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You have 6 in one hand and one half dozen in the other. You can easily suggest that a participant receive the adjustment through the current date, but that would fail to consider the fact that the participant was not available to receive the distribution at age 70 1/2. So, on what authority would they argue to be entitled to an increase through the current date when the delay was not attributable to any wrong-doing on the sponsors part. I don't believe there is a clear precedent, but could see how the actuary would reasonably conclude that the calculation be made to the point they attempted to pay the participant, but were unable to due to the participant not being available. The least you should do is make immediate payment for what you both agree on (the calculation through age 70 1/2) while you debate the necessity to pay through the current date. Good Luck!

Correct. They "ONLY" way you'd have a 'deemed' distribution is in the absence of a distributable event. This say nothing about taxation. So, when the loan fails to meet the requirements of 72(p), then it will become an actual distribution (e.g. no need to deem it until a distributable event because the participant is already eligible for a distribution.) Now that you've established that an actual distribution is taken, you must now determine taxation. This is where you look at the entire account (be sure to account for pre 87 and post-86 basis), to determine which part of a distribution of after-tax basis and which part is considered earnings. Good Luck!

No. The Basic Plan Document will, typically, state that regardless of the selection made between W-2, Withholding, and 415 Safe Harbor, the compensation for a 'self-employed' individual is 'earned income from self-employment'. Okay, now you're like... Huh???.... The key here is that when you have an owner of a business that is not incorporated, and he is therefore not receiving a W-2, then his income is determined from the profits of the business (i.e. K-1, Net Schedule C). Good Luck!