justanotheradmin

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.

well typically its tied to the contribution year, and not a particular participant group. For example, if the QACA was originally written as 100% immediate vested. But then effective 1/1/2025 (for a calendar year) there is an amendment making it on a 2 year cliff. it needs to be clear though as there there are different ways to slice and dice. In my example, all of the QACA accrued for 2024 and earlier is 100% vested, and any QACA contributions for 2025 and future years is subject to the 2 year cliff. This does mean folks who have been there awhile will be 100% vested no matter what if they have enough vesting service, and newer folks will always be subject to the 2 year cliff, but that happens over time anyways.

is this a one person plan? DC? DB? Are there going to be any future contributions, benefit accruals, deposits? If no, then eventually will be deemed terminated whether the person likes it or not. If the business has closed because the owner retired - is there even a sponsor? is it an abandoned/orphan plan? If its an active plan, other than one retired person doesn't want to take their money - is it a big deal to let them leave it in? In additional to possible better protections, some plans have better investment options, pricing, etc than an individual would get themselves with a retail IRA.

they can have both - if the documents allow - the model SEP doc does not. If they do have both - the combined limits for 404 and such apply. I would be cautious of removing money from the SEP. The standard correction for a non-deductible contribution is an excise tax and carryforward, not removal of the excess unless it also violates 415 etc.

Something to consider - for the 401(k) plan is she treated as a terminated participant? or rather something other than an active employee participant for purposes of the 401(k) plan? Her husband's account is hers yes, but some plans do not allow terminated participants to roll money into the plan. Does the plan allow other terminated participants to roll money into it? Assuming she would be allowed to do a rollover in - some additional suggestions - the 401(k) account should be renamed/recoded (even if only on paper) to her as the participant - similar to how an Alternate Payee's account is set-up/segregated pursuant to a QDRO. The inherited SIMPLE IRA - she rolls to a regular IRA of her own first, then rolls that IRA into her 401(k) account in the plan. But all that work is pointless if she can't do a rollover into the plan. Just my 2¢.

Company A has a traditional 401(k) plan with a safe harbor provision, no automatic enrollment, plan has been around several years, well before SECURE 2.0. Company B - does not have a plan. Company B owners - purchase Company A as an equity purchase as of 7/1/2023. Company B intends to become a participating employer in Company A's plan as of 1/1/2025. It is a control group. Assume the transition period runs until 12/31/2024. The two companies are similar in size for number of employees, about 30 each. Is the resulting plan exempt from the automatic enrollment rule of SECURE 2.0? Or would it need to add an automatic enrollment provision that satisfies SECURE 2.0 as of 1/1/2025? what say all you lovely people?

Not relevant for this year - but for future years - Double check your plan document. If using a standardized document (as opposed to individual designed, or non-standardized) the basic plan document may preclude certain types of compensation exclusions particularly from safe harbor, not withstanding what can be written in to an adoption agreement, or actually allowed under the laws and regs. Fine print is important.

Jakyasar - what changes for the PS if you have comp excluded? does it actually change any amounts that someone gets? If not - amending that into the plan document for a future year - seems to add complexity that doesn't serve an actual purpose or change the contribution results or possibilities. If it is the HCE you want to receive less profit sharing, just give them less, as long as 401(a)(4) testing passes. With everyone in their own group, you don't need a change to the plan's definition of compensation to do that.

For this - you learn by doing. Use as many of the sample forms available on the IRS website, and construct and assemble and submit according to the instructions in the EPCRS Rev Proc. It tells you the order of the items to be put into the PDF and everything. Those issues are custom and won't be covered completely by the available sample schedules, so you will have to prepare your own from scratch. Alternatively - if these people have a missed opportunity to defer - is is cheaper to do a QNEC to correct that error? it will depend on number of years, number of affected people, etc. And might not be eligible for self-correction. If you are asking the IRS to allow a retroactive corrective amendment to exclude people, and to forgo a corrective contribution, particularly for NHCE, you will need to make a clear case about why that should be allowed, and include a supporting analysis in your VCP submission. If the plan is going to do the QNEC for those who were held out and shouldn't have been (the part-timers and the one year wait) and then amend the doc for future years, and just want the IRS's blessing on the QNEC, then that is an easier write-up for the VCP. I don't think I've seen or heard of a VCP being done without an attorney's involvement. Though I suppose some TPAs might have an ERPA or EA or CPA on staff that does them a lot. But that might be more of a reflection of the bubble I work in, than an industry practice. So I'd suggest they contact an attorney who can help, if they really want to go the VCP route.

well its too late for 2024 for deferrals and safe harbor..... what method does the plan use for profit sharing allocations? if everyone in their own group - does amending the compensation definition really change anything? Would they even pass §414(s) if the compensation exclusion was in place? Sometimes its hard to pass.

Ask your employer for a copy of the Summary Plan Description. That is a document that should have the plan provisions in easier to understand language.

I think the misunderstanding that many people have is that if the participant did not fill out a beneficiary form/designation, then the account is subject to the terms of a will, or if no will, then intestate rules. It isn't. 401(k) plans have default beneficiaries written into the governing plan documents, so that in the event a participant passes without a affirmative beneficiary designation, there is a default beneficiary. Typically that is something like spouse, children, estate, but it varies. Read the plan's document carefully. Even if the estate is where the benefits are to go - they go there because of the beneficiary rules in the plan document, not because of the application of a will or intestate laws. So If everyone else pre-deceases the participant (not what we have in this post) the estate is the named default beneficiary under the terms of the plan, and gets the $$ because of that.

Example: basic plan, 1 year of service (1,000 hours) eligibility requirement, age 21, semi annual entry etc. part time employee hired 5/1/2024, Works 300 hours by 12/31/2024. Works 300 hours from 1/1/2025 - 4/30/2025 Works 450 hours from 5/1/2025 - 12/31/2025. Option A If we use the more common First computation period is 5/1/24 - 4/30/2025, 600 hours: then yes over 500 hours, but less than 1,000 Second computation period is 1/1/2025 - 12/31/2025, 750 hours: yes over 500 hours, but less than 1,000. LTPT as of 1/1/2026 since two consecutive periods (as defined in the plan document as the overlapping periods as above) Option B Alternative version - if plan document allows: Initial computation period for regular eligibility 5/1/2024 - 4/30/2025 less than 1,000 hours, so switch to LTPT analysis First computation period for LTPT - 1/1/2024 - 12/31/2024, 300 hours: less than 500 hours Second computation period - 1/1/2025 -12/31/2025, 750 hours: over 500 hours, less than 1,000 Third computation period - 1/1/2026 - 12/31/2026 If they are over 500, then LTPT as of 1/1/27. If over 1,000 then regular part as of 1/1/2027 There are lots more ways to do it, but comparing just these two methods, option B gives an employer an extra year to figure it out. and I think is less likely to be done wrong. It gives a service provider a longer time as well to possibly notice and mention that someone might be a LTPT next year. So if a document provider can accommodate it, I think not using the shifting method, even if just for LTPT analysis, is a better way to go.

well, if the employee doesn't have 1,000 hours by their first anniversary date, why couldn't the first computation period be 1/1 -12/31? assuming a calendar year plan? I understand the plan is allowed to shift the second computation period, but what is preventing them from going back and considering the first period to be 1/1 -12/31? Just for LTPT purposes. Using the dates in the example: DOH 5/1/2023 - if they worked 1,000 hours by 4/30/2024 then they are subject to regular elig rules for the plan anyhow, not the LTPT. But if they didn't: Then the first period to look at could be calendar/plan year 2023, which is 1/1/2023-12/31/2023. Did they work 500 hours in that period? Yes or No? And then the second period would be calendar plan year 2024, Did they work 500 hours in that period? yes or no? The plan document would have to be written to apply such a computation period method just for LTPT employees, but I think saying to an employer - just tell me how many hours they worked in each year, period, is an easier thing when evaluating who might have to be offered the plan because they satisfied LTPT status.

Upon further reading, I think doing it my original way is fine too, as long as that's what the plan document calls for. Though I suspect many will still use the original computation method, whatever it uses for regular eligibility computations, for non LTPT. "I.R.C. § 410(a)(3)(A) General Rule — For purposes of this subsection, the term “year of service” means a 12-month period during which the employee has not less than 1,000 hours of service. For purposes of this paragraph, computation of any 12-month period shall be made with reference to the date on which the employee's employment commenced, except that, under regulations prescribed by the Secretary of Labor, such computation may be made by reference to the first day of a plan year in the case of an employee who does not complete 1,000 hours of service during the 12-month period beginning on the date his employment commenced."

I take that back. I see that is has to be from the date the employee commmenced, per §410(a)(3)(A). my apologies!