Jakyasar

Hi DB plan - one lifer Client takes full annual RMD on 4/1/2023 instead of monthly (12x) Client decides to terminate the plan today and wants to rollover prior to 12/31/2023. No further RMD is due, correct? Thanks

Good question and answer. Simply exclude, no complications.

Hi This is a new one for me. Law firm Partnership XYZ is splitting (no PBGC coverage). Currently sponsor a DB and DC plans. 2 partners and a bunch of employees. Partner Mary wants to keep the current plans. Partner Joe wants to set up his own DB/DC combo in his new company. Joe also will take a few employees with him. Other than treating Joe and a few employees as terminated and carrying over the benefits accrued in the DB plan to the new law firm, is there anyway to transfer DB benefits for Joe and the employees coming with him? Or new plan(s) has to be set up for Joe's new company? For the DC plan which has deferrals+SH+PS, if a new plan needs to be established for 2023, can SH still be set up for 2023? Any suggestions/experience with this situation is appreciated. Thanks

A follow up question Because Joe was already part of the cb plan, he would still need to get 5% of top heavy under the dc plan, correct? If he was never eligible to participate in the cb plan, he would only get 3% under the dc plan. thanks

Hi CB plan excludes non-owner HCEs. Joe has been an employee/participant for the past 3 years and getting CB pay credit. He becomes an HCE for 2023 under lookback rules. This means, for 2023, Joe does not get a pay credit, correct? Top heavy provided under DC plan. Thanks

"In addition, although there is currently some ambiguity around when this becomes effective, you will (eventually) be able to adopt an amendment retroactively to fix this under 401(b)(3) (as added by SECURE 2.0 sec. 316) without the additional restrictions of -11(g)." I do not think we know yet if this is applicable for an amendment adopted in 2024 and it is retro for 2023. At ASPPA this was still an open item, last I remember (I may be wrong in remembering). It is definitely valid for an amendment adopted in 2025 retro to 2024. 11-g will be a thing of the past. Still waiting on regulations though and see how restrictive this amendment is going to be, if any. To avoid any issues, as Corey suggested, fix it in during 2023 and be done with especially if you have any NHCEs where 11-g is not going to pass if you only provide it to HCE. Another point, if you wait till 2024 to have an 11-g amendment (assuming you cannot retroactively amend as per above) and the document has an automatic fail safe language (no document should have this IMHO), you may have issues depending on how it is written.

To add what Corey very clearly stated: If the employee(s) are not owners, it is not up to them to be included/excluded unless the document provides a one irrevocable election for not participating. Be careful though, it means nothing as they will be included in all testing. Also, some employers negotiate a payment package with their prospective employees who are not owners. I personally frown upon on this but there are some out there state that it is ok as part of payment package. In essence you are asking the employee to fund their own pension plan, hmmmmm. There is also a big difference between electing not to participate and electing not to contribute. Assuming to are referring to owners/partners, electing not to participate is fine but electing not to contribute when you are already a participant, may not fly here. This can be a big issue in a partnership. This is not a 401k election you are referring to here, you have to be very careful what and if you allow the client to do. Be very careful with your wording, if I may suggest. Either you are in or excluded categorically. another 2 cents of mine.

What am I missing here? Why is the participant making the contribution unless is the owner? Is the balance vested to be rolled over? As Corey stated, MASD may be a big issue especially if the participant is at 415 limit. Also, if at 415 limit then may not be getting any additional allocation, all facts and circumstances. Also, as Corey stated, you need to check the AFTAP certification - 436 rules and also do the 110% test, if the participant is HCE. The document has to allow it. Just my 2 cents

Yes, that is what I see as well

Interesting. My software's AFN does not cover some of the information on SAR like the name of the institution holding the monies. May be other AFN's prepared thru other software do. I will see once what was done by the other TPA once I get them.

Hi Bri Are you saying no SAR for PBGC covered plans, could not quite understand what you stated?

You can only convey your concern. You are not in their biz nor the CPA. If you are also concerned about how they conduct their biz and possibly think that it may have adverse effects on how you administer the plan, you can refer them to an attorney. If caring makes you a jerk then I definitely am joining you on being one.

Hi The way I have been doing every year, I prepare the AFN and also provide a mini-SAR (software does it this way). Taking over a plan where the other TPA insists that AFN is sufficient i.e. no SAR is required and they have never provided to the plan sponsor. Am I missing something here?

Hi David Are you referring to the 1 grace period that may be in the plan document? If not, what else are referring to? Thanks

How about setting up a sole prop with a minimal activity.? Must file schedule c every year though

A follow up question Looks like Mary did not take the RMD by 4/1/2023. Can she take it now with the actual 2023 RMD and also could this be under self-correction? Thanks

Thank you for the great write up

Hi Checking for someone DC plan - calendar Joe DOB 12/1/1951 - when is first RMD due? Mary DOB 10/1/1950 - when is first RMD due? In both cases when is second RMD due? Thanks

WASHINGTON The Internal Revenue Service today announced cost of living adjustments applicable to dollar limitations for pen (irs.gov)

I totally agree but wanted to check if I was missing anything as usual

Hi Here is a new one for me. Having a discussion with a broker about which table to use for a DC plan RMD calculation. I never heard of this before. Age difference between the 2 spouses is 20 years. The broker wants to use uniform versus J&S table. If uniform, the RMD is 10,000, if J&S table, RMD is 7,000 (making up numbers) Q1: Can the table be optional? Q2: Assuming not optional, should not the excess 3,000 distribution be subject to in-service and 20% withholding rules? Q3: Plan normal form is lump sum and no spousal consent is required for distributions but still, need to complete a distribution election form for the extra 3,000 distribution? Q4: none of the above as they can choose between the 2 table and either number is ok under RMD rules??? Any other questions I am not thinking of/not asking? Any comments are appreciated. Thanks

Hi Lou Great ideas. Thank you

Hi Asking for a CPA friend of mine. Corporation A. Joe's year of birth is 1952. So Joe will be 73 in 2025 Joe owns 10%, Joe's wife owns 1% and Joe's son owns 89% Joe will sell 8% to his son in 2023. Is there anything I cannot think of that would allow Jow to defer RMD until forever? Also, assuming Joe needs to start RMD, 2025 is the first year, correct? Thanks

How is this different than allowing in-service distribution after NRA? Just curious.

May I ask why not doing a conversion? Cusefan has very good points and then some to the reasoning of terminating. This way, you will continue with the very high deduction limits, not to worry about prior distribution adjustments, establishing new salary history etc etc. Simply do the conversion at end of the year with the (A+B) method - only permitted method. Of course, I have no idea what the facts and circumstances are here so everything I am saying above is from my point of view.