Jeff Hartmann

My understanding is that the compensation threshold is a "Lookback" number. i.e. to limit THIS year's catch-ups, you look back to LAST year's compensation. That means ...... the relevant compensation for 2026 catch-ups is the 2025 compensation, with a threshold of $145,000. Indexing based on 3rd quarter 2025 CPI increases the 2026 compensation threshold to $150,000, which will be used to determine 2027 catch-ups. UPDATE November 13 ........ my original "understanding" seems to be incorrect. Notice 2025-67 says to apply the 2026 limit [$150,000] to the 2025 Compensation being tested. ..... Jeff

Regardless of the client's intent [2025], I think you have an additional 2024 contribution to include in the 2024 accounting, as part of year-end Asset. I don't think you can "pre-fund" the 2025 contribution in 2024 ...... assuming the contribution would otherwise be deductible in 2024. .... Jeff

Did they follow through with their "intention"? Right away? .... Jeff

FWIW, note that Reversion amounts are reported on Line 13a. In my opinion, the "lesser of 2 evils" is to report the reversion on line 8j as a Transfer (from) the Plan, notwithstanding lack of saying that in the Instructions. Line 8a "Contributions RECEIVED or Receivable" seems (to me) to be clearly intended for contributions added to the Plan, not reversions. .... Jeff

I agree with the "2025" answer above, since all actions (writing/sending check; receiving/depositing check) clearly occurred in 2025. The (2024) termination date is not relevant for determining the taxable year. What about when the Plan completes its processing in late December, sending the check in the last 2-3 days of December, when: 1. Plan knows the participant received (and deposited) the check on or after January 2 ? 2. Plan does NOT know the date the Participant received the check ? Is there a "presumptive" date of receipt? I looked in the 1099 instructions and found no discussion regarding this. In my opinion, the distribution should be taxable to participant in the year he RECEIVED the check, but how is the Plan able to determine this in the 2nd situation above? .... Jeff

Agreed, the Catch-Up limit for ages 60-63 is $11,250, so the total is $23,500 + $11,250 = $34,750. Note, the unrounded amounts were just a few $ short of the next "bumps" .... would have been $24,000 + $12,000 if September CPI had come in slightly higher. .... Jeff

My understanding is that the (minimum contribution) funding deadline will become earlier if the Plan Termination date is earlier than 12 months after the prior year-end date. The funding deadline date has nothing to do with the "final distribution date". Final distribution date will impact the deadline for filing the final return for that plan year. For example, assume plan year was the calendar year, and plan termination date is June 30, 2024. Without plan termination, the 2024 funding deadline would have been September 15, 2025. With 6/30/2024 plan termination, the funding deadline moves up to March 15, 2025. If the final distribution is made in June 2025, this creates a "short plan year" in 2025, and the "7-month deadline" for filing the 5500 return (for 2025 plan year) moves up to January 31, 2026. ..... Jeff

Generally, when a Cash Balance plan is adopted, the Profit Sharing plan should provide (or amended to provide) that there is no End of Year employment requirement ..... because it usually better (cheaper) to provide staff benefits in the PS plan. .... Jeff

If participant born 4/11/1952 is terminated or was a 5%-owner, his Required Beginning Date is April 1, 2026 (not 12/31/2025). .... Jeff

Your segment rates for 430 should be 5.03/5.27/5.59, because the first two 404 rates fall within the 95%-105% corridor of the 25-year average segment rates. ..... Jeff

In my opinion, the Paul Shultz memo (from June 2002) "set the standard" [at 0.5%] for testing whether a benefit is considered meaningful by IRS. Is anyone aware of IRS challenging a 0.5%+ benefit accrual as NOT meaningful? .... Jeff Paul Shultz memo: https://www.irs.gov/pub/irs-tege/memo_060602.pdf

Actually, SECURE (1.0) updated the minimum age to 72, but did not contain any language about updating the life expectancy tables. The tables updates were done by IRS regulations proposed in November 2020 (and finalized in late February 2022). Again, SECURE 2.0 just updates the minimum age to 73, but does not update the life expectancy tables. My guess is that IRS is not planning another update immediately to the life expectancy tables, but if they are planning to update the tables it would be announced well ahead of time and not take effect before 2024 at the earliest. ..... Jeff

Is this for a DB or DC plan? The rules differ. I will state my answers for a DB plan ...... 1. For an annual payment by 4/1/2023, RMD payment should be the annual RMD, $24,000. April 1 is a BEGINNING date, for monthly payments, but for an Annual RMD, you should pay the entire Accrued Benefit x12 as of 12/31/2022. 2. At least $24,000, plus an interest adjustment (actuarial increase) for delayed payment that was due 4/1/2023. There is also potential 50% Excise Tax for missing 4/1/2023 deadline. What/when is the NEXT RMD payment going to be? 3. $36,000 should be received in 2024. I think this should be paid around 4/1/2024 (or 1st anniversary of 2023 payment, if earlier than 4/1/2023). .... Jeff

It's unclear to me what you mean by a "Lump Sum withdrawal" ? Do you mean a "lump sum" of 12 monthly payments ($2,000 each), or a "Total Distribution" of his entire Accrued Benefit? If he is NOT terminated, does the plan permit In-Service Withdrawals of his entire Accrued Benefit? If this is a total distribution, and the plan allows In-Service Withdrawals, the total distribution might be worth around $264,000 (2,000 x 12 x approx 11 [APR] ). If by "lump sum withdrawal", you just mean 1 annual payment (vs. 12 monthly payments of $2,000) you should be able to pay a $24,000 annual RMD payment before 4/1/2023, if plan document allows annual payments of the RMD's. P.S. you didn't say whether the $1,000 / $2,000 AB's were monthly benefits or annual benefits, but the discussion implied this was a Monthly Accrued Benefit. .... Jeff

FYI, PBGC Premium indexing is based upon increases in the National Average Wage Index, which increased 8.89% in 2021, so all the 2023 premiums are approx. 8.89% higher than 2022 rates. The indexing rules are part of ERISA (as amended by several later laws). .... Jeff