Barbara

We have an overfunded DB plan that is being randomly audited by IRS. TPA fees to respond to the audit are pretty substantial, but are actually less than 0.1% of the total overfunding amount. This is a H&W plan but they also occasionally have 1 non-owner Employee. For the year being audited (2022), no rank and file employees accrued any benefits, but for 2025, the year in which the fees will be paid, there will be 1 or 2 eligible NHCEs. Do we think the client can pay the TPA fees as they relate to 2022 from the overfunded plan assets?

The Roth was created as a conversion from a traditional IRA in 2010 so it was formed more than 5 years ago. Spouse is designated income beneficiary of the trust for the rest of her life, and then his children and grandchildren become the income beneficiary. The corpus of the trust will be distributed when the children/grandchildren attain a certain age. If he dies now, is the spouse required to fully distribute the Roth IRA by the end of the required 10 years period? If the spouse dies before the 10 year period will the children/grandchildren be required to distribute the remaining balance of the Roth IRA within 10 years of the Roth owners death?

So sorry to hear this. He will definitely be missed. Condolences to the family.

Thanks to both of you for the prompt responses.

This question is not exactly on point, but here goes: An old SEP which was established incorrectly, into which an individual made contributions over many years totaling $66k improperly, but for which the accountant never took deductions (because he had advised his client NOT to make the contributions in the first place.) To clarify, the individual is a 1% partner in an LLC, and all of his income is from this LLC, which sponsors a 401(k) Plan for the partners and employees. Client now wants to withdraw the $$ from the SEP, but custodian is insisting that they must issue a 1099, since the money is theoretically in a SEP. Can anyone think of a way to convince the custodian not to issue the 1099?.

This is a question related to California and the CalSavers rules, which say that you must offer employees an opportunity to defer. Does anyone know if the Cal Savers rules apply to employees who work under 1,000 hours?

I have a client who sponsors a Defined Benefit plan only. He (the owner) is the only Participant, because the eligibility is 21&1 with 1,000 hours. He has a long term part time employee who usually works 500+ hours, but always under 1,000 hours, so therefore she is technically not "covered" by a qualified retirement plan. Does he have to set up an opportunity for her to defer, either under a qualified 401(k) plan (which then must have auto enrollment), or under our state's mandatory CalSavers Plan? He does not want to contribute to a 401(k) plan himself.

Thanks for the quick responses!

I have a cross-tested profit sharing plan where the client is considering adding a Safe Harbor 401(k) feature for 2024. Will auto enrollment features be required?

Hi, I have a Plan that expected to terminate and pay out benefits prior to June 30, 2023. However, my document vendor (Ft William) doesn't yet have its Cycle 3 document ready, and says it won't have the doc until July sometime. All the benefits have been calculated for a June distribution. This is a small, non-PBGC-covered Plan and we are not submitting to IRS. Would you distribute anyway, and then update the document in July? Or? If we wait to distribute until after the docs are completed, we will have to recalculate everything. Thanks in advance.

I've heard they are more than a year behind from an attorney friend who has submitted numerous VCP requests and is waiting to hear on all of them.

Thank you, Peter, this is very helpful.

Thanks, Lou - I have no idea why they didn't notice it before, but the issue is whether there is any way to find records going back that far. Is there any source that we haven't explored? To clarify, she believes she requested a taxable distribution, but it appears the funds were rolled into a pre=tax IRA.

Participant terminated from company in 1985 and requested her distribution be rolled over into a taxable account. Funds appear to have erroneously been rolled into an IRA and no one has any records anymore; individual tax returns were shredded, brokerage company was sold to another, previous Employer no longer has records. IRS and FTB say they don't have 1099s going back that far. Participant is now required to take RMDs. Is there any way to avoid taking an RMD from the IRA into which the funds were erroneously rolled over? We can't find anything to support the claim that an error was made.

I found the Mercer one particularly helpful. https://www.mercer.com/our-thinking/law-and-policy-group/users-guide-to-secure-2-0.html

I double checked and in Datair, it's also an option to be checked in the AA (not in the BPD).

We are using FT Williams and the option to revoke the beneficiary designation appears in the AA. In Datair, I think it is in the BPD and is an automatic revocation.

unless husband and wife have a minor child, which means there is in fact a CG.

Most firms give a small discount for H&W plans, because no testing is required. Where are you located?

This is a new but related question: Dr. is 100% shareholder of his own S-corp; invests in two dialysis companies through his former SEP-IRA. Each investment is under 5% of the total ownership of the dialysis companies. Dr. refers some patients to each dialysis clinic, but uses a total of 6 different clinics. In order to see whether we have an ASG, I've determined that the Dr's Corp must be the A-Org., and the question is whether a dialysis clinic is de facto either a Professional Service Corp or a "Service Organization" or not, since dialysis machines are pretty capital-intensive. I have been unable to determine the answer by researching the individual names ofthe clinics, and so if there is not a de facto determination, does anyone know how to determine whether an ASG exists?

I have a 403(b) plan with a 1/31 year end. HCEs are excluded from the fixed matching contribution formula, but after performing the ACP test, it appears that HCEs could be allocated a small matching contribution and the tests would still pass. The Employer wants to amend the plan to allow such discretionary matching Employer contributions which would apply to HCEs for the Plan Year Ending 1/31/21, as well as a true up provision for the fixed matching contributions that are already in the document that would only apply to NHCEs. Does this seem okay if the Employer signs the amendment before April 15th?

There are many TPAs in the Valley who can help you. You can hire one of those TPAs, they will take over the plan, and then you can roll over the TD Ameritrade assets into it. I can help you if you don't find anyone else; I'm in LA.

I have several terminating calendar year 401k plans where the termination amendment is dated in December, 2020 but funds have not been paid out yet. What effective date should I use for the Cycle 3 restatement? Should I use August 1, 2020 or a later date?

Actually, i have several triple stacked match plans where there is first a SH Match, then a fixed $ for $ up to 4% match, and finally a discretionary match to get the business owner up to the maximum. Obviously this only works when none or few other employees elects to defer. But we don't have conditions on the fixed match in this case.

and what about delaying DB required deposits beyond 9/15?