Ian

Forgive me if this has already been discussed. If a 401(k) loan is made from pre-tax funds and the loan becomes due upon termination of employment, the loan offset is taxable unless rolled over. If the loan is made entirely from Roth funds, I assume the portion of the offset attributable to principal is tax-free, but the portion attributable to interest ("earnings") is taxable (if not rolled over) -- unless it's a qualified distribution. Am I looking at this correctly? Thanks.

Thank you for the response. But I'm not asking whether NUA can be done a second time. I'm asking whether the lump sum distribution requirement prohibits someone from continuing to participate in the plan (e.g., from making additional 401(k) elective deferrals) in years following the calendar year in which the LSD is taken.

One of the requirements for using the net unrealized appreciation (NUA) strategy is that the plan participant take a lump sum distribution. If a participant takes an LSD and does NUA at age 59 1/2 without separating from service, it's never been clear to me whether they can continue in the plan for years after the year the LSD is paid. Any thoughts? If the answer is no, any references where the IRS or a court has said this? Thanks in advance.

I agree that $150,000 is likely. The IRS has already said that had plans been forced to follow this rule in 2025, the 2024 limit would have stayed at $145,000. We won't know for sure until the COLA adjustments are published later this year.

So, this means the mandatory catch-up rule must be compiled with for taxable years on or after 12/31/25. But for the 2026 taxable year, plans can use a reasonable, good faith interpretation of the statute. Then, for taxable years after 12/31/26, the final regs must be complied with. Correct? Lots of confusion on the web about this.

Thank you for the helpful response!

I am confused about a provision in the recently-issued proposed regs The IRS says that a plan may allow deemed Roth catch-up elections for affected participants who have mistakenly elected pre-tax. The regs also say that a deemed election provision is a prerequire for using the two new correction methods. But wouldn't a deemed elected provision allow a plan to automatically allocate the catch-ups to a Roth account, thereby negating the need to make a correction? Obviously, I'm not understanding this correctly. Any help would be greatly appreciated.

Does anyone have an opinion on whether the SECURE 2.0 one-time $50,000 QCD to a split-interest entity counts against the overall $100,000 annual limit? Seems to me that the legislation doesn't clearly answer that question. Thanks.

Does anyone have an opinion on whether the SECURE 2.0 one-time $50,000 QCD to a split-interest entity counts against the overall $100,000 annual limit? Seems to me that the legislation doesn't clearly answer that question. Thanks.

This is extremely valuable. Thanks so much!! So, the exception to the 10% penalty for terminal illness would really only apply to those who terminate employment before 59 1/2.

Appreciate the responses on reporting. Any thoughts on how deductions would work for the self-employed?

Thanks. To clarify, you mean the terminal illness distribution only -- not the others? Also, what good is this if elective deferrals (and, in most plans, employer contributions) can't come out before 59 1/2 anyhow w/o hardship? (Doesn't seem they're adding this to the hardship withdrawal safe harbor.)

Based on the language of SECURE 2.0, it appears that new distributions for those terminally ill can only be made when the person is otherwise eligible for a distribution. But other new distributions (e.g., emergencies and domestic abuse) create new distributable events. In either case, however, allowing any of these new distributions is optional. Do you all agree, or do you read the law differently?

For 401(k) plans that decide to allow Roth employer contributions, how, if at all, will the deduction rules change for those contributions? I'm thinking that traditional employers will still get a deduction, but what self-employed plan sponsors? Will it depend on the way the self-employed business is structured? Thanks for any thoughts.

This is exactly what I was looking for! Can't thank you enough.

Thanks so much. Am I correct in assuming that, even if the 403(b) were an ERISA plan, the ability of the IRS to impose a tax levy under section 6331 of tax code would trump the required ERISA anti-assignment provision. (I know that Reg. 1.401(a)-13(b)(2) specifically says that for qualified plans.) Again, thanks for the help.

Assume they are monthly payments.

Forgive me if this has been answered . . . Can the IRS enforce a tax levy on 403(b) plan annuity contract payments? Does it matter if the 403(b) plan is an ERISA plan? Finally, are these answers any different if the levy is imposed on the 403(B- contracts before they are distributed? Any help is appreciated.

I'm sorry, I don't have access to that book. If you could summarize, I'd appreciate it. Thanks so much!

Does ERISA anti-alienation still apply once funds are distributed out of the plan? I found an article from 2014 indicating that seven federal Courts of Appeal had ruled that anti-alienation does not apply and one has ruled that it does. Is that still the state of the law, or has something changed since them? Thanks for any help.

Thanks very much. Always appreciate your help.

Never mind! Section 1.C. of Notice 2020-50 specifically says this.

Is it clear that a plan loan "deemed distribution" (as opposed to a "loan offset") cannot be treated as a CRD by a CARES Act qualified individual?

Is it clear that a plan loan "deemed distribution" (as opposed to a "loan offset") cannot be treated as a CRD by a CARES Act qualified individual?

Could a cure period extend the new January 2021 repayment date until June 30, 2021?