Vlad401k

The plan document allows for the distributions of After-Tax Employee Contributions at any time. In this case, can you rollover the After-Tax Contributions (in a 401(k) plan) directly into a Roth IRA? I believe you can and the code should be code "G". Is that correct?

A former spouse of a participant passed away. The QDRO requires the distribution in this case to be made to the estate. If the distribution is paid to the estate itself, what are the tax and penalty consequences? Is it the standard 20% Federal Tax withholding and no 10% penalty? Thanks!

A standard document was used in this case. The only participant in the main company is the owner. The other employees would not be eligible until 2024 - the year in which the owner did not contribute anything. Given these circumstances, what would be the appropriate way to fix the fact that employees at the other company were not told about the 401(k) plan? Thanks!

A Solo 401(k) plan is part of a controlled Group. The owner of the company owns 100% of another company. He is not paid through that other company but has 2 employees. The owner is not contributing anything to the Solo 401(k) in 2024, but he did not tell his employees in the other company about the 401(k) Plan and that they are eligible. What would the correction process be? Based on this link: https://www.dwc401k.com/knowledge-center/missed-deferral-opportunities, it looks like the correction method is to fund the average deferral rate of participant's group. However, nobody is receiving any contributions in the Solo 401(k) plan. Would there be no Missed Deferral Opportunity in this case? Thanks!

If an employee is LTPT (but not yet eligible for the 401(k) plan under the Plan Document's eligibility conditions), is that employee part of the Average Benefit Test or is he/she excluded? Thanks!

A follow up question... let's say the Owner's child is now eligible, but not contributing to the 401(k) plan. Based on the Form 5500-EZ instructions, it sounds like it can no longer be used and Form 5500-SF must now be used. Is that correct? Thanks!

Both former spouses work in the same company. If the rollover due to QDRO is moved from one spouse's 401(k) account to another's (within the same plan), would it be considered a Related Rollover or an Unrelated Rollover (for Top Heavy purposes)? Thanks,

I've looked into https://www.irs.gov/retirement-plans/fixing-common-plan-mistakes-failure-to-provide-a-safe-harbor-401k-plan-notice Based on that link, Lou is correct. Give the recent changes with the missed deferral QNEC (0% for less than 3 months, 25% for between 3 months and 2 years), I wanted to check if the 50% QNEC for the missed deferrals would still apply to this situation. Since that link did not provide any guidance on this question, it sounds like 2% QNEC for the missed deferrals + 4% for the missed Safe Match (both adjusted for earnings) would have to be funded. Does that sound right? Thanks!

If the Plan Sponsor did not inform an employee of their eligibility (and did not provide any 401(k) documents to the participant), what would be the correction procedure? The plan is a 4% Safe Harbor Match plan. Only HCEs deferred, so we don't know the NHCE ADP. Thanks!

It is my understanding that the QDIA is required for affected plans (that employ more than 10 employees) that use the required EACA feature under the SECURE 2.0. Is there a QDIA requirement for QACA plans also (assuming the plan employs more than 10 employees and must have an Automatic Contribution feature)? Thanks!

Peter, We categorize the code at time of distribution. Thanks,

Thank you! Another quick follow up question... let's say we know that the business at which the participant works will close down in 2025, so the participant will no longer be employed in 2025. Since the termination will take place in 2025, could Code 2 be used for this distribution? Or is it better to use Code 1 at time of Distribution? Thanks.

Let's say an employee turns age 55 in 2025. The plan is terminated in 2025, but the employee is still working for the company. If he chooses to take a direct distribution, would he get age 55 exception from the 10% penalty? Thanks.

A participant made ineligible deferrals in 2024. There is no mandatory withholding on the excess deferrals using code "8". However, can the participant choose to have taxes withheld? Thank you.

Thanks, Bill! That makes sense.