justanotheradmin

The plan document will say. Look at the actual adoption agreement (if there is one) not just the SPD. Some are written to limit conversions only to people/sources that are eligible for distribution. This is similar to the older rules of in-plan-Roth rollover. Others are written to not limit conversions to people who are eligible for in service withdrawals. What does the document say?

So they are using the trust to engage in real estate business? That's what is smells like... are they reporting UBIT? This isn't just a large pension plan that happens to hold some real property as part of a diversified portfolio. It sounds like people whose business in general includes real estate investing and they are also using the plan for that purpose. Beyond the myriad of possible prohibited transactions, the anti assignment wrinkle, and just burdensome issues of having real property in the plan such as making sure all the property taxes are paid by the trust - how would they ever expect to get a mortgage for those properties? A mortgage requires payments, credit, etc. The trust doesn't have a credit score, or income statements like paystubs, would they co-sign the notes? that would be terrible I'm sure someone else with better experience will chime in with a more thoughtful answer, but my instinct would be to walk away. Even their current set-up seems ripe for issues.

By any chance was the employee who did the rollover in - a decision maker ? Owner, director, trustee, HCE etc? Depending on the structure of the service provided by the recordkeeper/custodian - I wonder who approved the rollover. For smaller plans - the participant might fill out a form to let the plan know they are submitting a rollover, and the plan administrator, trustee etc might have to approve that before the custodian or recordkeeper will actually process the incoming dollars. In my experience - when plans are brand new - there aren't a lot of rank and file employees chomping at the bit to get their money into the new plan. The ones who are best positioned to immediately do a rollover in are the ones who have known about the new plan the longest, typically the decision makers or power players at the sponsor. Edit to add: who prepares/maintains the plan document? if a bundled provider it is typically the recordkeeper as well. If is someone else - the recordkeeper might not have any idea when the plan document is actually signed or effective, and just goes off their provision intake form. Not saying that is right. Just saying I see it done that way.

What do you mean by 'supplemental refund' ? Are you asking about a pension plan? 401(k) plan? something else? Are you asking what happens when a person has a zero account balance due to distribution, and then receives an additional contribution? More specificity is needed to understand your question.

NOT ADVICE what about the 60 rollover rule? If the trust didn't exist - and the rollover $$ was deposited to an account in December, and then the account converted to a trust account in January, its less than 60 days...

All valid questions - its a very unique situation, so I don't know how comfortable I am putting the answers on a public forum. If I get permission from them to post more details I will.

Hi Everyone, Self referrals are welcome - a small ESOP company is looking for an attorney who can advise the plan/company about a real estate transaction they are considering in the very near future. For privacy purposes I won't post the details here, but if anyone could suggest an attorney they could contact, it would be welcome. If you send me your contact information - I'm happy to give more details privately to see if the scenario is something you are interested in working on - before I pass along your contact information to the ESOP. Thank you all.

It is the same as doing an in-plan Roth conversion, which has been around for a number of years. Either immediately, or at the end of the year, depending on the service provider, they will receive a 1099-R showing the amount as taxable. The 1099-R would be for the year in with the deposit occurs. If the deposit of Roth Employer Match occurs in 2025, they receive a 2025 1099-R and use that tax form when they prepare and file their personal return in early 2026. For good reason - all the plans I've seen that allow for in-plan Roth conversion, restrict them and only allow it from 100% vested monies. The same will be the case for employer contributions that the participant elects as Roth. If a participant is not 100% vested in those dollars at the time they are contributed, they would not be eligible to go in as Roth dollars.

Many of the audits I work with start with 3 business days, or look at things like how quickly can payroll taxes be remitted as a guidline. As for not having a new recordkeeper - if there is a old recordkeeper - the old one continues to take deposits until the new one is set -up. That is standard and part of the coordination and timeline management that either someone at the company, the TPA, the recordkeeper etc should have managed. If that is not possible - there is typically no reason why an outside account in the name of the plan -even just a checking account or basic brokerage account - can't be used. The deposits have to be segregated from employer assets. They go into the plan account - and then when the recordkeeper has the individual accounts ready - the plan account sends the money to the recordkeeper. Happens for brand new plans occasionally too. I encourage plans to avoid it with good planning, but sometimes the unexpected to unavoidable happens and its necessary. If the deferrals go into the plan account timely, even if they aren't at the main recordkeeper, they are timely. There may be other issues, but late deposits won't be one of them.

I had to send some files, so the IRS agent on one audit was able to send me a link and a code for a separate one time upload option, separate from the secure messaging. It worked, but I will need to contact them every time I want to send something, so I will be more likely to wait until I have several items to send together, or I absolutely have to get something to them, before I contact them for a new code. The agent was very understanding and patient, but I'm sure its taxing to have to get individual links/codes out every time someone needs to send you something! Also good to know I'm not the only one who isn't able to figure out the new system.

For employees who fail to affirmatively elect a deferral rate, and are automatically enrolled at the plan's default percentage, how does the employer apply the default percent to tips received as cash to the employee? I understand excluding cash tips from plan compensation has its own complications, especially since most HCE do not receive tips. I am not asking about how to employees defer from tips when they affirmatively make an election - those employees can turn in their tips each shift if their expected net pay is not large enough to cover the elected deferral amount. I am wondering specifically what guidance or advice folks have been given sponsors who have to implement an EACA or better (most of ours go with QACA), in light of the auto enroll mandate in SECURE 2.0. If there is another thread on this somewhere, please feel free to share, I wasn't able to find anything recent, but perhaps did not use the right search terms. Thanks!

Has anyone had issues getting their login updated for the IRS' secure messaging portal? Looks like they did an update and even when I try to follow the instructions it is not letting me in. Any tips or tricks? https://www.irs.gov/help/tege-secure-messaging

A rollover is a lump sum distribution. An annuity stream is not a lump sum distribution. The force out distributions above $1,000, if done as a lump sum, go to a force out IRA, not as a cash directly to the participant.

I'm confused. Are there contributions owed to the 403(b)? By the employer? Is your question related to a defined benefit plan and not a 403(b)?

you as the tax preparer would need to apply for relief if requesting an ext for your clients NOT in affected areas. See the information on Bulk Requests From Practitioners. https://www.irs.gov/newsroom/irs-provides-relief-for-helene-various-deadlines-postponed-to-may-1-2025-part-or-all-of-7-states-qualify to tack on my own question - large plan has an auditor in a affected area - audit is not ready - sponsor is NOT in affected area. Auditor says the plan should rely on the disaster relief, but is refusing to apply for relief as the preparer. They are saying since they don't prepare the Form 5500 they aren't the tax preparer. The sponsor is not having luck with the 1-866-562-5227number to request relief. Has anyone been successful with a similar situation or had a sponsor be able to get through to request relief? Any tips?

Probably YES - unless they demonstrate the plan meets the one-participant plan exception for the year and is below the filing threshold. Read the instructions to the Form 5500, Form 5500-SF, and Form 5500EZ. just being small doesn't mean a filing isn't required. plenty of one person and two person plans are required to file, even when assets are very low.

from the EZ instructions "You can obtain the official IRS printed 2023 Form 5500-EZ from the IRS to complete by hand with pen or typewriter using blue or black ink. Entries should not exceed the lines provided on the form. Abbreviate if necessary"

You really need to consult with a family law attorney. The fact that a potential future spouse cannot sign away retirement plan rights they do not yet have is very well established. I don't know what website you are talking about. The only thing that matters is the plan's actual legal document. This usually comprises of several parts to make up the whole - an adoption agreement, a basic plan document (all the definitions and boilerplate) a trust document, and an opinion letter. You will find that in an every regular 401(k) document the default beneficiary is the spouse. Not the estate. I've never seen one bypass the spouse for the estate, and for good reason. Some split the benefit if there is QJSA, but that is less and less common. And of course there are always exceptions, I'm talking about for the vast majority of regular 401(k) plans 99.9% the spouse is the default beneficiary of 100% of the benefit. The fact that some of the account existed before the marriage is immaterial. You should just google prenuptial 401(k) court cases and start reading.

100% correct. Executor - you need to listen to David. it is a very common mistake that people think their pre-nup has any bearing on the 401(k). It doesn't. The spouse has to sign the beneficiary form waiving their benefit if the participant wants any portion to go a non-spouse. The spouse has to sign after the marriage occurs. Some basic searching online for court cases will demonstrate this. The plan administrator doesn't care what the pre-nup says. All they can follow and should follow is the terms of the plan and a valid beneficiary form. If the widow received the 401(k) $$ and some other agreement says they shouldn't, well then the estate or whoever typically would take legal action to try to resolve that, against the widow. It isn't an issue for the plan. Any competent estate lawyer would know about this when drafting the pre-nup and explain it to the parties. And that is why a post-marriage checklist exists for a reason. But no one can force people to sign anything. I suggest you contact an experienced family law attorney if you want to pursue it further.

if you are not doing the maximum deferrals to the 401(k) plan - that is a good place to start. For example, when folks get upset about their RMD being taxable income to them, and I notice they could be deferring more - that is an easy fix. Do pre-tax deferrals to counteract the RMD income. Do more pre-tax deferrals and it will help counteract the taxable income you face with cashing out the policy. None of this is tax advice, just pointing out the math. Consult with your own advisor when making a decision.

unless the life insurance policy is owned by one of the entities in the "FROM" column the answer is likely no. https://www.irs.gov/pub/irs-tege/rollover_chart.pdf You own the policy yourself? directly? I don't see why it would be a rollover, its not coming from a tax qualified retirement account. I realize the life insurance feels like a tax qualified account - but it is a very specific kind - upon death. Its not the same as tax deferred or tax qualified retirement account. which is what it needs to be coming from in order to be eligible for rollover into a 401(k) plan.

Gina makes some great points. In my day to day experience - if a sponsor or trustee on a small SDBA style plan is having trouble opening an account for a participant, they aren't doing it correctly. Since the account is owned by the plan/trust, the beneficiary of the trust (the participant) does not need to consent. If the participant's signature is required it isn't titled correctly, or the wrong type of account is being used. Plans with safe harbor non-elective or discretionary employer contributions utilize SDBA for participants all the time without their involvement. Some additional common issues I see: Only the participant has access to the account - their access should be secondary to the trustees'/plan The plan does not have access (or does not want access) to the account, statements etc, they consider it to be private to the participant (how do they do any accounting?!) Fee disclosures for the investments aren't robust or easy to read QDIA might not be chosen or utilized properly if the trustee has to manually invest the money, or the QDIA notice isn't done, or there is no QDIA Remittance of federal tax withholding on distributions - if not using an outside service, this can sometimes require a separate account to help facilitate and often isn't done correctly Trading restrictions aren't set up correctly, and things like trading on margin, or purchasing illiquid assets might occur that the plan did not intend to allow A different advisor is allowed to trade/manage each account, such as the participant's personal advisor for their account. This might create fiduciary issues, or even non-discrimination issues of the HCE are using their own advisors on their accounts that the NHCE don't have the same access Each participant is allowed to have their account wherever they want - some plans end up with accounts at 30 different places. How the deposits are remitted on time, I don't know. The plans grow to a size where the number of participants and accounts to track is cumbersome. A 7 person plan with SDBA, sure. A 62 person radiology practice with SDBA that have no easy consolidated reporting options or capabilities? Not so great. There are lots more I'm sure I'm missing. While I appreciate the amazing flexibility of brokerage accounts, small employers often do what they want without considering the legal, tax, practical issues of having them in their retirement plans. When done in a window that provides consolidated reporting and recordkeeping they can be amazing and easy to work with. When done correctly I have no issue with them.

no, I would say this would be similar to a burst pipe. The bank isn't evicting or foreclosing because of the septic issues.

I agree a BRF issue. If all the HCE are in the 100% immediate group, and there end up being enough NHCE in the subject to 2 year group, BRF won't pass. But who knows. maybe over time there will be a few in the subject to 2 year vesting group. Why not eliminate the groups though? and just track new QACA amounts on the 2 year vesting for everyone? Anyone who has been there long enough would be 100% vested in those new dollars anyways. the old QACA dollars would stay 100% vested. Seems like an unnecessary complication to do the date of hire classifications, which might not even pass BRF testing.

no, I was saying all QACA contributions for 2024 would be 100% vested regardless of the participant's vesting service. All QACA Contributions for 2025 and future would be regular 2 year vesting overall, not per year. I was just trying to explain that the buckets that vesting is applied to is by money, not group of employees. Better example: If a discretionary employer contribution provision changed vesting from 100% immediate, to 6 year graded, to 3 year cliff over the course of several years, depending on how it is written the plan could end up with a bucket that is 100% vested, a bucket that is 6 year graded, and a newest bucket that is 3 year cliff. After each change, all the new contributions would be in a new bucket together with the new vesting schedule, until the plan is amended to change the vesting again the future, and then a new bucket would be tracked. I agree, I would NOT do it by year and apply the vesting separately to each year specifically, that is terrible and I haven't see it in decades.