Tom

I believe this is an easy question but I want to be 100%. Plan sponsor has 2-1% owners who are employed by the business. The other 98% is owned by the mother of one of the 1% owners and she does not work for the plan sponsor. Clearly seems the 1% owner would have her ownership attributed to him then as a 99% owner. I know some nuances changed in the last several years. Comments? Thank you, Tom

Husband has owner-only K and DB plans. Spouse has her own owner-only K plan with a bundled provider for a couple years. Total assets exceed $250,000 so all plans are to file 5500s. We are investigating if 5500 has been filed for her k plan. I doubt that the bundled provider inquired as to whether she was part of a controlled group. I don't know how far back her plan goes. She was added for coverage under his DB plan for a nominal benefit which I was told was required due to being a controlled group - maybe 401(a)(26). That may have been the first year of her K plan. I realize the max penalty is $1500 but hopefully someone doesn't have to go back a bunch of years to file. I have a feeling we'd be asked to do that even though we have no role with the plan. You know how things go - the record keeper will say they are investment platform only. Thank you for any comments. Tom

We have a participant who died, his wife beneficiary was injured in the car accident as well and has medical bills so she is in a big hurry to get his account which is $100,000+. (So the plan sponsor puts the medical bill guilt on us.) We asked for the death certificate but was told it would not be available for 12 weeks. The record keeping platform does not require a copy. I see 2 options: - Ask the plan sponsor owner to confirm that the participant died and then we rely on his direction (such as did you go to the wake and see the deceased?) - or wait it out and require the death certificate. I'm strongly inclined to require this. I don't want to take any chances. Comments? Thank you, Tom

Employer is approaching 100 employees. Only 4 participate in the current SIMPLE plan. They are eligible but don't participate and most don't speak English. It is an egg farm. You do wonder if they know they are eligible. Most employees hold a permanent resident card but that expires in the next couple years. I see the IRS 100 employee prior year rule with wages of at least $5,000. I don't think any type employee can be excluded from this count. It's simply $5,000 or more. I don't know that a 401(k) would be worth the trouble with auto-enrollment, etc. The new plan would like to be referred to us which I'm not sure I would even want! Comments? I doubt classes of employees can be excluded from a Simple IRA count. Tom

Oh the 5-year clock - Thank you for that!

A client defers $23,500 as Roth in 2025 and will have an employer contribution of $46,500 ($10,500 SH nonelective and $36,000 PS.) Can he elect Roth on a portion of his employer contribution or does it have to be the entire money source for that year? Example - he might want to have $20,000 of his employer made as Roth. Seems that should be possible with an election form. I realize the Roth conversion option may be a better and simpler option. Thank you, Tom

I want to be 100% for this particular client who loves Roth. I realize the plan could allow for Roth conversion as an option. But he may prefer to fund his employer contribution as Roth. I know it accomplishes the same thing but that might feel better to him. He is a sole proprietor and maximizes deferral and employer at 415. So I assume he could elect Roth for his safe harbor nonelective and profit sharing. I know it will be troublesome to have to allow this option for his few employees also. The plan is not on a record keeping platform so we don't have to worry about any limitation there. The plan already provides for employee Roth but not the employer Roth of course since that is SECURE 2.0. Sound ok? Thanks Tom

I see this code applies to 414(m) which relates to affiliated service groups. So 3H must be used for an ASG. It's just odd that the instructions description mention "controlled group" but not ASG by name. So 3H applies for an ASG. No need to comment unless someone thinks I'm wrong. Thanks

What is everyone doing for SECURE 2.0? I realize the amendment is not yet due and we are tracking the very few optional provisions elected by clients. I don't believe I've seen an interim amendment from FIS other than for a terminating plan. We've notified clients of the LTPT rule for 2024 and then again for the 2025 change. I'd like to get a SMM out with that, along with the higher cash-out limit. Thank you Tom

Thanks Paul. You confirmed an enhanced safe harbor match cannot be based on deferrals over 6% (so as to satisfy ACP safe harbor) and the matching rate can be over 100% but not increase on higher deferral tiers. This will give them something to think about. Not sure how practical a higher match rate is but they may cosnider since they want to encourage employee participation and aren't keen on across-the-board profit sharing.

fmsinc - David thank you it was a TSP. Tom

We've never had a client enhance the basic safe harbor match beyond 100% of deferrals up to 4%. We now have a client who prefers to enhance the safe harbor match beyond that instead of adding a discretionary match. It seems that the rules say deferrals over 6% cannot be matched under any safe harbor match option (and get a pass on ACP). Is that right? I think they will want something like 100% up to 3% plus 50% on the next 3%. The maximum match likely could be 100% up to 6% as an option I believe. I understand the rules for enhanced are that it must be at least as generous as the basic safe harbor match and the rate cannot increase with an increase in deferrals if it's a tiered match. Thank you, Tom

What would happen to someone's funds who passes away, has no spouse nor children and no other designated beneficiary? We assume the plan (not our plan) and state laws of Indiana would say the account goes into the estate. It is $1.5 mil. She does have 2 brothers (one is our 1040 client.) We believe a court will decide the brothers will get the money. And if so, the question then becomes, can they roll to an IRA? Doubtful. If they can when would it have to be distributed? The decedent was not RMD age. We don't know the terms of the decendent's plan. She worked for the VA and so it is a govt plan. Any comments are appreciated. We are not offering our 1040 client any specific advise. This is mostly just for our general education. Of course the main lesson is - have a designated beneficiary and a will.

Just another I believe you are right about that. you jogged my memory.

I know much has likely been said about this already. We have a new client plan that uses the part-time exclusion (those scheduled to work <1000 hours). But are those who worked 500+ for 2 consecutive years still eligible to defer? Or does the PT exclusion trump the LTPT rules? Thank you, Tom