CuseFan

Agree with Bill. Follow the document. It is likely that some of their VAT will need to be returned to correct 415 violations.

Yes, this isn't Monopoly (no bank error in your favor)!

Most likely not - see third bullet below. From IRS website: https://www.irs.gov/retirement-plans/retirement-plans-startup-costs-tax-credit Eligible employers You qualify to claim this credit if: You had 100 or fewer employees who received at least $5,000 in compensation from you for the preceding year; You had at least one plan participant who was a non-highly compensated employee (NHCE); and In the three tax years before the first year you’re eligible for the credit, your employees weren’t substantially the same employees who received contributions or accrued benefits in another plan sponsored by you, a member of a controlled group that includes you, or a predecessor of either.

Even if they remain employed, rolling to an IRA would then create an RMD (or increase RMD) from IRA(s) next year - so this only makes sense if taking the cash (less 20% w/h).

Thanks Lois, I don't know how I missed them before, must have glossed over as other items caught my eye instead. Sorry for the redundancy.

I know one or more people have asked about DC plan litigation statistics within the last year. I came across Part II in another newsletter and found Part I so linking these for anyone interested. https://www.callan.com/blog-archive/dc-plan-lawsuits/ https://www.callan.com/blog-archive/dc-plan-litigation/?utm_campaign=Headlines_102722_US&utm_medium=email&utm_source=Eloqua

I don't think anyone is advising that - just advocating for proper accounting for matching contribution purposes. As Frankenstein's monster said, "fire bad, catch-up contribution good!"

That is an incorrect interpretation. As discussed, deferrals become catch-ups after a limit (402(g), plan imposed, or ADP test restricted) is reached, not simply by election. By "people" do you mean participants or service providers? The latter group should know better. The SPD wording means (if drafted by a knowledgeable person, or platform) that you are eligible for catch-up deferrals if you attain age 50 at any time during the year, not simply after reaching age 50. Whether I turn 50 on 1/1/2022 or 12/31/2022 I can defer $27,000 in total in 2022, and do so all in Q1 if able or spread throughout the year. The SPD could possibly be worded with more clarity, but the administrative system providers (payroll and RK) should know how to do this properly.

Google is a wonderful thing. https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/irs-guidance-clarifies-relief-for-fsa-carry-overs.aspx https://www.flexiblebenefit.com/blog/carryover-grace-period-run-out-period-whats-difference Can an FSA have a carryover and a grace period? Health FSAs have an additional option of allowing participants to roll over up to $550 of unused funds at the end of the plan year and still contribute up to the maximum in the next plan year. Health FSA plans can elect either the carryover or grace period option but not both. There is also potentially a run-out period, different from the grace period, which can be paired with the carry-over if my understanding is correct.

Two solid starters in Cole and Tailon, cultivated from their minor league franchise in Pittsburgh! (and pains me to say that being a Pirates fan, but acknowledge the truth and jealous of those who aren't looking ahead to fantasy football come Memorial Day!) Sorry you got swept by those cheating Astros - not sorry! At least the Dodgers didn't make the WS and I can officially say I have no interest. Could have gotten behind the Padres, but that wasn't to be. So for half of the MLB teams that are relevant, there's always next year.

and this is a very true statement that happens far too often

That has to be the word of the day! Thanks Peter.

If the plan does not specify a hierarchy I would think prorated/weighted split is most reasonable. So $500 would be $333.33 pre-tax and $166.67 Roth, +/- a penny on either side depending on how you round.

Yes, unless the plan also has a true-up provision or otherwise allows calculation on annual basis.

Those penalties were magnified so additional revenue could be manufactured, real or imagined, to offset the cost of SECURE (or maybe CARES). I wonder if the government tracks the actual revenue raised from these changes during the 10-year budget period versus their projections used to get the law passed. Like pension contribution relief, which was supposed to reduce pension contributions and deductions to increase tax revenue. Who is most likely to cut back on their pension contributions? Companies losing money (so paying little or no taxes) that don't need deductions and tax-exempt NFPs that don't pay taxes - so all that did was further weaken already under funded plans which further stressed the PBGC and likely raised very little of the projected additional revenue. Sorry, didn't mean to go off on a rant, talk about tangents, or as my wife and I say to each other in such instance - squirrel!

and then you can all chant "here comes the Judge!"

If normal plan administration calls for paying out this person now you can pay and forfeit, including an involuntary cash out if permitted. However, given that today is 10/21 and this person will need to get the NOIT (due by 11/2), unless a cash out can be done, I would not expect this person to elect a distribution knowingly that would result in 40% forfeiture.

If not, the ex-spouse should put the plan on notice and get one in the works asap.

There is not a deadline/due date. If an IDP has never received a D-letter then it is eligible to apply for one at any time. However, submitting within a certain time after a new plan is adopted can afford the sponsor a remedial amendment period to correct any deficiencies without penalty. If a plan waits 3, 4, or 5 years, for example, and then submits and there is a deficiency beyond the applicable provision's RAP (or whatever the current terminology), then I think you're looking at audit CAP.

Yes, you need more info, as in who owns how much of each company. There is an optional transition period for coverage and nondiscrimination that may be applied after a transaction that creates or eliminates a control group, provided certain conditions are met. The transition period includes the year of transaction and the subsequent plan year.

Good point, did not even think about that.

That should be the first check. Concerning operational failure or not, it may be that the plan was followed but the CBA was not - although I think a union rep would have been all over that. If plan contribution language is flexible then maybe the only issue is vesting and maybe no one has been directly impacted yet, hence so material conflict between operation and CBA. The 2018 thread Lois provided has a lot of positions/arguments/disagreements but no true consensus, although I think most thought the plan document must govern. If you have nothing else to do this afternoon you can read it but otherwise let's cut to the chase - if the plan does not currently have language that incorporates for CBA then get it amended ASAP to comply with CBA.

The addition of the design-based safe harbors (3% NE or SH match) for the most part, in my opinion, rendered the QNEC and QMAC obsolete. There are many advantages to the SHNE or SHM compared to their "ancestors" and as Bird chirped, we're just scratching the difference.

But they'll be hired primarily to audit and harass all the low income service industry workers, if you can believe certain political commercials, so retirement plans should be in the clear!

The IRS position is that the tax treatment of distributions received in a prior tax year does not change because the retiree received and had use of the funds. Any repayments of prior distributions in the current year can and should offset any otherwise taxable distributions paid in the same tax year. Any additional amounts repaid above and beyond current year distributions (or if it was a lump sum that was paid in a prior year and no future payments are being made) may be deducted under IRC Section 165(a) as a miscellaneous expense to the extent such amount exceeds 2% of AGI. See IRS Revenue Ruling 2002-84. This is not tax advice, the parties-in-interest should consult their own respective qualified tax advisors. However, they should confirm that current year distributions will be offset by current year repayments on current year 1099Rs.