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Peter, I appreciate this. As I recall, the DOL in previous sub-regulatory guidance has indicated that members of the controlled group share "sufficient commonality" in the circumstance described above.

No. The former participant (i.e., does not have an account balance as of 12/31/2020--the plan termination date) is not an "affected employee."

Please see attached as an inspiring note for Christmas--- Best wishes for the New Year----BOB

Let me think about where I saw this, and I will direct respond to you.

If it was distributed by the plan in 2020, then it is taxable to the participant in 2020 and a 2020 1099-R should be issued. Whether the participant cashes the check in 2020 or 2021 is irrelevant. See Rev. Rul. 2019-19.

Having said all of that, if not funded by 12/31/2020: No deduction under 404 for 2019 for portion of matching contribution not made by applicable deadline. Amounts not included in 415(c) for 2019. Operational failure, which will need to be fixed under EPCRS.

To evaluate a range of potential answers to the questions raised above, one might read carefully the Labor department’s rule. 29 C.F.R. § 2510.3-55 Definition of employer—Association Retirement Plans and other multiple employer pension benefit plans. https://ecfr.federalregister.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-B/part-2510/section-2510.3-55

Assuming the plan document states that the limitation year is the plan year, the 415(c) dollar contribution limit for PYE 9/30/2020 would be the 415(c) dollar contribution limit for 2020, which is $58,000 (I believe). For 415(c) purposes for PYE 9/30/2020, the 401(k) contributions from 10/1/19 to 9/30/2020 are counted. He only contributed $19,000 during that time period. What we do not know is his 401(k) deferrals from 1/1/19 to 10/1/19. That would determine how much of his deferral for 2019 calendar year would be regular and how much would be catch-up (which would not count towards the 415(c) limit for the PYE 9/30/2020.) Yes, he will have to defer above the 402(g) limit for calendar year 2020 to take advantage of the catch-up provision for the 2020 calendar year. But, under your facts above, that will not have an impact on his 415(c) limitation for PYE 9/20. His deferral in the last quarter of 2020 will not be counted towards his 415(c) limit for PYE 9/20.

sam248, you should also be applauded for your apparent willingness to "do the right thing". I'm sure that most of us on this Board have experienced similar situations from the Plan side, where participants who were mistakenly overpaid resisted returning these funds to the Plan, resulting in unnecessary time, expense and misery for everyone involved in attempting to recover the overpayment.

Here are my general rules (because there are always exceptions): 1. If a 401(k) plan is going to be deferral only, I recommend against it or prefer they go somewhere else. Past experience shows that they almost never work out successfully. 2. If an employer qualifies and the limits are acceptable. a SIMPLE IRA is quite often the best choice instead of a 401(k). I know that doesn't work here because of the employer contributions, but I still often recommend it. 3. While our industry exists because of "state" supplied rules, I'm generally opposed to state run programs.

My advice would be to cooperate, but not to the point that it disadvantages you beyond where you would have been had the mistake never occured. And that's tricky, to say the least. I doubt the bill collector will just say "sure, you work it out" because then they don't get paid. Of course they shouldn't have been involved in the first place. Just be very careful about taking money out of the IRA - if you "just" ask for it to come out, it will be taxed to you, plus subject to the premature distribution penalty if you are under 59 1/2. It might be ok to take it out as an "excess contribution" (which it is) and then return it. But you really need some specific guidance from someone who can see the details of your situation.

Mr. Bagwell makes a good point, and raises a broader point: When dealing with potential controlled/affiliated/management group scenarios in closely held businesses, make sure you have all the facts and ask all the relevant questions as it relates to family attribution. For example, while it would appear based on the facts you provided in this post and previous post that a controlled group does not exist, as Mr. Bagwell points out, if the husband and wife have a minor child (under age 21), all bets are off: Each spouse's 100% ownership in their respective companies is attributed to the minor child. The minor child is deemed to hold a 100% interest in both companies making this a classic brother-sister controlled group of corporations. This means that the controlled group cannot offer both the 401(k) and the SIMPLE IRA in the same year.

The requirement is that advanced notice must be provided within a "reasonable time" prior to the beginning of the plan year. That requirement is "deemed" to be satisfied if it is provided no later than 30 days before the beginning of the plan year. Depending on the facts and circumstances, one can always argue on reasonableness of time.

If she was an employee of the husband's business wouldn't that be a controlled group by stock attribution because as a spousal employee should be be deemed to own 100% of husband business as well as 100% of her other business? But he said no CG so I assume she is not employee. Assuming the wife has no direct ownership of husband business, is not an employee (and same goes other way) and there are no GC or ASG issues I see no reason why wife can't maintain SIMPLE-IRA for her business while husband has 401(k) for his.

Any time you amend out a SH Match you need to give 30 days advance notice. I'm not aware of any exception that says, unless it crossed a plan year end.

In the past I have put provisions in the spinoff documents themselves (e.g., board resolutions and/or plan documents) that state that the existing enrollment and beneficiary designation forms will be assumed by the spun off plan until new are obtained. Never had a problem with that. Needs to be communicated to the participants of course.