RatherBeGolfing

Most people dont pay much attention to the release of next year's 5500 in the middle of testing season I guess? ASPPA/ARA did mention it in one of the daily/weekly news emails though.

Oh for sure. I think there is a bit of a trade off with the audits themselves becoming more detailed (and more expensive), but probably not enough replace the income from the no-brainer audits of plans with 200 eligible but only 20 accounts balances. I also wonder what impact the auto enroll mandate will have since we will surely see an increase number of participants with a balance.

This wasn't a total surprise. This has been on the map since the proposed 5500 revisions in 2016.

Indeed they did! ARA GAC was one of the stakeholders pushing this after LTPT in S 1.0, so I count this as a big win for our advocacy folks. Its not always instant results, but this is big one. We have plenty of plans that will drop out of audit because of it.

Practitioners and industry organizations are really the ones who have pushed e-filing of the 5558 (for good reason). IRS has had a "we will get to it when we have time and funding" approach...

As sad as it is, this is probably dead on. The notice generator automatically generates and mails out a notice when certain data or criteria are met in the system. Unless its a glitch, someone found and entered an old 5558 into the system and a notice was mailed out.

I think you are making this more complicated than it needs to be because of how you define participant. I would go back to the plan document. Are you sure none of this is spelled put in the definitions?

They are (if there is a balance), just not entitled to future contributions.

This.

I sure hope so...

Yea we were caught off guard by it as well...

Impossible. That would mean that Lorena filed with Marty's super secret pin...

Me too! @Jakyasar I agree with David (and Derrin) on the compensation issue. I would use $22,000. Its worth pointing out that there is no formal guidance on losses in a related business, so the question should be "is this approach reasonable?"

I think you hit many of important questions here. I agree that it would be income rather than compensation, so it will not affect plan compensation or payroll taxes It makes sense to tax in the year of contribution rather than the year of allocation. Otherwise you could run into issues where the contribution is decided on months after a participant files his or her taxes for the year of allocation. Plan assets for withholding... probably limited to instances where the participant is otherwise eligible to take an in-service distribution to prevent leakage.

No permanency issue with merging new plan into existing plan. The new plan "continues" in the existing plan because of the merger.

I have seen a few people raise the question. I don't see why FICA would apply since it is a payroll tax. Match and nonelective contributions as Roth is more like a Roth conversion. Its a pre-tax contribution from the employer that the employee elects to treat as Roth. The employee has to include the amount as income, but it isn't compensation.

Retirement is one of the few areas where there is some bipartisan agreement. Also, who wants to be the one to tell their higher income voters that they cant make catch-up contributions? The rank and file voters won't care since very few earn enough to worry about catch-ups anyway. I think that a technical correction here is about as much of a given as it can be in DC.

Agreed. That's why I try to stay ahead of it when invited

ROTH only for those making [pick a number at random] coming in SECURE 3.0. But don't worry about plans terminating, it will also include a plan mandate for employers with [pick a number any number] employees. kidding aside, I'm 99% sure we will see this in the next 10 years.

In my experience, checking the box on the 5500 does not guarantee an invite. That said, I recommend accepting the invitation if you get one. I'm usually in the minority on this one, but I have found the DOL to be easier to work with than the IRS if you are forthcoming and cooperative.

Can you expand on your reasoning as to why it shouldn't be legal for plan documents?

Alternatively, one could create this using publicly available records, perhaps limited to those sections that are likely to impact one's business (I doubt most of us will bother with the tax court provisions for example)

I haven't seen one, but it would be VERY helpful to have a redline type document of affected sections.

And remember, there is no IRS model notice, this is basically good faith compliance. I highly doubt that the IRS will come after anyone following their document providers guidance on this issue, whether that is in the year adopted or the year after adoption.

Confirm with document provider. I have heard some providers say 2022, and others say 2023. Mine is firm that it is 2022.