Basically

Roth Account... This partisipant has 4 different money pools: PS SH Pre-Tax Deferral Roth Deferral The plan document says that we can pull money from all plan accounts to complete this hardship distribution. In my mind I feel it would be best to preserve the Roth deferral account and pull all of the money needed to complete the hardship distribution from the other 3 accounts. Make sense? Any reason I shouldn't?

Thanks! I didn't know the Hardship wasn't automatically subject to 20%. So I guess I should ask the participant what % they want to have withheld? Also... his deferrals are all Roth. I need to look into that and understand the tax complications there.

I have a participant who has a legit hardship. His wife has become disabled. The medical and credit card bills are getting out of hand because his state is dragging their feet with any state benefits. Simple question... just want to be sure... it's just like any other distribution, correct? Taxes need to be withheld (20%). The 1099-R will be coded properly and if there is no exception he will pay the excise tax when he does his personal taxes. Am I correct? Missing anything? Thanks

Thanks! I knew there was a reason I use a service like Penchecks. If you are familiar, the base fee is $35. For these small payouts I was just trying to save the terminated participant some $$. I appreciate everyon's responses!

Yes... just a small amount in cash... a dividend or something. SH 401(k) plan. I will put $200 on my bulletin board as the magic number.

$200 is the magic number? no higher? Just making sure Thanks

I am horrible at searching the message boards. Is there a number at which point taxes do not need to be withheld from a distributtion? Reason... Bob was paid out but the financial advisor didn't wait for everything to settle and now there is $150+/- still in the investment account. I am happy to generate a 1099-R if it is acceptable to liquidate the account and send it all... no withholding. Is that ok? Is there a magic amount when taxes are not required to be taken? Just be sure it is reported via a 1099-R? Thanks

It's little things like this that make this forum so important.... so valuable. In the example where the check was generated/written in 2024 but ultimately cashed early in 2025, I would have gone with the reasoning that the funds left in 2025 therefore it is a 2025 payout. How about this... Letter of Authorization dated December 28, 2024 submitted to the financial advisor to payout a terminated employee. The funds were to be transfered/ach'd/wired... not a check... to the participant but the payout is not actually complete until 2025. Would you go by the LOA date? A 2024 payout and 1099-R?

51% top heavy now so all good there. Yes, I will keep an eye out for that in the future. Thanks!

Is this correct: If a business has all HCE employees (each earing well in excess of the HCE compensation limit... in fact in excess of the 401(a)(17) limit), when it comes to allocating a PS NEC contributoin, can the allocation be discriminitory? Can the owner of the business max out himself and contribute zilch to everyone else? Even pick and choose who might get a NEC contribution? Seems to be passing the tests when I run them all. I've never had this kind of a situation. If all good, I'm pleasantly surprised (and so will the business owner be). Thanks

Trying to payout this account. The participant (80) died in 2023. Has been taking RMDs. We need to take an RMD for the spouse now so we can roll the balance to her IRA. Do all pension RMDs use the uniform life table? CPA wonders if it should be a single life table. Thanks

Bumping this post... Is there a worksheet to help re amortize a loan that was suspended during COVID?

This client has resurfaced... asking questions. Am I correct with this example... Let's say that when the dust settles for the year he has room for a $35K VAT contribution and he deposits it. He already paid taxes on the money. If he converts it right away via an in-plan Roth conversion his 1099-R would declare taxes on the earnings alone. The Gross distribution would indicate the total conversion but the Taxable amount would be the earnings alone. 1099-R Code... The code would be 2, early distribution (because he is under 59-1/2)... and G, Rollover? The money path and documentation... Where would the VAT contribution be deposited? Can it just be deposited into an account designated for the VAT contributions and then document the intention to do the conversion on paper? Simple as that? Or do we need to make the deposit to the PS account and literally transfer it to the VAT account? Have a definitive trail? Thanks

Thank you. That's a big help.

Simple questions for a cheat sheet I am making.... If a participant makes ROTH deferrals, that money has its own 5 year clock... Yes? If a participant continues each year to make ROTH deferrals, does that new money use the original clock start date? If a participant makes an in-plan ROTH conversion, I know that has its own start date. And every time they do an in-plan ROTH conversion the conversion gets its own start date. Here are the questions... all in-Plan ROTH conversions need to be in their own investment account... That account can be on paper... correct? My system will track it, that's all that matters, correct? Thanks

I feel it is easier for me to efile the form using my credentials. Similar to AC's process, the 5500 is sent to the client along with an efile authorization form. It allows me to have my finger on the pulse, to know exactly who hasn't filed yet in real time. I have only 1 client to whom I send a link and that is done way back in April. He is quick to respond and he gets it done. I would be nervous as heck if I was this close to the deadline and relied on the client to get the return filed by 10/15. My 2 cents

In my plan design I always put in that vesting does not apply when someone dies or becomes disabled. How is this applied if the employee terminates, the balance is left in the plan and then they die? I bumped the vesting up to 100%. Am I correct?

Thanks So what I gather is that Uncle Sam will get his taxes for each year. He allows you to push it off for the first year but then you get hit twice the second year. After that it's year to year.

Bob was born 3/1/1953 He turns 72 after December 31, 2022 therefore his RMD age is now 73 He turns 73 on 3/1/2026... he needs to take a 2026 RMD He can put off his 1st RMD payment as long as it is paid by April 1 of the following year, 4/1/2027. Q/ This payment he makes on or before 4/1/2027 represents the 2026 RMD based on his 12/31/2025 year end balance... correct? OR; is the deal he can put off his 1st RMD payment until 2027, the amount of the RMD is based on the 2026 YE Balance, but the catch is he must take it by 4/1 What I struggle with is if he puts off his 1st RMD (the 2026 RMD based on 2025 YE Bal) until 4/1/27 (the following year) and then he needs to take another one for 2027 based on the 2026 YE Bal, he is going to have 2 RMD payments hitting his personal account in 2027... a lot of taxes to come up with. Am I overthinking this?

This is a year by year application... If only EE deferrals and SH match, no NEC in 2024, then no sweating a TH requirement? I like to design a plan as simple as possible... not going to have all kinds of different kookie hour requirements. Otherwise Excludable employees... Always makes me think hard to get it right. I need a good publication that will explain clearly and simply this group of employees and how they affect testing. In the end does it come down to the plan design?

A SH match contribution is not dependent on hours of service... correct? if an employee is eligible to defer then they will receive a SH Match ...period. With regards to eligibility, it's only for the NEC and EE contributions that you could have in the design an hour requirement... right? With regards to TH, a plan that has no NEC contribution in the design is exempt from TH ... correct?

Thank you. Ya, doesn't make sense for one company to pay another company's contributions. And they are not filing a joint return. Looking at your responses I should have thought of that.

I have a new plan, everyone is part time. It's a SH Match. To be eligible to defer you only need to work for the company for 6 months, no hour requirement. CAN the SH eligibility have a hour requirement? will that screw everything up? My ADP test?

In the situation where you have a control group that use one plan.... It seams to reason that each company pays the contribution required for it's own employees... right? I'm talking a straight forward 3% SHNEC. Can Company-A pay Company-B's 3% SHNEC? (curious with this question) Just need confirmation, thanks

I have 4 missing participants with the following balances: $95.76 $52.07 $14.90 $39.56 We use Penchecks to process our 1099-Rs and we also pull the distribution fee that we charge from the participant's distribution. After all distribution expenses are deducted each of these payouts will have a negative balance. Can I zero these accounts out with expenses? or do I need to open missing person IRAs and get the expenses somewhere else?