AJC

I feel comfortable about preparing the late filings as well as using DFVCP. One thing I am wondering about is the fact that the plan sponsor terminated the business that sponsored the plan a few years ago and started another business. I do not know whether another retirement plan was started. The client is a dentist, so the type of business remains the same. What effect, if any, does the termination of the original business - the one that sponsored the plan, have on the late filing process and the Post PPA restatement?

The owner was paid out just after the termination amendment in early 2019. And maybe that is why they have the missed filings. In any event, filing Forms 5500-SF for the remaining years appears to be the way to go.

Preparing to start a DFVCP filing for the plan years 2019 through 2023. The plan was terminated during 2019. There were twelve participants (all with balances) at the start of the 2019 Plan Year. At the end of 2019, there were two participants remaining and one of the two had an ending account balance of only $0.75. We plan to amend the 2018 Form 5500-SF for a couple of reasons. In the process, can we "not count" the participant with the $0.75 balance in the participant counts at the end of the 2011 Plan Year? Would it make any difference? Let's say we do count the participant with the $0.75 balance at the beginning of 2019, and the account custodian took the $0.75 as a fee in Jan-2020. Then there was only one participant with a balance, and that participant still has a balance today (May-2025). Can we file a Form 5500-EZ for 2019 if our inactive participant count is two on Jan-01 but only one on Dec-31? Keep in mind that we are filing under DFVCP beginning with the 2019 return. If we must file a Form 5500-SF for 2019, can we then file Form 5500-EZ for the remaining years through the plan's final return?

Are you saying all (100%) of the benefits, rights and features in the new partner's solo plan must also be available and at least as favorable in the existing partnership's plan?

A 50-employee medical clinic is owned by four doctors' individual PAs. Each doctor's PA owns 25% of a medical clinic - the partnership. The medical clinic's 401(k) plan is funded by the partnership. Three of the four partners actively participate in the medical clinic's 401(k) plan, though as the doctors are not employees of the medical clinic, their individual benefits under the 401(k) plan are funded by their PAs. The fourth partner is new and wants to sponsor a solo 401(k) with the 1099 income he receives from the partnership rather than participating in the medical clinic's 401(k) plan. In this scenario, is there anything wrong with the new doctor sponsoring a solo 401(k) rather than participating in the clinic's plan? Would it matter if two of the four partners wanted to sponsor solo plans?

As C.B. Zeller pointed out, the QDRO from the court had not yet been qualified by the Plan Administrator. I spoke to the participant today, who stated the $140,000 figure was calculated based on something other than the participant's account balance. The Plan Administrator rejected its qualification today because the Order would require the Plan to provide benefits greater than the benefits available to the participant without the QDRO. Simple as that. Both parties' lawyers were notified. An amended QRDO will be prepared and filed for the $125,000 amount that was available as of the assignment date.

I received a QDRO that was filed by the court with judge's signature. The QDRO assigns $140,000 to the alternate payee as of Sep-19-2024, adjusted for investment gains and losses through the date funds are segregated. The problem is the participant's account balance as of the assignment date was only $125,000. Can we assume the QDRO's intent was to assign 100% of the participant's account balance as of the assignment date? And there has been a single $1,500 deposit for the participant since the assignment date, which is not subject to the QDRO and will remain in the participants' account +/- any gain or loss.

So, because the annuity payments began mid-year 2024 and will total $105,000 during the second half 2024, only $105,000 of the $150,000 RMD will be offset by the annuity payments during 2024. I wonder... Is it possible that the annuity payments in 2025, up to the "required beginning date" of the RMD, could also be used to offset the 2024 RMD?

The 2024 RMD is based on the individual's accrued 401(k) account balance on December 31, 2023. The funds used to purchase the annuity this year (in 2024) came from his account under the 401(k) plan. The annuity is not owned by the 401(k) plan. I do not know whether or not the annuity was purchased into an IRA, but I think not.

The owner (plan sponsor) of a 401(k) plan is retiring. The owner turns 73 this November (2024) and his first RMD has been calculated for this year at ~ $150,000. Three months ago, the owner spent $2,850,000 from his share of the 401(k) plan assets to purchase a lifetime income annuity for himself outside the 401(k) plan. Does SECURE 2.0 Act allow the monthly payments from the lifetime income annuity that are paid to the owner during 2024 to count toward satisfying the owner's 2024 RMD from his 401(k) plan account?

Our office orders free tax forms from the IRS every year. For 2022, half of the forms 1096 we received from the IRS in our forms order have 2021 in the upper right corner instead of 2022. Is it okay to use the 2021 forms 1096 for the transmittal of the forms 1099-R?

Thanks, Lou.

A client over age 50 is self-employed. He has net Sch C income of $20,000 for 2022. No other earnings. No partners. No employees. He wants to contribute $18,587 of either pre-tax deferrals or Roth into his 401(k) plan "and" $6,500 into his Roth IRA. I think it is okay. Any issues with this?

The distribution check was written by an employee of the sponsoring employer from their DC Plan's pooled account. And the refund was redeposited into the same account upon receipt.

A client plan delivered funds based on a terminated participant's rollover request. The payment included the participant's vested balance plus a $10,000 overpayment amount (a simple clerical error - check was written for $60,000 instead of $50,000). The error was caught within 30 days. Both the participant and receiving custodian were notified of the mistake. And the receiving custodian returned the $10,000 overpayment amount to the client plan in a timely manner. Nothing has been reported yet. Does the Form 1099-R reporting for the participant distribution need to include or otherwise address the $10,000 error in any way, since the participant received what was due and the original client plan was made whole? Does the client plan need to report a plan failure?