Get this! A rule on the books stated that if a married couple had two completely separate businesses and they had a minor child, those business would be considered linked for retirement plan purposes.
If they did not have a minor child, those businesses would not be linked.
So two individuals have separate businesses. One has a retirement plan with employees, and one does not.
Everything is fine while they’re dating.
Then they get married. Everything is still fine.
Now they have a kid, and now we have a problem; The spouse who does not have a retirement plan is now linked to the spouse who does have the retirement plan!
Can you see how this might cause coverage issues?
Why should a newborn child who cannot say two words have an impact on your retirement plans—an impact that would last until the child was age 18?
The IRS finally cleaned this up and removed this silly rule, but that will not be effective until 2024.
Thinking of having a baby? According to the IRS, you might want to wait just a little while longer!
Ask the professional retirement plan consultants at Concierge Retirement Services how SECURE 2.0 and other changes in the rules can bring you opportunity.