expert — Articles

Can an employer establish a SEP or SIMPLE IRA for a minor child employee?

Short answer, yes.

IRA, expertAscensusNovember 21, 2024SEP Plan, SIMPLE IRA Plan, IRA, IRS

A plan administrator must take all necessary steps, as determined by the facts and circumstances of the participant’s situation, to determine if the participant is truly missing or nonresponsive.

Employer Plan, expertAscensusNovember 21, 2024Retirement Plan, DOL, Beneficiary, Distribution

New RMD Rule Could Affect Spouse Beneficiaries, Hypothetically

The new RMD regulations are not without at least one limitation for spouse beneficiaries, in the form of the “hypothetical RMD.” This could affect a spouse beneficiary who inherits an IRA or qualified retirement plan account before the deceased’s RMDs are required to begin—generally age 73—and who elects the new 10-year beneficiary payout rule in order to delay the onset of required distributions.

Mandatory Automatic Enrollment Under SECURE 2.0

Automatic enrollment features are attractive to employers that wish to increase the plan participation rate and encourage employees to begin saving for their own retirement. Automatic enrollment is designed to improve retirement preparedness and improve overall financial wellness.

expert, Employer PlanAscensusOctober 17, 2024Retirement Plan, Qualified Retirement Plan, Regulations

HSAs and Medicare

It is not turning age 65 that makes people ineligible to contribute to HSAs, but rather enrollment in Medicare that prevents HSA owners from making further contributions. And while most people do enroll in Medicare when they turn 65, it is not necessarily required.

HSA, expertAscensusSeptember 19, 2024HSA, HSAs, Medicare

401(k) Actual Deferral Percentage Compliance Test Basics

The ADP test measures or determines whether elective deferrals that are made in the plan are disproportionate between two groups of employees: the highly compensated employees (HCEs) and the non-highly compensated employees (NHCEs). This status is determined by such things as compensation and company ownership.

expert, Employer PlanAscensusSeptember 19, 2024Qualified Retirement Plan, Retirement Plan, 401(k) Plan

The Not-So-Simple Changes to SIMPLE IRAs

Employers may now offer an increased SIMPLE IRA plan elective deferral limit, even though plan documents do not reflect the new provision. In fact, it may be required for some companies to allow these increased limits now, depending upon the size of the company.

IRA, expertAscensusAugust 15, 2024SIMPLE IRA Plan, IRA, Roth IRA, Qualified Retirement Plan

Now that Cycle 3 is Over, What's Next?

The IRS requires that all qualified retirement plans be established and supported by a formal written document that complies with the Internal Revenue Code. Employers may choose to use a pre-approved document offered by a document sponsor, like Ascensus.

Removing and Recharacterizing Excess IRA Contributions

The deadline to remove excess contributions and avoid the penalty—removed with the net income attributable (NIA)—is the IRA owner’s tax return due date, plus extensions.

IRA, expertAscensusJuly 18, 2024IRA, Recharacterization, Excess Contribution, Traditional IRA, Roth IRA

Handling Cashout Distributions

If elected in the plan document, a plan sponsor can cash out a terminated participant’s account if the balance in the account does not exceed the threshold identified in the plan document, following appropriate notification to the terminated participant.

expert, Employer PlanAscensusJuly 18, 2024Qualified Retirement Plan, Q&A, Regulations, Retirement Plan

Untangling Those Tricky IRA Withholding Rules

Financial organizations must offer federal withholding on all IRA distributions that may be subject to income tax.

expert, IRAAscensusJune 20, 2024Withholding, Beneficiary, Distribution, IRA, IRS

A Brush Up on EPCRS’s Self-Correction Program: Reviewing updates made to EPCRS following the passage of SECURE 2.0

Plan sponsors may generally correct eligible inadvertent failures under the EPCR’s Self-Correction Program. Exceptions to this rule include failures in which the plan or plan sponsor is under examination by the IRS or for failures that have been identified by the plan or plan sponsor but have not been corrected within a reasonable period of time after identification.

Escheatment: When to Send IRA Assets to the State

The very nature of IRAs can make them more susceptible to becoming dormant. For example, because IRAs are meant to provide income during retirement, some individuals may keep their IRAs open for years with little to no activity. Other individuals may forget that they have an IRA or may not know that they have one (e.g., IRA beneficiaries or missing plan participants).

expert, IRAAscensusMay 16, 2024IRA, IRS, Roth IRA, Traditional IRA, Q&A

Retroactive Amending to Deny HCE Safe Harbor Contributions: When, If, and How

Employers with qualified retirement plans cannot disproportionately favor highly compensated employees (HCEs). This basic principle may lead to a misconception that no issues would result from implementing changes that negatively affect only HCEs.

529 Plan-to-Roth IRA Rollovers

The SECURE Act of 2022—also known as SECURE 2.0—made many changes to tax-advantaged savings arrangements. Not all SECURE 2.0 provisions took effect immediately. One new provision that takes effect in 2024 is the option for certain assets in 529 higher education savings plans to be rolled over to Roth IRAs.

expert, IRAAscensusApril 18, 2024Roth IRA, IRS, Contributions, IRA

Understanding the New Eligibility Requirements for Long-Term, Part-Time Employees

Over the past five years Congress has passed extensive legislation to encourage more people to save for their retirement. One obstacle many people face in this endeavor is not meeting eligibility requirements to participate in an employer-sponsored 401(k) plan. This hurdle is now easier to overcome for people who have worked on a part-time basis for their long-term employer.

Don’t Get Tripped Up by Tricky IRA Deadlines

There are many deadlines to keep track of throughout the year. Although it’s generally up to clients to track these deadlines, they may come to you for guidance. This article will cover some common questions surrounding certain IRA-related deadlines.

expert, IRAAscensusMarch 21, 2024Compliance & Operations, Beneficiary, IRA, Traditional IRA, Distribution

SECURE 2.0 Provides New Financial Incentive Option for Encouraging Employee Participation

Today, many employers offer long-term incentives, such as employer matching contributions, to boost participation in their retirement plans. But, as of plan years beginning after December 29, 2022, a small immediate financial incentive can also be offered to entice those not deferring in their employer’s 401(k) or 403(b) plan to start contributing to the plan. Inevitably, this has generated questions—the most popular of which we will answer here.