Articles — Ascensus

Common Coverdell ESA Distribution and Portability Questions

Here are answers to some of the common Coverdell ESA questions we receive from financial organizations.

expert, ESAAscensusJune 15, 2023Coverdell ESAs, Coverdell ESA, Compliance & Operations, Q&A

How SECURE 2.0 Affects Family Attribution Rules

SECURE 2.0 is the hot topic in the retirement industry right now and has been hailed as the most important retirement enhancement legislation in more than a decade. One of the changes effective for plan years beginning after December 31, 2023, reforms the family attribution rules by redefining “employer” for qualified retirement plan (QRP) purposes.

SECURE 2.0 Adds New Penalty-Free Distribution Option for Certain Emergency Expenses

The SECURE 2.0 Act has added several more penalty-free distribution options—including one that helps individuals pay for certain emergency expenses.

IRA, Employer PlanAscensusJune 15, 2023IRA, IRS, Regulations, Retirement Plan, Qualified Retirement Plan

SECURE 2.0 Provides New Ways to Take Penalty-Free Distributions

The SECURE 2.0 Act provides more ways for individuals to access their retirement savings and creates new exceptions to the 10 percent early distribution penalty tax.

IRS Provides EPCRS Guidance Related to SECURE 2.0

The IRS in late May 2023 issued Notice 2023-43 to address questions and provide interim guidance related to Section 305 of SECURE 2.0.

IRA, News BriefAscensusJune 15, 2023Compliance & Operations, IRA, SEP Plan, SIMPLE IRA Plan, IRS

Our Client Says That We’ve Incorrectly Reported His SEP Contribution—What Do We Do?

There can be confusion surrounding how to report SEP contributions. Our ERISA consultants receive frequent calls about this topic on our 800 Consulting lines. A common scenario involves a self-employed business owner receiving a Form 5498, IRA Contribution Information, and noticing that the SEP contribution that he made wasn’t reported for the tax year in which he reported the contribution on his federal tax return.

IRAAscensusMay 18, 2023SEP Plan, SIMPLE IRA Plan, Reporting, Regulations, Contribution

Can Interns and Other Employment Classes be Excluded From Retirement Plan Participation, Including Eligibility to Receive Safe Harbor Contributions?

Not everyone who participates in the workforce serves an employer on a permanent full-time basis. Most qualified retirement plan documents allow an employer to tailor a plan to meet its specific needs, including defining the eligibility requirements for employees to enter and participate in the plan.

Your SEP and SIMPLE Questions Answered

A sole proprietor whose aim is maximizing her contribution may find a SEP plan more appealing than a SIMPLE IRA. But as her business grows and she starts hiring employees, she might decide to switch to a SIMPLE IRA, which allows for employee deferrals instead of solely relying on employer contributions.

expert, IRAAscensusMay 18, 2023Compliance & Operations, IRA, SEP Plan, SIMPLE IRA Plan, Contribution, Traditional IRA

Be(A)ware of Roth IRA and Roth Employer Plan Differences

Although Roth IRAs and designated Roth accounts have a few similarities, such as the name “Roth” and the objective of generating tax-free earnings, there are also some significant differences between the two accounts.

2024 HSA Limits Released

The IRS has issued Revenue Procedure 2023-23, providing inflation-adjusted amounts for health savings accounts (HSAs) for calendar year 2024.

HSAAscensusMay 18, 2023HSA, Business Insights, IRS, Compliance & Operations

Do You Have Clients in a Federally Declared Disaster Area? Here’s How to Navigate Form 5498 Reporting and Late IRA/HSA Contributions

Is the 2022 tax season truly over for your clients? If they live or work in a federally declared disaster zone, their federal tax deadline has been postponed this year.

HSA, IRAAscensusApril 20, 2023Compliance & Operations, IRA, HSA, IRS, Disaster, Contributions, Traditional IRA, Roth IRA

Agencies Update Form 5500

Plan sponsors have watched for updates to the process of filing Form 5500 over the past three years as the Department of Labor’s (DOL’s) Employee Benefits Security Administration, the IRS, and the Pension Benefit Guaranty Corporation (“the Agencies”) released changes to the form to comply with provisions in the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE 1.0).

Agencies Change Form 5500 Schedules

The third phase of updates to Form 5500, Annual Return/Report of Employee Benefit Plan, was recently released. This guidance addresses changes related to provisions in the Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE 1.0).

Navigating the New Federal Withholding Requirements

Withholding elections for nonperiodic distributions are now made on the new IRS Form W-4R.

IRA, expertAscensusApril 20, 2023IRA, Withholding, Regulations, Tax, Reporting

Voluntary Correction Program (VCP) Considerations

Given the complexity involved in operating a retirement plan, it’s not surprising that from time to time there may be miscues, such as operational, document, or even eligibility failures. Some can be resolved without the direct involvement of the IRS, under the agency’s Self-Correction Program within the broader Employee Plans Compliance Resolution System. Other failures must—or, if an employer chooses, can—be corrected under the IRS Voluntary Correction Program (VCP).

SECURE 2.0 Offers New Type of Emergency Savings Account

Effective for 2024 and later plan years, employers may permit participants who are considered non-highly compensated employees to contribute up to $2,500 (indexed), or less if dictated by the plan, to pension-linked emergency savings accounts (PLESAs) as part of their 401(k), 403(b), or governmental 457(b) plan.

AscensusMarch 16, 2023

What to do When an HSA Owner Dies

Although there are a few similarities between IRAs and HSAs, the beneficiary options are different.

expert, HSAAscensusMarch 16, 2023HSA, Beneficiary, Distribution

401(k) Plan Terminations and Successor Plan Rules

When an employer establishes a 401(k) plan, the IRS expects the plan to have longevity. If the employer terminates the 401(k) plan, the employer should have a good reason for doing so.