FPGuy

As a side note, now that Secure Act 2.0 allows the employee to designate employer contributions as Roth, there are at least two new potential buckets to consider. As a further side note, if the employee has a seasoned Roth account are new Roth employer contributions seasoned by association or require independent seasoning?

Seems to me the cleanest solution is to sell real estate prior to making the distribution and adjust distribution accordingly, unless plan valuation procedures would have any loss relative to appraisal value inure to the detriment of remaining participants. Other than that not sure why this isn't being considered. If there's no or depressed market for the real estate then appraisal is bunk (although that becomes problem for decedent's wife, who may or may not welcome it, if either of the two properties can be successfully distributed in-kind).

Presumably you are addressing need to take decedent's 2024 RMD, which must be taken by 12/31/25. And presumably you could request the RMD figure from whoever had been providing it for prior years. Government not particularly fussy about which IRA(s) the RMD comes from. Believe that per Secure Act 2.0 when beneficiaries inherit equally, iRS will only go after an inheritor who doesn't pony up her/her pro-rata share. Once decedent's RMD taken each IRA is on its own based on respective beneficiary's age, as you indicated.

Was unaware of the nuance in determination of 5% owner status. Fascinating. Could an individual who, say, turned RMD age in 2023 start a new business in 2024, roll in her QP accounts, and be free from RMDs until retirement? And just as an aside, using the cash basis of accounting in which year is the contribution deductible, year made or year in respect of which it was made?

Question states that plan in question was a "SoloK" which can only include owners and spouses of same who are owners by attribution, so RMD cannot be postponed until termination of employment. Business had to have been in existence in 2023 or plan could not have been adopted retroactively. Question in my mind is whether the participant owner's account had a zero balance as of 12/31/23. Assuming a contribution deduction was taken in respect of 2023 could it be argued that account had an indeterminate 12/31/23 balance until contribution was made, and then was the value of the contribution? Seems to me that we have a conflict between being able to adopt a plan retroactive to the beginning of the prior year and a participant's RMD in respect of that prior year if the plan is funded in the subsequent year.

Question states that plan in question was a "SoloK" which can only include owners and spouses of same who are owners by attribution, so RMD cannot be postponed until termination of employment. Business had to have been in existence in 2023 or plan could not have been adopted retroactively. Question in my mind is whether the participant owner's account had a zero balance as of 12/31/23. Assuming a contribution deduction was taken in respect of 2023 could it be argued that account had an indeterminate 12/31/23 balance until contribution was made, and then was the value of the contribution? Seems to me that we have a conflict between being able to adopt a plan retroactive to the beginning of the prior year and a participant's RMD in respect of that prior year if the plan is not funded until the subsequent year. But following David Rigby's suggestion, if the contribution wasn't vested...My understanding is that the RMD is based on total account balance but payment limited to vested balance with difference, if any, rolled into the following year.

I would expect that the owner rolled over the money into an IRA and purchased the annuity therein. Do not believe distributions from the IRA can be applied to satisfy the QP RMD or vis-versa. Have to be separately accounted for. Prospectively, if he rolls over the remaining QP money (after first taking his 2024 QP RMD) he can, courtesy of Secure Act 2.0, aggregate, i.e. count the annuity distributions against the RMD for the combined value of the two IRAs. Again, I am assuming that he purchased an IRA annuity. As an aside, rolling over the QP balance would moot the issue raised about how a QDRO would be constructed.

As backstop to proposed sale/merger, has client considered trying to "absorb" excess through Plan purchase of life insurance?

Have personal experience (family member) with SSDI. Monthly income limits based on wages (exclusive of sick pay, paid time off, bonuses and perhaps other categories as well). Contribution to a 401(k) not reducing wages has no bearing. It is my understanding (not experience) that retirement plan distribution are considered unearned and if so would not count. But again, that's SSDI. SSI's definition of income much broader: “...any item an individual receives in cash or in-kind that can be used to meet his or her need for food or shelter {with some limited exceptions}.” Don't think contributions to a 401(k) affect SSI but pensions (presumably QP distributions) do. Having said that, can only agree with other commentators that subject individual should seek guidance from SS. Maybe employer can help by suggesting questions for him/her to ask.

"May be a REIT"? Figuring out what it is, its liquidity (note that a publicly traded fund could be an interval fund which has limited liquidity), its current and ongoing valuation, and UBTI would seem to me to be primary concerns in probably that order. And the more it represents as a percentage of plan assets the more pressing the answers.

Not sure I agree with, but maybe don't follow, Paul I's contention that the Jan 1 distribution as described is not a RMD but a rollover eligible distribution. My understanding is that first money out in any year for which a RMD is due is the RMD and not rollover eligible. Similarly a subsequent distribution in the same calendar year would be the RMD for that year to the extent thereof. Am also curious about comment regarding obviation of RMDs by mandatory account plan payouts at age 65. Are employees mandatorily retired at 65? If not, are they excluded from plan participation if they work past 65?

Assuming beneficiary is an individual or trust for that individual alone... First question: Is beneficiary decedent's spouse? If so, he may title inherited IRA in his name and RMDs would be determined according. 10 year rule does not apply. Next question: Is beneficiary a minor child, disabled or less than 10 years younger than decedent? If so, special rules apply (e.g. 10 year clock does not start for minor until she reaches age 21). Next question: Did decedent die before or after her Required Beginning Date (RBD)? If before and 10 year rule applies no intermediate RMDs are required. If after, RMDs required during the 10 year period determined using IRS Single Life Expectancy Table based on longer of decedent's or beneficiary's life expectancy. At this time it does not appear that waived RMD in respect of 2021 and 2022 for an inherited IRA subject to the 10 year rule have to be "made up." My understanding is that in 2023 the RMD is calculated as if any prior RMDs had been paid, i.e. if decedent dies after RBD in 2020, the 2023 RMD would be calculated as being the 3rd year of RMD payments.

Full cash value taxable, less cumulative annual economic benefit value imputed income determined under Table 2001 (formerly PS 58 Table) or carriers 1 year term rates, if lower - and under any calculation actually recognized for tax purposes by insured. Except for self employed, imputed income equivalent not imputed but non-deductible, so no basis to recover. Because full cash value taxable, basis becomes equal to cash value so no "gain" per insurance company of difference between cumulative premiums and cash value. In instant case, $56K less imputed income derived basis, if applicable, taxable as ordinary income. Insurance company calculated "gain" inapplicable despite a likely 1099 from them indicating otherwise. Little known or, I think, used "loophole" is to extent that taxable element of proceeds applied within 60 days to non-transferable annuity, distribution will be non-taxable (akin to IRA rollover). Yes, proceeds should have been paid to plan, and yes, issue with ignoring required tax withholding.

Point of interest: Assuming business takes deduction but sole proprietor (for example) includes in current income, will adversely affect the permanent 20% QBI deduction for taxpayers who otherwise qualify for the deduction in whole or part.

Names can be deceiving. If this is truly a dynasty trust than it is irrevocable and attribution is according to actuarial value of beneficial interests. In other words, if D is 50% beneficiary she is deemed to own 37.04%*50% of company. If it is a revocable grantor trust that becomes irrevocable on a later date (e.g. grantor's death), grantor (assumed as D's father) is constructive owner and his ownership is attributed to D. If revocable but non-grantor than attribution same as if irrevocable. First level cut. There may be re-attribution among family members depending on other facts.