justanotheradmin

What is your question? What do you want to know? Please ask it in a conversational way. Just curious if these posts are coming through an online translator, as all your posts are very very formal and not written in a way that is easy for a native English speaker to understand. If you are not a native English speaker - perhaps try asking your question in your native language and see if people respond or perhaps can understand your question better.

Wall Street Journal Prime rate. I've never seen any other Prime rate used for retirement plan loan purposes. And no - the TPAs I know of check it - but some recordkeepers only update theirs once a month even if the rate changes in the middle of the month, as long as it is consistently applied to new loans I've never heard of an issue with it.

unless the person was entered into the plan immediately upon hire - no, the 30 days advance notice is the grace period. The default deferrals should typically start on the first pay date on or after 1/1/2025. Pay attention to the pay period end date as well. Many plan documents differentiate between pay date (W-2 cash basis) and accrual (when the hours are worked). If there is a pay date on 1/5/2025 and deferrals should apply to it - do it. Even if the hours for that pay date were worked in 2024.

Having 8 people in the plan can mean very different things. Testing, especially for profit sharing contributions, might have to include all employees, or employees who are eligible but not participating, in the plan. How many employees you have this year (even part-time or short service) can be an important determining factor, even if you don't want them to receive any profit sharing into the plan. When you send your data to your TPA make sure to include everyone - even if you don't think they are eligible. I would hope that any owners that are interested in the maximum overall contribution starts by maximizing their own deferrals. If that is not occurring - that is definitely step one. Beyond that your TPA can do the calculations for maximizing profit sharing, seeing is a discretionary match is feasible (typically restricted to 4%) etc. If the owners are similar in age to the NHCE, the testing will look very different than if the owners are older than the NHCE.

if it walks like a duck, quacks like a duck, smells like a duck, its probably a duck. That being said - there aren't enough details to know. The real question isn't "Are proceeds from the sale passive income?" It's "Will he(as an individual) have earned income at a sufficient level to make it worth starting a 401(k) plan?" The money he receives for the business sale - where is it being paid? to an LLC? to him personally? Etc? If it is actually going to an LLC or entity - what is going to be his personal earned income from that entity? Zero? For example - if he has a LLC with an S-Corp election, but no W-2, then he has no earned income. If he only receives a K-1 Form 1120S, then no earned income. If its a 1065 K-1, is there earned income reported on it? His CPA will need to tell you if he actually has earned income.

10%

100% agreed. There are just so many pitfalls, I rarely see real estate in done well in small plans. I wonder about the improvements - are they developing land? improving buildings? putting up buildings? etc. What is the real estate currently used for? is it literally just a tract of land held for investment? is it rental property etc? Are they flipping the properties? leased farmland? etc. They should discuss those with someone who deals with real estate in plans.

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.