MGOAdmin

If an active (not a 5% owner) participant is 80 years old and dies during the year, does the beneficiary have to take and RMD? The participant is of RMD age but was not required to take them as they were still actively employed.

Now that SIMPLE plans can allow Roth, can you roll SIMPLE Roth into a 401k Roth? I know regular Roth IRAs cannot be rolled into a 401k plan but couldn't find any rules on SIMPLE plans.

In 2026, if catch-up reclass is required for an ADP test failure, do we need to convert the catch-up to Roth for employees that are HCE due to compensation? What is a plan does not allow for Roth, does the reclassed catch-up get refunded instead?

Thanks for the reply. In your example, it feels like the participant that deferred $15,250 in the first 6 months then deferred $15,250 in the second six months is double dipping when it comes to catch-up. Because he contributed $30,500 for 1/1-12/31, there should be no catch-available to reclass. Just as if he had contributed $30,500 for a plan year 1/1-12/31. Any failing ADP test would result in refunds as no re-class would be available. It seems like the off-calendar plan year is benefiting this participant.

With the new self-certification rules, are there penalties for approving a hardship that is later determined to not be a hardship? Assuming the TPA/Plan Sponsor has no reason to suspect the request doesn't qualify for hardship. It is my understanding that the old rules required the employer to re-deposit the ineligible hardship.

Thanks for the response. My issue is more when the ADP test for the 6/30/24 plan year fails and we have to reclass some of the contributions as catch-up to avoid refunds. Does that reclass decrease the amount that can be contributed for all of 2024? So the maximum for 2024 is $30,000. But if we had to reclass $2,500 of the 1/1/24-6/30/24 as catch-up, wouldn't that mean that $27,500 is the maximum contribution for 2024? Otherwise we would end up with $10,000 of total catch-up for 2024. ($2,500 re-class + $7,500 normal catch-up)

I have a plan that is a 6/30 year end. For this plan, there is 1 participant that always has 401k reclassed as catch-up to avoid refunds. This has not been an issue in prior year, because he never actually contributed catch-up - his 401k for the plan year and calendar year was less than the maximum 401k. For the period 1/1/24 - 6/30/24, he contributed $15,000 and we had to reclass $2,500 as catch-up to avoid refunds. Does this necessarily limit how much we should have limited his 7/1/24-12/31/24 contributions? Is he limited to $12,500 for 7/1/24-12/31/24? If he contributed $15,000, is a refund fo excess deferrals required?

Can a 403b make each participant their own allocation group for non-elective contributions like for 401k plans?

I have conflicting guidance on this issue. So long as a plan allows, can anyone convert all or a portion of their 401k accounts (including all pre-tax sources - deferral, rollover, employer) at anytime? Some suggest that only those eligible for in-service distributions (typically age 59.5) can covert to Roth. Others are suggesting that anyone can convert but only taxes can be withheld for those that are eligible for in-service. This is obviously only an issue for active employees, not terminated employees.

Thanks for the reply. This is what I was thinking but got some pushback from another provider.

As I understand it, if an employee is not offered a 401k plan when they are eligible, as long as their deferrals start within 3 months of entering the plan there are no penalties/QNECs due. What happens if a plan if an employee signs up for a plan but the deferrals don't start until 3 months after signing up. This is dissimilar from the first scenario since the employee is offered and opted in but deferrals did start for a short time. Would a QNEC be due for the employee that signed up but wasn't started for 3 months? The IRS website gives the example of the first scenario where an employee is never offered the plan but I could not find the second scenario.

I am new to 403(b) testing. Can a 403(b) run the ACP test uy excluding all employees that would not have met a Age 21, 1 year with dual entry eligibility? Like we do for 401(k) ADP/ACP testing?

Does a plan have to require self-certification for Hardship distributions? If it is discovered under audit or otherwise that the hardship should not have been permitted (because the employee lied) what is the penalty?

Facts: Company A, owned 100% by Adam has a 401k plan Company B, owned 100% by Bob has a 401k plan Neither company are currently related in any way. They are going to form Company C (33% owners each with a third unrelated owner) starting July 1, 2022. All of Company A clients and employees will move to Company C 95% of clients and employees of Company B will move to Company C. The owner of Company B will be on payroll and Company B & C. The idea is to have Company C take over as plan sponsor of Company A. The question is: 1. Can company B retain their 401k plan and not be related to Company C? The owner would like to keep his assets where they are while all of the employees of B transition to C would roll their money over. 2. Or should Company B terminate 6/30/22 to avoid issues. 3. For Testing purposes, how should this be handled? 1/1-6/30 for A, 1/1-6/30 for B and 7/1-12/31 for C? C do 1/1-12/31 for A employees and 7/1-12/31 for B? any help would be great.

I have a client that is US citizens and lives in the US. He work in the Cayman Island a few weeks a year and picks up the income on his Sch. C of his 1040. Can this income be used towards retirement contributions. I believe it is subject to self employment taxes.