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October 10, 2024

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

AJC created a topic in Retirement Plans in General

401(k) Funds Used to Purchase Lifetime Annuity Outside a 401(k) with Payments Used to Satisfy Owner's RMD

"The owner (plan sponsor) of a 401(k) plan is retiring. The owner turns 73 this November (2024) and his first RMD has been calculated for this year at ~ $150,000. Three months ago, the owner spent $2,850,000 from his share of the 401(k) plan assets to purchase a lifetime income annuity for himself outside the 401(k) plan. Does SECURE 2.0 Act allow the monthly payments from the lifetime income annuity that are paid to the owner during 2024 to count toward satisfying the owner's 2024 RMD from his 401(k) plan account?"

4 replies so far   |    Click Here to Add a Reply

J Simmons created a topic in IRAs and Roth IRAs

Fix for Intended 'IRA'

"X had benefits in a former employer's 401k plan. X wanted to direct the benefits to make loans to local construction contractors (no familial, no other business relationship), with promissory notes with stated interest rate and with collateral to secure repayment. X sets up an account at a local bank to roll the $$$ into the account. Between X, the bank and his accountant, there was a miscommunication; rather than an IRA, the bank simply opened a regular business account for X. The 401k plan sent the $$$ to the bank and reported it as a direct rollover distribution from the 401k plan. The bank placed the $$$ in the account (not an IRA). Now that the problem has been discovered, X has sought my assistance to remedy the situation. Any suggestions will be appreciated."

1 reply so far   |    Click Here to Add a Reply

FFF0999 created a topic in 401(k) Plans

Are Safe Harbors Plans Required to Pass ACP Testing If a Plan Has After Tax Contributions Enabled?

"There is an ongoing discussion in one of the companies I work with. They are evaluating moving from a SIMPLE 401k plan to a Safe Harbor plan, to ensure that the compliance tests are passed and to enable a possible Mega Backdoor Roth plan. I have been able to simulate the tests and with the Simple 401k plan, the ACP falls into non-compliance quite quickly. However, I've done some research and found that Safe Harbor plans offer some type of waiver over tests. But I've also found that after-tax contributions do not qualify for safe harbor test exemption, meaning that even when the company adopts a safe harbor strategy, it is very likely we would fail the ACP test. Can someone help me confirm if safe harbor plans with after-tax contributions are subject to ACP testing? (and, why are they called safe harbor if they are not entirely safe?)"

4 replies so far   |    Click Here to Add a Reply

Will.I.Am created a topic in 401(k) Plans

Do Statutory Employees Who Get a W-2 Count as Employees for Auto Enrollment Purposes

"I have a client who pays people who could be classified as independent contractors as statutory employees and issues them a W-2. Do these employees count towards the limit of determining if a plan sponsor has to do auto enrollment or not?"

3 replies so far   |    Click Here to Add a Reply

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