Leaderboard

There are only very limited circumstances in which deferrals can be withdrawn - attainment of age 59-1/2, termination of employment, financial hardship, or termination of the plan. If none of those have occurred then you have an operational failure. If the failure is significant (sound like it is to me) then you would have to correct under VCP since it is more than 2 years after the failure. The correction will likely be to have the employees return the overpayments to the plan. For payments that have already been taxed, return of the payment will create after-tax basis in the plan.

I guess it depends on the dialect spoken by the duck. If it speaks only IRA (the fact is that the account is an IRA) I agree with the ERISA esq. If, otoh, it actually speaks qualified plan (the fact is that it is just a bank account with an improper name in the title) just have the name changed. The proof is in the pudding!

I'm actually not 100% sure. But I am certain that at least one platform - Am Funds PPTPA - takes the loan fee out of the requested amount, so you have to gross up. I don't think that is universal. I might be out in left field on all of this though, especially since I misread the original Q.

No wages, no plan contributions. You should be careful to be very precise in discussing this topic with clients, advisors, CPAs and prospects. If S-corp shareholders received "profit distributions", then they did receive "income" from the corporation. What they apparently did not receive from the corporation were "wages" for employment. Wages are the basis of plan compensation. Using imprecise language like "income" leads to these situations. I get proposal requests all the time, telling me a prospect has tons of "income". But that income may or may not be plan compensation. Usually a good chunk of it is in fact NOT plan compensation. Sometimes it is gross revenue, sometimes it is their 1040 adjusted gross income, sometimes it is a WAG. I always ask for the entity type and how it is electing to be taxed. Then I can ask specific questions to get to a plan compensation figure to use.

There must be a DRO for each plan. You can't have a DRO that covers multiple plans, therefore, the absence of a DRO related to the pension plan would mean there is no obligation to split the pension benefit.

Yes; understood. Another good reason for pooled plans! ?

Larry - I'm surprised you are surprised at anything you see these days ;).

I vote for no reporting, and booking only the $25k deferral and ignoring the four cents.

Yes. It is so small that a correction is unnecessary. What is frivolous about that argument?

In my company we have a phrase also, "Sorry don't feed the bulldog!". It is unrelated to this post and I don't know exactly what it means, but I thought I would share it.