Old Reliable

I'm dealing with a similar issue just today! Client has 401k plan with a match (25% to 6%). Eligibility is 1 yr. They're hiring a regional manager who will earn 190k. Since he's only being hired now (effective Aug. 1), it is my understanding that he won't be HCE in 2025 or 2026. Any problem amending to allow him in immediately? Is it better to allow him in by Job Classification, or is specifically naming him in an Amendment OK?

sponsor of a 401k/Safe harbor Match/ Profit Sharing plan is adding a cash balance plan retroactive to 2024 (corp. tax returns not yet filed). they want to change 2024 Profit Sharing contribution allocation method, from integrated with social security, to new comp. Employees will receive a greater profit sharing contribution when using new comp as compared to integrated, so they are not losing anything. HCE's will be getting a smaller contribution because they are getting a big number in the cash balance. Can this be done by amending the DC retroactive to 2024, in addition to adopting the cash balance? Thank you for your guidance! O.R.

sole proprietor has not filed his tax returns yet (on extension). wants to adopt solo 401k retroactively, and make maximum deferral and profit sharing contributions. What is the latest date he can adopt and contribute? I'm being told that under Secure 2.0 he cannot defer after April 15. Is this true? (Getting conflicting answers.) your help will be most appreciated!

An accountant asked whether DB contributions in an owners only DB plan are deductible in New Jersey. Any reason why they should not be? Thanks

Thank you, much appreciated!

Husband's IRA was kept at a bank. Unfortunately, no beneficiary was designated. There is a will, which says that upon his passing everything goes to the wife. The bank says it cannot do a direct spousal rollover. Instead, they want to roll over to an account for the Estate, and then the spouse can get it. Would she then be able to roll the proceeds into her own account? Would it be considered an inherited IRA or would it become hers as a spousal rollover? Obviously there are significant tax and RMD implications, etc. Thank you

Client maintains safe harbor 401k profit sharing plan. Participant's first wife died. New Beneficiary designations were completed, naming his children as beneficiaries. The participant also has IRA's, which has his children as named beneficiaries. Participant recently remarried. Pre-nup agreements were prepared, agreeing that she does not have any rights to his retirement plan or IRA's. Would the new wife automatically become beneficiary of his retirement plan upon being married 1 year, unless the participant obtains a spousal waiver? Is a spouse the automatic beneficiary of his IRA's as well? The husband would rather not broach this less-than-romantic topic with his new spouse if he doesn't have to! 😉 Thanks

Plan year end was 6-30-23, so 5500-SF was due January 31 2024. Plan was being audited for prior year, so they neglected to file before Jan 31 due date. Now its 20 days into February. Can the return be filed electronically, although late, with reasonable cause explanation? Or [when compared to $250 per day] is it safer just doing DFVCP for $750? Thanks

of course we all know this question was prompted by a life insurance "specialist" 🤔

Is Life Insurance permissible in a cash balance plan? If yes, how is the 'incidental' limit calculated? Is it 100x projected benefit as in DB plans, or a % of contribution? Is it discriminatory unless policies all purchased on all participants? Any guidance is appreciated! Thank you

We administer an Owners Only 401k plan. Contributions for 2022 were $20,500 to Roth 401k and $40,500 in after-tax voluntary contributions. Participant now wants to do an in-plan conversion of after-tax voluntary contribution to a Roth account. 1) How should this transaction documented? Does the plan issue a 1099-R showing a total distribution of the current after-tax balance, with only the earnings portion as taxable ? 2) Assets are held a Schwab. Does a separate sub-account need to be set-up for the various types of in-plan conversions e.g., after tax, employer match, profit sharing etc. or can they all be "lumped" into one account? Thank you

DC Plan, only participant was owner, spouse pre-deceased, no children, no beneficiary designation. There is a will directing how the Estate is to be distributed. Do the plan assets get paid to the estate, and then distributed accordingly? Can any relatives (or even non-related beneficiaries) roll to IRA's? Any other tax advantaged methods of distribution available? Thank you in advance for your help with this!

Company switched payroll providers. New payroll company has not withheld 401k from the 5 participants for 2 months. What's the best (and cheapest) way to correct? Can this be self-corrected? Must employer make up lost earnings? Can the DOL calculator be used?

client is a single member LLC which holds a 5% interest in a retail store organized as an LLC partnership her share of partnership income (all active) is reflected on K1 to the single member LLC can she have her own qualified plan for her LLC income? Thanks

Client adopted new DB plan under SECURE retroactive to 2020, but already contributed 30k to his owner only SEP for 2020. He really is only allowed to contribute to a DC 6% x $285k, which is $17,100. The SEP is with Schwab, and so is the new DB. I doubt they will transfer the contribution directly from SEP to DB unless classified as a rollover (which it isn't!). Is the only solution to ask Schwab to return the contribution as a contribution in error? Do we ask for a return of the erroneous non-deductible excess (30,000-17,100 = 12,900) or the full $30k? Your help is appreciated!