Basically

Can anyone point me to a link that will outline the history of the IRS' 6 year restatement history? is there such a definitive list? When it started? Required and optional interim amendments, a chronological history? Thanks

Ahh... yes. Thank you C.B., that is what I was looking for. RMDs are part of the basic operation of a plan... something that must be done. I sometimes second guess my knowledge. Appreciate the help.

Pooled... which is why I am asking and which is why I have in the past just used the 9/30 year end balance. If they were segregated brokerage accounts using 12/31 would have been easy.

For a September 30 FYE plan, when calculating the RMD can/do you use the 9/30 balance or do you need to determine the 12/31 balance and calculate the distribution based on that year end balance? Thanks

Coincidentally, today a client that setup a straight 401(k) for the employees only now wishes to participate in the plan. According to Lou's post above, I can amend the plan now to be a 3% NEC safe harbor as long as I do it by November 30. Correct?

Ahh... Zeller posted just before I did.. so let me amend my post. - To go from PS to 401(k) you just need to give everyone 90 days. As always, Thanks for the help!

Looking for clarification.... I understand that a new 401(k) must be adopted by 10/1 to ensure that the participants have at least 3 months to make deferrals for that year. - A straight PS plan has until December 31, correct? - A single member business 401(k) has until December 31, correct? - A 401(k) can be adopted any day from 1/1 ~ 10/1... correct? What is the rule if the plan sponsor wants to convert a PS into a SH? is there a deadline for that?

Ok, so the IRS is addressing the document authors and the plan sponsors adopting their document. And the key phrase I see you wrote is "to make corrections to their documents" regarding 1/31/23 Thanks

In announcement 2020-07 there is this passage: Deadline for Employer Adoption of Pre-approved Defined Contribution Plans The end of the third six-year remedial amendment cycle for pre-approved defined contribution plans is January 31, 2023. An adopting employer whose defined contribution plan is eligible for the six-year remedial amendment cycle and who adopts, by July 31, 2022, a newly approved plan, will be considered to have adopted the plan within the third six-year remedial amendment cycle. so... Jan 31, 2023 or July 31, 2022? I don't get the need for 2 separate dates. If I have an existing plan and we need to restate the document to comply with Cycle 3 it says above "The end of the third six-year remedial amendment cycle for pre-approved defined contribution plans is January 31, 2023" which I am taking to say you need to restate by 1/31/23. Or do I need to have them restated by July 31, 2022? What is the IRS is trying to convey? What am I missing?

I listened to that webinar mentioned above, very interesting. The speaker was easy to listen to and it was clear she knew her subject. After listening to the webinar I don't think I would venture into accepting 3(16) responsibilities. She talked about putting your 3(16) responsibilities in your service agreement and ways people try to insulate them self from 3(16) liability. At one point the cons outweighed the pros and I concluded it's not worth it. I am learning that some clients are beyond not involved and feel that the work you do for them can wait, frustrating. The only reason I would consider taking on any 3(16) responsibility is why this post was started by CLE401kGuy... to speed up the process of getting a form 5500 signed and filed timely. I bet it will be listed for others to review ->Erisapedia Webcasts

#2, for plans that DO impose a last day requirement, as long as that is the case you can amend mid year? The plans that I am handling I intend to restate in early 2022 to meet the 7/31/2022 restatement deadline. Should be no problem (if the client agrees) to move to a X-tested plan for more flexibility? Ya, #3 gets into how other business' operate. Appreciate the help.

CB, what you are saying is that an employee can defer less than the 402g limit and some (if not all) can be classified as catchup? And by re-classifying it you can play around to pass the 415 test. BG, 3 questions: A X-tested plan can still be a SH plan, correct? With the Cycle 3 restatement deadline this coming July would it be advised to maybe restate all plans from SH 401(k) or straight PS over to a X-tested SH 401(k) or X-tested PS? Do firms charge more for X-testing? FT William compliance software performs the X-testing.

BG, he gave me last year's comp and deferral numbers and said this year would be very much the same. He is thinking he wants a larger PS contribution to get a better corporate deduction. Hmm, I knew that when calculating the maximum contribution you don't include the CU to pass the 415 limit when there is plenty of compensation, but I didn't know you could exceed the compensation limit boundary by the CU I figured (if she is only deferring 22,500) - 30,000 compensation -22,500 salary deferral 7,500 profit sharing But what you are telling me is take out the CU all together and then back into the PS contribution. And if she maxes out it would look like this - 26,000 salary deferral 7,500 profit sharing (25% of 30K comp) 33,500 <- total can exceed her total compensation? His contribution calculation is the same. Max deferral + 25% PS As I stated at the top, his goal is to get the largest corporate contribution deduction. This makes that happen without any worries, right? The plan design is a pro-rata PS. Very vanilla. I never understood how to sway contribution amounts in one participant's favor. An integrated at TWB formula does that but in this case he does not have enough compensation. X-tested with everyone in their own group? Is that how most people design their all around plans?

I got him to fill me in fully.... not as much money as I though... actually very simple. Sorry to waste people's time. For exercised sake, here it is: C-Corp He - $105K W-2 comp She - $30K W-2 comp He wants to max the corp contribution to get the business deduction. Total eligible comp is $135,000. 25% of eligible comp is $33,750. He gets 26,250 She gets 7,500 Deferrals: He can defer the max - 26,000 She can defer 22,500? Total contributions: He - 26,000 SD + 26,250 ER = 52,250 total She - 22,500 SD + 7,500 ER = 30,000 total Good?

I will gather that info and follow up

I hope this is ok, revisiting this topic. My question is kind of the same but for a different client. Here's the story - Husband and wife Husband earns $300K Wife earns $50K So, total allowable comp in the scenario would be $340K (290k for the husband and 50k for the wife) Maximum employer contribution would be 25% of $340K or 85,000 Both are deferring the max, 26,000 Husband's contribution would be 19,500 + 38,500 + 6,500 for a total of 64,500 Wife's max is the following? 19,500 + 6,500 + 24,000 employer for a total of $50,000 - Reason being... maximum employer that can be contributed to the plan as a whole is $85,000. Husband can receive $38,500 to max out leaving 46,500 available. The wife can receive from the 46,500 an amount that doesn't make her contribution exceed her compensation. Right? And, we need to include her catchup... bottom line is she can not have contributed on her behalf more than her compensation.

This Dr. is taking down his shingle. He was born 1/6/1951. I've been reading and here is what I found.... The beginning date is determined as follows (from the IRS site): April 1 of the year following the later of the year you turn 72 (70 ½ if you reach 70 ½ before January 1, 2020) or the year you retire (if allowed by your plan). If you are a 5% owner, you must start RMDs by April 1 of the year following the year you turn 72 (70 ½ if you reach 70 ½ before January 1, 2020). So... first, he was not 70-1/2 before 1/1/20 so he shouldn't need to take an RMD until he is 72 but he is a 5% owner... and he is retiring. Can he just roll his money into an IRA or does he need to take an RMD first? Thanks

Thanks to the comments. I simply told the gentleman that real estate has too many balls in the air and that my knowledge of real estate in a plan only allowed me to juggle one ball.... the "no real estate" ball. I told him to go find a good ERISA attorney. He was satisfied with that recommendation.

Thanks!

I'm glad you brought that up. An RMD is only required to withhold 10%? And, if the participant wants they can elect to not have anything withheld?

I was asked this question a week or so ago and have been putting it off hoping this person would go away. He hasn't. I have read that there are companies who promote real estate in plans. I see it as a big pain in the .... butt. Here is what he wants to do and also what I want to tell him - He wants to purchase an apartment building. He informs me that he is in escrow to purchase and intends to get a loan AND wants to use some of his pension money to complete the deal. Doesn't sound ok to me. Maybe a great investment, but IDK if he can legally do it. Am I correct in thinking this is a prohibited transaction at it's simplest? He will benefit personally outside the plan with the help from his pension. IDK, maybe there is a way to pull this off but I clearly don't know the way. He is concerned about prohibited transaction rules which impresses me, he is concerned and wants to do it the right way. He is asking me if I know anyone who could advise him how to complete the transaction. I was going to tell him to find an ERISA attorney in his area ( I am east coast he is west). Am I right... steer him towards an ERISA attorney and let him/her educate him on the legalities of this type of investment? and if it can be done how it needs to be structured. Thanks

I advised them they need to take the RMD. And I thought it through regarding the 1099-R. One for the rollover and one for the RMD. I appreciate the responses. Thank you both.

A participant is terminating/retiring. Because he is not an owner he did not have to take an RMD from the plan. Does he need to take one before he rolls his account balance into an IRA? The goal is to pay him out before the year end and we don't want to miss an RMD if he is required to take one.

I am being asked if this person's plan can have total assets of only their pension loan. Here is what I know. Woman intended to start a business (did actually) and opened a 401(k) plan. She rolled into the plan $200,000+ worth of IRA and pension money from her previous employer. She took a $50,000 loan and was making quarterly payments. COVID hit and her business went nowhere. She ended up rolling her IRA and previous employer plan money out and into an IRA (felt it was safer). She ended up stopping her loan payments as well so all that is in the plan is the loan balance. I told her that if she wanted to close the plan her loan would be a deemed distribution. She does not want that. Can it go along with only the loan as an asset?

Thankyou. Little things help