metsfan026

Is there a limit to the amount of rollovers a participant can take, using the 60-day window to repay the distribution/roll it into an IRA? I believe it's limited to one per year, but I just wanted to confirm. Thank you!

What is the required time necessary to amend a matching contribution? Currently it is a mandatory match, but they want to switch it to discretionary (it is not a Safe Harbor Match). Do they need to give more than 30 days notice? In other words do they still have time to make the change for 2026?

How much notification does a 403(b) need to give participants if they are amending the Plan to go from a mandatory matching contribution to a discretionary? Is it 60 days? Thanks!

I'm not arguing, it just seems odd to me that if a Highly Compensated Employee opts not to get a contribution in the Profit Sharing Plan his/her salary is excluded from the calculation since they are still benefitting/participating in the Plan. They just aren't getting a share of the Profit Sharing monies.

Got it, thanks. So if we give her Profit Sharing, we can then reclassify the 401(k) as a catchup contribution? So technically she'd receive contributions greater than 100% of compensation? I just always was told it was eligible compensation, so if an HCE opts not to receive a Profit Sharing contribution their compensation is still included in calculating the 25% deductible limit. I guess that's not actually accurate?

I'm not necessarily trying to get a Profit Sharing contribution for her. I'm more looking to use her salary to get him a bigger Profit Sharing contribution (if that makes sense).

So if we re-classify some as of her 401(k) as a Catchup (say it's $15,500 as her 401(k) and $7,500 as catchup), she can then get 25% of the $7,500? I also thought it was 25% of eligible compensation & deferrals: "25%1 of all participants' compensation,2 plus amount of elective deferrals made." So my thought was the total compensation is $123,000, therefore he could get 25% of that or $30,750 (instead of just 25% of his $100,000). Is her salary solely not included because she deferred it all? $30,

I just want to make sure I'm accurate in this. A Plan has two participants, a husband & wife, both of which are deferring th maximum 401(k) contribution for the year: Husband - $100,000 salary Wife - $23,000 salary Wouldn't the maximum deductible contribution be 25% of the total between them ($123,000 x 25%)? I know the wife's full salary is being deducted as a 401(k) contribution, but couldn't we still use her salary and give the husband the total 25% of their combined salaries as a profit sharing contribution since her salary is still technically eligible income? Thanks in advance!

For two it was under $1,000. One person the checks went to the participant, as requested, they just never deposited it. Yes, there is going to be a 2025 requirement, since this money is still there. How do we show this money coming back into the Plan? Or if this was the only money left at the end of '24 is there still a filing requirement? So if the Plan was officially terminated in '23, for '24 there's no minimum funding requirement and therefore there is no 2024 Schedule SB required? I just wanted to be sure. So this question would be no (I just want to make sure):

We have a Cash Balance Plan that terminated in 2023. The bulk of the distributions were completed by 12/31/23, with a few finalized in 2024. All of the 2023 distributions were reported on the 2023 Form 5500, but it turns out 3 checks get returned as undeposited and the money was back in the account as of 12/31/24 (it is the only money that is sitting there, totaling under $3k). So how do we handle that in terms of the Form 5500: Do we have to show it on the Form 5500? The participants were sent 1099-R for the distributions in 2024 (for 2023) and it was already reported as distributed on the Form 5500? If we do have to report it on the Form 5500, how is it shown as coming back into the Plan? It's not really a contribution... If a Form 5500 is required, is a Schedule SB also required? Or is it just the SF at this point? Thanks everyone. This isn't a situation I've run into before. The Plan is to have the money rolled into an IRA on the participant's behalf by 12/31/25, but trying to handle the '24 Form 5500 first.

Great, thank you!

Great, thank you! What if it is a 1-person plan where the SB isn't required. Is it still just that the first Form 5500 is filed for year 2 since the plan was retroactively adopted?

We have a plan that was adopted after the extension deadline (as per Secure Act), so there was no extension filed. How do we mark that on the Form 5500. I'm getting an error when I click off: "If this is a retroactively adopted plan permitted by SECURE Act section 201, check here" Is that the right way to indicate it on the Form 5500?

Sorry, SEP is not something we normally work with but someone is asking me so I'm trying to help them out. They are just setting up a SEP Plan for a group, 5 employees during the year: Can you have a last day requirement to get a contribution? Can you have an eligibility period? If so, can it be setup similarly to a 401(k) Plan? Are there specific rules? Thanks in advance!

We have a plan that terminated as of 12/31/24, but we just found out that there was a residual that came in during 2025 and then immediately paid out. How do people handle this type of situation? Do we just file the 12/31/24 as the final? Or do we have to do an additional 5500 showing the money in and out in '25 (which is a small amount)?

If someone has an outstanding loan but has now incurred a hardship (notice of eviction), can they take the Hardship Distribution? I'm probably overthinking this, I just wanted to be sure. Thanks!

Yes, I had already said that to them. It's the owner of the company who is taking the loan, so I'm guessing they are going to loan the money to the company, but I'll make that point clear to them.

I think I know the answer, but the client is asking if they can take a loan and/or in-service distribution (as allowed by the Plan Document) out of the 401(k) Plan and use that money to fund the Cash Balance Contribution (and for the in-service, potentially pay it back under the 60-day provision). Is this something that would be allowed? (Again, I think I know the answer but I want to be sure)

What are the penalties if someone can't fund their minimum contribution? It's been awhile since I've been in this situation, so I wanted to be sure what we were looking at. Thanks in advance

Agreed 100%. Would there be an issue to do this retroactively to 2024? Just curious, because I know they are struggling now to come up with the money, so freeze their contribution for '24, '25 & probably '26 before revisiting starting contributions back up?

Client has hit some hard times, but wants to continue to benefit the employees (at least for now). They reduced the contribution to the owners in 2023, but now need to reduce their contributions again. Generally I know you can't change the benefit annually. However, if the employees stay the same and it's just the owners who are taking a reduction (possibly as low as $0), would that be viewed as acceptable? I don't see an issue, since it's only the HCE who are being negatively impacted. I just wanted to confirm that I wasn't overlooking anything.

Thanks Effen! One more clarification. There are participants who are eligible for the 401(k) Plan but not the Cash Balance Plan (they work under 1,000 hours but are getting a Safe Harbor Match). So for the 6% of eligible compensation that goes into the DC Plan I assume their salaries count, correct?

I know that when you are testing both a 401(k)/Profit Sharing Plan and Cash Balance Plan together, the contributions to the Profit Sharing are limited to 6% of eligible compensation. Does that 6% include any Safe Harbor Match that is made to the 401(k) Plan? Or does it only apply to the Profit Sharing? I think I'm confusing myself so I just want to make sure. Thanks in advance!

I'm not sure if they gave her the option to defer and she just opted not to. As long as she's eligible now, that's my only concern. So the best option is to just amend the Plan stating that a participant that worked out of the country previously is immediately eligible to participate? Something to that effect?

Not an HCE. I guess a contractor. What I was told was payments to her were considered an "expense". I'm not sure if she's a US citizen now, but definitely a resident who is receiving a W2.