Message Boards Digest

January 26, 2023

Here are the most recently added topics on the BenefitsLink Message Boards:

WCC created a topic in 401(k) Plans

SECURE 2.0 Section 603 - Striking Subparagraph (C)

"Section 603 ELECTIVE DEFERRALS GENERALLY LIMITED TO REGULAR CONTRIBUTION LIMIT This is the section that refers to Roth catch ups for those making $145k. This section states the following: (b) CONFORMING AMENDMENTS.-- (1) Section 402(g)(1) is amended by striking subparagraph (C). Question: isn't that the subsection that allows catch up beyond the 402(g) limit regardless of compensation? If that section is stricken, what remaining section allows catch up beyond the 402(g) limit? I am curious if this has the unintended consequence of eliminating all catch ups - is that what this does? (If it does, I am sure it will be fixed so this isn't a fire drill question) Thanks"

3 replies so far   |    Click Here to Add a Reply

AlbanyConsultant created a topic in 401(k) Plans

Employee Retention Credit

"A CPA reached out to me today to tell me that he was amending 2020 and 2021 tax filings for the Employee Retention Credit (under CARES, I think), and how would that affect the employer contributions for those years? Basically, certain business are getting to amend COVID-era (like it was so long ago) tax returns to claim a tax credit for retaining their employees if they met certain criteria (I don't care what the criteria are since I know my business didn't qualify for it). This increases the net income for the year - sometimes significantly - and therefore for a sole prop or partnership entity, this affects the net compensation. Has anyone else been hearing about this? How are you handling it (ideally with the minimal amount of disruption)? I'm concerned that if we include it in 2022 (or 2023) based on the deposit date, then it will reduce the amount that can be contributed for the current year (or next year). And, since the CPA is amending the 2020/2021 tax return, it would be nice (though not required) if things lined up. Any thoughts are appreciated. Thanks."
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Coleboy1 created a topic in Cross-Tested Plans

Average Benefit Test and Rate Group Test

"We use FT Williams for administration ... This cross-tested plan has passed the rate group test but not the average benefit test. It also passed the ratio percentage test. Does it still have to pass the average benefits test as well? Are deferrals included in the average benefits test?"

6 replies so far   |    Click Here to Add a Reply

thepensionmaven created a topic in Defined Benefit Plans, Including Cash Balance

Possible Takeover

"Received a referral on a cash balance as well as a 401(k) plan. Cash balance no eligible employees (presumably), 401(k) remains to be seen. My first question to him is the 401(k) 'handled' by a payroll company as I refuse to takeover any such plan. Secondly, ADP has no knowledge of the cash balance plan. Third, the cash balance is on a 10/1-9/30 plan year; the 401(k) is calendar. Regardless of different plan years, granted they need to be aggregated for deduction purposes; don't the plan need to be tested together for 401(a)(4) ? Seems like a loss leader."

3 replies so far   |    Click Here to Add a Reply

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