer under section 404(a)(6) of the Code.
  15. Ah, well said. Serves me right for being too lazy to look it up this morning. Mea Culpa.
  16. I agree with Jeff. The distribution calendar year is 2025, yes, but the Required Beginning Date is April 1, 2026. I see that C.B. and I were typing at the same time.
  17. I'm too lazy to look it up right now, but my memory agrees with Lou.
  18. Thanks all. We did the first couple with the "a" but have since modified it. Update - we use FT William for our 5500 software. Their system instructions, (which for this question are taken from the 5500 form instructions) do NOT specify that the "a" must be used. Yes, when you enter the number Qxxxxxx, it flags it as red, and when you go out to edit check, it adds the "a" to the number on the form. We've sent a question to their support folks (who are outstanding) to ask about this. I will let you know what they respond. Also, in case it matters, we are talking about a 5500-SF. I don't know if similar issues arise on a Schedule R. 10:00 AM - excerpt from FT William response - there was a bit of back and forth - but they are our 5500 software provider, so we'll do what they say! "EFAST2 is programmed to only accept the input when formatted as Q123456a."
  19. So, preapproved plan, you have to give the Opinion letter Serial #. Ours has the format Qxxxxxx with a small "a" after the 6 digits. The 5500 instructions do not appear to require inclusion of the "a" - has anyone heard otherwise? I always assumed the "a" meant "approved" so maybe it is meaningless in the context of filing 5500's at this point?
  20. Yeah, I've resigned myself to that - I assume most, if not all, will have to be signed - this won't be a typical "cookie cutter" amendment. I am VERY thankful that we already did the CARES amendment, so we don't have to try to reconstruct all that garbage - going to be bad enough dealing with the SECURE/2.0 amendments. We might just require signatures on all of them for administrative consistency - no danger of missing one that way. And thanks to you and C.B. for the responses.
  21. This subject has come up in discussion before, but since I've seen the new FIS plan termination amendment, I thought I'd bring it up again. We've been taking the conservative position (rightly or wrongly) that the jump to $7,000 only applies if the plan ALREADY has a $5,000 limit. A plan that has a $1,000 limit, we've been amending to $5,000, then operationally switching to $7,000. The FIS plan termination amendment, which of course isn't IRS approved language, does provide an option to jump directly from $1,000 to $7,000. But, this is a termination amendment, not an amendment for an ongoing plan. I believe in one of the webcasts quite a while ago, there was some musing that operationally jumping directly from $1,000 to $7,000 operationally, and catching up with the formal SECURE/2.0 amendments, would be acceptable, but that was REALLY unofficial - just some general discussion. Anyone have any new thoughts on this subject?
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