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I am retiring from my firm and the active practice of law at the end of this month. The BenefitsLink daily news feed has been a very important practice tool for me, and the message boards have provided a diversion that has been both educational and a lot of fun. I expect to continue to lurk and maybe participate occasionally, so this is au revoir and not goodbye. Best wishes to all for a healthy and happy 2020.

Luke... this is my understanding. A gets $100K in cash. B gets $50K in cash, and *already* got $50K as a loan. The $50K loan may be "worthless" to the plan, but B did get $50K in cash so not "worthless" to B. And then B gets his $100K account... in one way or another.

Back date? Never seems like a good idea.

Not that it is relevant, because clearly the following requirements were not met. You can make "employee" traditional IRA contributions to a SEP IRA account if the custodian allows them and you designate them as such. Once made, you can not "recharacterize" SEP IRA contributions as traditional IRA contributions.

Generally, It is very difficult for a spouse simply performing work tasks for the other spouse's business to meet the IRS Behavioral Control, Financial Control and Relationship of the Parties requirements to be considered an independent contractor. However, Larry is correct that the barber chair rental and the fact that the revenue goes directly to that individual makes this pretty clear that she is in fact an independent business. I'm convinced she can adopt her own SIMPLE IRA plan. However, there is an alternative. They could treat both businesses as a single qualified joint venture (QJV), see Schedule C instructions. They elect QJV treatment simply by each spouse filing a Schedule C/SE under the same business. Then they could use the same Simple IRA plan. With no employees other than owners and optionally spouses. A one-participant 401k gives more options for retirement plan investing. Larger potential employee deferrals (2019 = $19K vs. $13K) and much larger potential employer contributions (25% vs 3%). However, since it is after the SIMPLE IRA 11/2 notice enrollment deadline, I think it might have to wait until 2021.

Fwiw, if the "trigger" in 409A terminology is "separation from service," moving from employee to IC status may not be a separation from service for 409A purposes if he will continue to provide services to his former employer as an IC. It could be, but it may not.

That $400,000, if properly reported, will come to him via a W-2 from his (former) employer as it is (formerly deferred) compensation from that employer. So in no way may it be considered self employment earnings for pension purposes.

First, we have to assume that the independent contractor status is valid (and it might be; such operations are normal in that business; often the "contract barber" is renting a chair in the shop and booking her own clients, etc.). So let's assume it is legit for this example. Now, they get married. Yes, the two entities are now a controlled group and let's also assume the spousal exception doesn't apply. Can they have two Schedule C's seems to be the question. And the answer is "of course". They have two different businesses; what if she was a self-employed plumber but they got married? Still two different businesses. You are apparently getting waylaid by the fact that they work in the same physical location, but who cares? Yes, they are a controlled group, but they are both HCEs and assuming there is no NHCEs in either entity, then there is nothing that stops them from having two separate plans since 401(a)(26) does not apply to defined contribution plans. As long as there are no discrimination issues due to NHCEs, your situation looks fine to me, but that assumes all our assumptions above are valid.

See my comments in ALL CAPS BOLDED. Scenario - A pension plan was joined to a divorce back on June of 2016; WHAT DOES THAT MEAN? JOINED? after the case was filed back on July of 2015 . WHO ARE YOU? THE PARTICIPANT? ALTERNATE PAYEE? PLAN ADMINISTRATOR? ATTORNEY FOR ANY OF THE FOREGOING? In August of 2016, alternate payee receives an audit letter from the plan , to put up her community share in an interest-bearing account , until the divorce is final . WHAT GENERATED THAT "AUDIT LETTER" FROM THE PLAN. IN YOUR STATE DOES THE ALTERNATE PAYEE HAVE A RIGHT TO DIRECT HER COMMUNITY PROPERTY, OR MUCH THAT AWAIT THE ISSUANCE BY A QDRO AND ITS APPROVAL BY THE PLAN. IN EQUITABLE DISTRIBUTION STATES "MARITAL PROPERTY" DOES NOT EXIST EXCEPT IN CONNECTION WITH A DIVORCE. IS THAT TRUE IN YOUR STATE WITH REGARD TO COMMUNITY PROPERTY? I ASSUME THE SEGREGATION OF FUNDS WAS INTENDED TO PROTECT THE ALTERNATE PAYEE'S SHARE. The plan received a certified QDRO in July of 2018. DID THE PLAN APPROVE/QUALIFY THE ORDER? WHEN? IF IT IS APPROVED IT SHOULD BE PAID TO THE ALTERNATE PAYEE IMMEDIATELY. Do the plan hold the funds that were set- up in the interest barring account mentioned in the audit letter , back in 2016, in a 18-month segregation period, required by erisa , or when they are joined to the divorce ?? IF THE PENSION (THAT I SUSPECT IS A DEFINED CONTRIBUTION PLAN AND NOT A PENSION) IS COMMUNITY PROPERTY, WOULDN'T THE FULL AMOUNT BE DIVIDED, THAT IS, NOT LIMITED TO THE AMOUNT THAT WAS SEGREGATED? OR DID THE COURT FREEZE THE AMOUNT AS OF A CERTAIN DATE? If so, 18- months will expire soon ... under erisa when are they required to release the retroactive benefit to the alternate payee ? THE PLAN HAS 18 MONTHS FROM THE DATE IT RECEIVES THE QDRO TO APPROVE IT. THAT WOULD ACCOUNT FROM JULY, 2018. START AT PAGE 4 OF THE FOLLOWING - https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/qdro-determining-qualified-status-and-paying-benefits.pdf

Yes. The IRS recognizes that they can't possibly list every possible failure/correction that could happen or be reasonable. The corrections listed in Appendix A and B are deemed to be "reasonable and appropriate" and I would generally use them for those failures specifically listed, if those corrections are appropriate for the situation. Nevertheless, see the following from RP 2018-52, Appendix A: (3) Other reasonable correction methods permitted. As provided in section 6.02(2), there may be more than one reasonable and appropriate correction of a failure. Any correction method used that is not described in Appendix A or Appendix B would need to satisfy the correction principles of section 6.02. For example, the sponsor of a 403(b) Plan that failed to satisfy the universal availability requirement of § 403(b)(12)(A)(ii) might propose to determine the missed deferral for an excluded employee using a percentage based on the average deferrals for all employees in the plan instead of using the rule for calculating missed deferrals set out in .05(6)(b). In doing so, the proposed correction method would fall outside Appendix A, and the Plan Sponsor would need to satisfy the general correction principles of section 6.02 and other applicable rules in this revenue procedure.