Ascensus’ highly educated ERISA consultants respond to hundreds of IRA, HSA, ESA, and employer-sponsored retirement plan questions every week through Ascensus’ 800 Consulting service. Featured each month are some of those questions—and the answers.
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.
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.
Some HSA owners may not fully understand what medically-related expenses their HSA is allowed to cover. Although financial organizations are not responsible for determining whether a medical expense is a qualified expense, it is helpful to know some of the basics.
An employer can design a plan and avoid worrying about ADP/ACP testing by offering an ADP/ACP safe harbor 401(k) plan.
Are there any age restrictions to making an IRA contribution? Can a working spouse contribute to a retired spouse’s IRA? What are the IRA catch-up contribution rules? Can I contribute to a 401(k) plan and to a Traditional IRA? Here are answers to your common IRA contribution questions.
What is a Sarbanes-Oxley blackout notice? What is a blackout period? What information must be included in the blackout notice? What are the potential consequences of not providing a timely blackout notice?
Naming a trust your IRA beneficiary is much less common than naming one or more persons, but it is not altogether rare. Unlike a will—which essentially only identifies who will receive a decedent’s assets—a trust can set conditions or limitations for receiving the assets and identifies one or more trustees to ensure that the decedent’s wishes expressed in the trust are carried out.
Eligible employees must be given the opportunity to contribute deferrals or after-tax contributions, including catch up, for the period of military service.
IRA-to-IRA rollovers are subject to the “one-per-12-month” restriction. Meaning that individuals may roll over only one IRA distribution during a 12-month period.
The top-heavy test in Internal Revenue Code Section (IRC Sec.) 416 compares the benefits that have accrued under the plan for key employees to those of nonkey employees.
Unlike the requirements for making annual IRA contributions, an individual is never required to have eligible compensation (i.e., earned income) in order to roll over retirement plan assets to an IRA, including a Roth IRA.
A safe harbor 401(k) is a specific 401(k) retirement plan design that allows sponsoring employers to avoid certain compliance testing. Many aspects of 401(k) plans are subject to compliance testing to ensure that higher paid employees and owners don’t benefit from the plan disproportionately in comparison with the rank-and-file employees. Put another way, the plan’s provisions must not unduly discriminate in favor of owners and the highly paid.
The deadline for IRA owners to recharacterize or remove their 2022 excess contributions is fast approaching. Typically, the federal tax return extension deadline is October 15. But this year that date falls on a Sunday, so the deadline has been moved to October 16, 2023.
If deferrals are not deposited into participants’ accounts by the Department of Labor’s (DOL’s) deposit deadline, the deposits are considered late. This failure may result in a prohibited transaction.
Beneficiaries are allowed to disclaim inherited IRA assets. But beneficiaries cannot direct where the assets will go.
With the passing of key retirement legislation in the last few years, there are many incentives for employers to adopt a qualified retirement plan that can provide meaningful benefits to employees. While there are numerous factors to consider during the establishment process, employers should consider certain effective dates that will significantly affect the success of their plan’s initial year of operation.
Health savings accounts (HSAs) continue to grow in popularity. And as they become more popular, you should expect an increase in HSA-related questions from clients. This article provides answers to some of the more common HSA questions that your clients may have.
Certain events in the life of a retirement plan may lead to some assets being temporarily allocated to special unallocated accounts, rather than being credited to a specific plan participant. This is the case with both forfeiture accounts and suspense accounts, which—perhaps not surprisingly—are sometimes confused with one another.
Here are answers to some of the common Coverdell ESA questions we receive from financial organizations.
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.
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.
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.
Withholding elections for nonperiodic distributions are now made on the new IRS Form W-4R.
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).
Although there are a few similarities between IRAs and HSAs, the beneficiary options are different.
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.
Here’s a refresher on how to know the reporting differences between rollovers, postponed/late contributions, and repayments.
An in-plan Roth rollover (IRR) is a rollover of non-Roth assets to a designated Roth account under the plan. Learn more about the plan and notification requirements for an employer plan to offer IRRs.
An individual can contribute to an employer-sponsored retirement plan and to a Traditional IRA. But claiming a federal income tax deduction for a Traditional IRA contribution may be a different matter.
Qualified plan loan offsets (QPLOs) give clients more time to repay most outstanding plan loans.
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