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Internal Revenue Service (IRS) announced an administrative transition period that delays the requirement for participants to “Rothify” their catch-up contributions until at least 2026.
Mary Beth’s Corner Did you know Plan Sponsors spend on average 40-60 hours, or over one week annually, submitting and updating payroll files? Manual data entry using spreadsheets or other rudimentary tools has been known to be one of the most strenuous problems for business owners. This method of payroll
New mandates require catch-up contributions to be made as Roth starting 2024 and increased catch limits starting in 2025.
Thanks to new regulations, for reporting purposes, the inclusion of eligible but non-participating employees will no longer be the methodology used when determining the number of participants– only participants and beneficiaries with account balances will be considered.
By 2025, most startup retirement plans will be required to automatically enroll new employees into their plan, unless they opt out, at an initial 3% employee deferral rate with auto escalation. – Sound familiar?
Employers may now consider retroactively adopting a tax-qualified retirement plan such as a profit sharing plan, cash balance plan, or traditional defined benefit plan, for the purpose of making tax deductible employer contributions before their extended corporate tax filing deadline.
Since employers contribute for slightly different reasons, those contribution due dates may vary depending on plan design. In other words, one set of rules may specify a deadline for compliance purposes, while another set of rules requires a different deadline for tax deduction purposes.
The House and Senate have passed the Consolidated Appropriations Act of 2023, which includes a grouping of retirement plan provisions better known as, “SECURE 2.0”.
On December 23, 2022, the bill was presented and signed into law by President Biden.
With 2023 rapidly approaching, it’s important to keep up with year-end IRS requirements and make the necessary communications around RMD rules for employees.
When asked why he robbed banks, a well renowned bank robber by the name of Willie Sutton answered, “because that’s where the money is.” Today, instead of robbing physical banks, thieves have sharpened their skills and honed in to “where the money is” – your retirement plan.
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