As the end of the year approaches, some of your clients may start requesting qualified charitable distributions (QCDs).
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A recharacterization is a transaction that allows an IRA owner to “undo” a regular Traditional or Roth IRA contribution and to treat it as though it had been made to the opposite type of IRA.
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Unlike breaks-in-eligibility service that can delay an employee’s ability to participate in an employer’s retirement plan, breaks-in-vesting service can delay or even prevent a participant’s ability to fully vest and become entitled to employer contributions if she is subject to a vesting schedule.
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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.
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Recent legislation passed by Congress includes several provisions that enhance the ability of workers to increase their retirement savings. One of these provisions, Section 110 of the SECURE 2.0 Act of 2022 (SECURE 2.0), also enhances the ability of employers that sponsor a 401(k), 403(b), governmental 457(b), or a SIMPLE IRA plan to supplement workers’ retirement savings by providing matching contributions to employees who make qualified student loan payments (QSLPs) in 2024 and later plan years.
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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.
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Here is a refresher for IRA excess contributions and how to remove them.
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Just as important for an employer choosing plan service requirements is considering when an employee will experience a break in eligibility service. Breaks in service—leaving that employer, in other words—can potentially delay when an employee becomes a participant, or resumes participation if he or she was an eligible participant before incurring breaks in service.
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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.
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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.
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The Department of Labor has launched an online filing system for termination administrators to be able to submit required information for abandoned plans to the DOL, in addition to existing email and paper-based methods.
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Financial organizations are responsible for paying out IRA assets to beneficiaries after an IRA owner’s death and properly report these distributions to the IRS. Ensuring that an IRA owner’s beneficiary designation is up-to-date and as complete as possible can minimize any distribution issues.
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The IRS has issued Notice 2024-55, providing guidance on emergency personal expense distributions and domestic abuse victim distributions that are effective after December 31, 2023, under SECURE 2.0.
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Employers that establish 401(k) or similar qualified retirement plans often have definite ideas on how, and when, employees become eligible to participate. Choosing eligibility requirements is one of many important decisions that employers must make when they establish such plans.
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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.
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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.
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Employers may now treat an employee’s qualified student loan payments like elective deferrals or after-tax contributions for purposes of providing an employer matching contribution.
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The Department of Labor (DOL) has issued an interim final rule, expanding the Abandoned Plan Program regulations to also include plans of employers who are in liquidation under Chapter 7 of the U.S. Bankruptcy Code.
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