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Every plan I have ever seen either is utterly silent (alas!) or is quite clear that the beneficiary has to survive the participant. The language concerning default beneficiaries will often say "If the participant does not designate a beneficiary or if the beneficiary does not survive the participant..." or some such. It strikes me as the only reasonable approach. I cannot imagine a plan document preserving the beneficiary's interest if the beneficiary dies before the participant. No idea what court cases are out there, but I would say (again, not speaking as a lawyer) that any court case to the contrary would have necessarily been wrongly decided.

I agree, with the usual caveat: What does the plan say?

My vote is that the beneficiary has no rights to any of the benefits at all unless the beneficiary survives the participant. Being designated as beneficiary gives no rights with respect to the participant's benefits until after the participant has died. If there is no other beneficiary designation and no contingent beneficiary and the beneficiary died first, then it goes to the default beneficiary (assumed to be the participant's estate). I have no idea where the "others" are coming up with their opinions. Please do bear in mind, though, that I have never seen the plan and I am not a lawyer!

There could be another reason or reasons in any particular case but the traditional reason is to avoid having to make top heavy minimum contributions for the associates.

I think it is a much tougher case than that if the Plan is silent and doesn't say what happens if the B dies first, although perhaps there are court opinions out there which serve as a basis for My 2 cents' view with which I am not familiar.

My two cents are with My 2 cents.

There are two very distinct events here. Those two events should always reconcile, but in this instance they do not. The first event is what actually happened and the second is what is actually reported. My question would be who is to say that the excess amount was rolled into the IRA as opposed to being distributed to the participant? This could easily be a situation where the $41K rollover is correct (and merely go underreported) and that they participant received $25K in cash when he should've received only $12K. If an reporting was actually done on the events as they occurred, then a 1099R for $41,461 would be issued with a Code of "G"; a Form 1099R for $25,000 would be issued with a Code of "1" to reflect the $12,158 cash and $12,842 loan offset, and a 1099Misc would be issued for $12,842 excess which would represent the overpayment to the participant which failed to get returned to the plan (and for which the plan must be made whole). This would merely be an exact way to report it has a happened; absent the actual election of the participant. Ideally, you can sync the series of events and report it pursuant to the elections; which would reflect the excess being rolled over (if that were indeed the case). Good Luck!

Wow that is very odd for a 401(k) plan. I guess if I'm in your shoes i would just document every conversation and put it in a CYA file. Im glad none of my clients have found this particular platform

We gave the same advice to a small collectively bargained plan. Interesting to note that some pre-approved plans now include a benefits/allocation provision that with a simple check of a box becomes: "Whatever the CBA says to do."

I think your numbers are clear enough. If you're not going to get the money back from the participant, and someone else is going to restore the money to the plan, you just amend the cash 1099-R from 25,000 to 37,842. I believe the IRS will eventually get wind of the excess rollover b/c that 1099 will be for 28,619 and the form the IRA sends to the IRS showing money received (Form 5498 I think?) will show 41,461. I'm not sure if they will do anything about it...pretty sure if amounts reported received are less than the 1099 they will inquire. As far as no withholding, it's not acceptable that it is the investment company's procedure. Someone has to figure out a way around that for the future, including getting another investment company.

I have seen firms like this (including accounting firms and doctors offices) have two plans to allow two different sets of people to work on the plans. In those cases the regular employee plan is worked on with HR based people that can see the employee's compensation. The partner plan is worked on by a very small and select group of people and the outside TPA who are the only people who get to see the partner's compensation. In short the partners were willing to pay money to make sure their compensation wasn't common knowledge even within HR. It has been a very long time since I worked on a law firm's plans but I seem to recall the exact legal form of ownership can matter at times.

Are you looking to add money to both plans? If not, there is no reason to terminate or do anything special with the Vanguard plan (if not adding money to that plan). If you do want to add money to both plans, well, you're letting the investment tail wag the plan dog. I get that the "free" documents seem attractive and all that, but at some point, is it really worth all the hassle? Vanguard and Fidelity (et al) are the ones giving you enough rope to hang yourself and should be answering your Qs. Odds are very good that you are doing something wrong; exactly what I don't know but from experience and the nature of your Qs it seems likely. Whether you get "caught" or not is another matter. Good luck, like I said, I get it, but IMO these solo plans being "run" by individuals with no knowledge in the qualified plan arena are just an invitation for trouble.

I'm not so sure about that. Maybe I'm misunderstanding what you are saying, but the "replacing 80% with 50%" modification, for 415 purposes, applies ONLY to 1563(a)(1) parent-subsidiary groups. Doesn't sound like that is the case here. If both entities were corporations, and they did not exist at the same time for any period whatsoever, then I would assert that there is no controlled group. Now, if one business was unincorporated, for example, then that's a different situation.

The regulations permit periodic re-enrollment. So, you can treat the 90th day as the trigger for a re-enrollment, deploying automatic enrollment. For example, since 2007, my plan has annually re-enrolled individuals who failed to enroll, or opted out of enrollment. We follow all of the required disclosures. The default percentage of pay was initially 3%, then 4%, then 5% and ultimately 6%. So, someone who opted out at the time of hire, was automatically enrolled at 3% in 2007, and if they opted out, was automatically enrolled at 3% in 2008, and if they opted out, was automatically enrolled at 4% in 2009, and if they opted out, was automatically enrolled at 5% in 2010, and if they opted out, was automatically enrolled at 6% in 2011. When people complained, "how many times do I have to tell you I do not want to participate in this plan", the answer was always the same "just once a year". This enrollment process is comparable to an "affirmative enrollment" in welfare benefit plans every year.

I'm a big fan of "solo-k" plans, for the simple reason that we've made a lot of money taking them over when they have been botched administratively, and either self-correction or VCP filing is required, and the investment house is no help. The fees are wonderful! Can you establish and properly run a solo-k? Absolutely. Will it work out, be handled properly, and will you get the good help you need from your broker/investment house? That I can't say. Be careful and do your homework, and hopefully it will work out fine. And remember that free advice over the internet, including from people like me, is worth what you pay for it.

I think those are only legal in Colorado, but I hear you can have them in California, as long as you don't sell them.