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No

I was in a webinar yesterday with Derrin Watson and Stephen Forbes - during the Q&A this came up. It was recommended to use a Code "1" if the taxpayer is under 59 1/2 and then the taxpayer would address this when the individual's taxes are filed. I believe there was a form mentioned that allows the taxpayer, when filing, r to advise the IRS that there was an exception. That being said, I agree that when the time arrives next January, there will be a "special" code that will be used however in this case Susan was needing a code right away. My two cents...

Several of us across multiple firms were discussing this a few days ago and the majority were going to use Code 2 (it was not a consensus) since that specifically says the distribution qualifies for an exception to the 10% penalty. We know the CARES Act withdrawal does qualify. Code 1 says there is no known exception and I don't think that's correct. We also think it's likely that the IRS will issue a specific code. But that doesn't help the providers that send the 1099 with the check.

Depending on plan size and fee, just about anything is feasible.

Wish. Granted.

Sorry for my typo, and any lack of clarity. Owners are excluded from SH match, and so get none. Owners are the only HCEs. Owners tell us that all NHCEs have been presented with 401(k) & SH Match and have elected not to defer. They say they have that in writing (do we ever believe everything the client tells us?) I feel this is very suspect, and I know that technically it works. But I was wondering if anyone has had experience with the IRS questionning such a case.

Forget about "seasoned money" at all. Unless he wants a taxable distribution (which is what a seasoned money use would be), you need to comply with the incidental insurance rules (the so called 25% or 50% rules - depending on the type of insurance purchased). And if you tried to use the seasoned money concept, you do have to comply with the other distribution restrictions (like the 59 1/2 rule).

Wouldn't surprise me if that's another thing not explained in the original posting. PLEASE PEOPLE: tell us all the details when you have a question!!!! If that is what he was thinking of, it would be an "issue" but the answer is the same. He is NOT an employee of someone else; can someone who is NOT an employee participate in another employer's plan? We all know the answer to that now don't we?