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Although RMDs from separate IRAs can be aggregated and taken from one Traditional IRA, individuals cannot satisfy RMDs from qualified retirement plans by taking a Traditional IRA distribution. In addition, individuals cannot satisfy Traditional IRA RMDs by taking distributions from their qualified retirement plans.

Plan administrators and plan participants must limit the elective deferrals that are contributed to their qualified retirement plans each calendar year to the Internal Revenue Code Section (IRC Sec.) 402(g) limit. The limit includes elective deferrals (including both pretax and designated Roth deferrals) that participants can defer into their qualified retirement plans (in aggregate) for each taxable year.

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

Short answer, yes.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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

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.

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).

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.

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.

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.

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.